V.G. Sabhahit, J.—This appeal by the Revenue is filed being aggrieved by the order passed by the Income Tax Appellate Tribunal, Panaji Bench, Panaji in I. T. A. No. 34/PANJ/2006 wherein the Tribunal has allowed the appeal filed by the assessee and set aside the penalty imposed upon the assessee under Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act").

2. The assessee which is a partnership firm filed returns during the year 1997-98 showing sale of Rs. 4,00,000 to M/s. Rajesh Industries and on assessment it was found that the sale of Rs. 4,00,000 to M/s. Rajesh Industries was shown in the return. However, in the closing stock of M/s. Rajesh Industries these goods were not shown. Under the circumstances, assessment order was passed considering the sale of Rs. 4,00,000 as bogus and made addition which was confirmed. Being aggrieved by the same, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals), Belgaum and the appellate authority by order dated November 21, 2005 confirmed the order of the Assessing Officer. Being aggrieved by the same the assessee preferred an appeal before the Income Tax Appellate Tribunal, Panaj