2003 (9) TMI 51 - HC - Income Tax

Tax return concealment penalty u/s271(1)(c) challenged for missing officer satisfaction note; penalty deletion upheld, appeal dismissed.

The dominant issue was whether penalty under s. 271(1)(c) could survive in the absence of a specific recording of the Assessing Officer's satisfaction in ... Levy of penalty u/s 271(1)(c) - concealed the particulars of its income - recording of satisfaction - t the satisfaction of the Assessing Officer, as contemplated in section 271(1)(c) of the Act was inherent in the queries raised by him during the course of the assessment proceedings. It is urged that the Assessing Officer had directed the issue of notice for levy of penalty under the said section after being satisfied that the assessee had concealed the particulars of its income and, therefore, the Tribunal was not correct in deleting the penalty on a technical ground. From the order sheets for the proceedings held before the Assessing Officer, placed on record by learned counsel for the Revenue, and the order of assessment, where the Assessing Officer had noted 'penalty notices under section 271(1)(c) of the Act have been issued separately', we find that there is no significant difference between the facts of the present case and Ram Commercial Enterprises Ltd.[1998 (10) TMI 13 - DELHI HIGH COURT]. No question of law, much less a substantial question of law survives for our consideration. We accordingly decline to entertain the appeal. Issues:1. Penalty under section 271(1)(c) of the Income-tax Act, 1961 for assessment year 1993-94.2. Whether satisfaction of the Assessing Officer as per section 271(1)(c) was recorded.3. Applicability of previous court decisions on the present case.Detailed Analysis:1. The High Court heard an appeal by the Revenue against the order of the Income-tax Appellate Tribunal, which had deleted the penalty levied on the respondent-assessee under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1993-94. The Tribunal's decision was based on the lack of recorded satisfaction by the Assessing Officer as required under section 271(1)(c).2. The Revenue contended that the satisfaction of the Assessing Officer was implicit in the queries raised during the assessment proceedings and the subsequent issuance of a notice for penalty under section 271(1)(c). However, the High Court disagreed with this argument. It noted that the order sheets and assessment record did not explicitly show the satisfaction of the Assessing Officer, similar to the precedent set in a previous case of CIT v. Ram Commercial Enterprises Ltd. The court emphasized the importance of the Assessing Officer forming and recording their own opinion before initiating penalty proceedings.3. The High Court referred to the decision in Ram Commercial Enterprises Ltd., where it was highlighted that the assessing authority must independently arrive at a satisfaction before imposing penalties under section 271. The court reiterated that the absence of explicit satisfaction in the assessment order precludes the assumption that such satisfaction was reached. Relying on this precedent and the principles established by the Supreme Court in prior cases, the High Court concluded that no substantial question of law remained for consideration and subsequently dismissed the appeal.In summary, the High Court upheld the Tribunal's decision to delete the penalty imposed under section 271(1)(c) due to the lack of recorded satisfaction by the Assessing Officer, in line with established legal principles and precedents.