Recording satisfaction before penalty proceedings bars appeal where the assessment order omits that foundational requirement.

Penalty proceedings require the assessing authority to record its own satisfaction before initiation. As the assessment order did not record that foundational satisfaction, no substantial question of law arose under section 260A of the Income-tax Act, 1961, and the Revenue's appeal was dismissed as not maintainable on merits.

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Issues: Whether the Revenue's appeal under section 260A of the Income-tax Act, 1961 was liable to be dismissed for want of any substantial question of law arising from the assessment order's failure to record the requisite satisfaction for initiating penalty proceedings under section 271 of the Income-tax Act, 1961.

Analysis: The appeal concerned the settled requirement that the assessing authority must form and record its own satisfaction before initiating penalty proceedings. The assessment order did not spell out such satisfaction, and in the absence of that foundational requirement, no substantial question of law arose for consideration.

Conclusion: The appeal was not maintainable on merits and was dismissed.

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