TaxTMI Login
Just a moment...
Press 'Enter' to add multiple search terms. Rules for Better Search
of 
of 
No Folders have been created
Are you sure you want to delete "My most important" ?
NOTE:
of of 
All Case Laws
of of All Case Laws
Note
Bookmark
Share
Don't have an account? Register Here
of <h1>Penalty under section 271(1)(c) invalid unless assessing officer records clear satisfaction of concealment or deliberate inaccurate particulars</h1> The HC held that penalty proceedings under section 271(1)(c) are invalid where the assessing authority has not recorded or manifested satisfaction that ... Validity of penalty proceedings u/s 271(1)(c) - No application of mind Or satisfaction recorded by the authority - regarding concealment of income or furnishing of inaccurate particulars - HELD THAT:- In our opinion, the legal position is well settled in view of the Supreme Court decisions in Anr. v. S.V. Angidi Chettiar [1962 (1) TMI 10 - SUPREME COURT] and D.M. Manasvi [1972 (9) TMI 5 - SUPREME COURT], that power to impose penalty u/s 271 of the Act depends upon the satisfaction of the Income Tax Officer in the course of the proceedings under the Act. It cannot be exercised if he is not satisfied and has not recorded his satisfaction about the existence of the conditions specified in clauses (a), (b) and (c) before the proceedings are concluded. It is true that mere absence of the words 'I am satisfied' may not be fatal but such a satisfaction must be spelt out from the order of the Assessing Authority as to the concealment of income or deliberately furnishing inaccurate particulars. In the absence of a clear finding as to the concealment of income or deliberately furnishing inaccurate particulars, the initiation of penalty proceedings will be without jurisdiction. In our opinion, the law is correctly laid down in Ram Commercial Enterprises [1998 (10) TMI 13 - DELHI HIGH COURT] and we are in respectful agreement with the same. The reference is answered accordingly. Issues: (i) Whether the satisfaction of the officer initiating proceedings under Section 271(1)(c) of the Income-tax Act can be treated as recorded where the assessing authority has not used express words of satisfaction but such satisfaction is otherwise discernible from the assessment order.Analysis: The governing statutory test requires that the Income-tax Officer or Appellate Assistant Commissioner be satisfied in the course of proceedings under the Act about matters specified in Section 271(1)(c) before penalty jurisdiction can be exercised. Supreme Court precedents establish that satisfaction must be formed during proceedings under the Act and need not be equated with issuance of notice; however, the assessing authority must itself form and record satisfaction. Prior decisions of this Court (including Ram Commercial Enterprises Ltd.) were examined and followed, holding that mere availability of material from which satisfaction could be inferred is not a substitute for a finding by the assessing authority. The absence of explicit words such as 'I am satisfied' is not necessarily fatal, but the assessment order must nonetheless disclose that the authority applied its mind and recorded satisfaction regarding concealment of income or furnishing of inaccurate particulars; otherwise initiation of penalty proceedings is without jurisdiction. The Finance Act, 2008 insertion of sub-section 1B in Section 271 (made retrospective from 1 April 1989) was noted but the reference is answered only in respect of assessment orders made prior to 1 April 1989.Conclusion: Satisfaction required by Section 271(1)(c) must be reflected in the assessing authority's order; where no clear finding of satisfaction as to concealment or furnishing of inaccurate particulars is discernible from the assessment order, initiation of penalty proceedings is without jurisdiction. The view in Ram Commercial Enterprises Ltd. is affirmed; conclusion operates in favour of the assessees in respect of cases with assessment orders prior to 1 April 1989.
TaxTMI 
TaxTMI 
