1977 (12) TMI 40 - AT - Income Tax

Tribunal rules in favor of assessee, penalty imposition not justified under s. 273(c)

The tribunal ruled in favor of the assessee, stating that the penalty imposition of Rs. 3,000 under s. 273(c) of the Act was not justified as the ... Penalty under section 273(c) - satisfaction of the Assessing Officer before imposition of penalty - obligation to revise advance tax under section 212(3-A) - validity of penalty where prerequisite satisfaction is not recordedPenalty under section 273(c) - satisfaction of the Assessing Officer before imposition of penalty - validity of penalty where prerequisite satisfaction is not recorded - Whether imposition of penalty under s. 273(c) was justified where the Assessing Officer did not record satisfaction that the assessee had committed the default prior to passing the assessment order. - HELD THAT: - The Tribunal found that the Assessing Officer's order contains no indication that he was satisfied, before passing the assessment order, that the assessee had committed the default under s. 212(3-A). Although a show cause notice was issued along with the demand notice, the demand notice would necessarily be prepared after the order was signed and there is no material on file to show that the Assessing Officer had formed the requisite satisfaction during the course of assessment proceedings. The statutory prerequisite of the Assessing Officer's satisfaction being recorded prior to imposing penalty thus remained unfulfilled. As that preliminary condition is essential to the validity of a penalty under s. 273(c), the penalty could not be sustained on the facts of the case.The penalty imposed under s. 273(c) is not justified and the assessee's appeal is allowed on this ground.Final Conclusion: Penalty imposed under s. 273(c) set aside because the Assessing Officer did not record the requisite satisfaction before passing the assessment order; other contentions left undecided. The assessee appealed against a penalty of Rs. 3,000 under s. 273(c) of the Act. The tribunal ruled in favor of the assessee, stating that the Income-tax Officer did not express satisfaction of the default, therefore penalty imposition was not justified. The tribunal allowed the appeal.