2014 (7) TMI 965

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....y of Rs. 1,00,000/- imposed under Section-271-B was cancelled. The appeal was admitted on the following substantial questions of law:- (a) Whether on facts and in the circumstances of the case the Income Tax Appellate Tribunal was legally correct in holding that the Assessing Officer was not justified in initiating the proceedings for imposition of penalty under section 271B of the Income Tax Act at a time when no assessment proceedings or any other proceedings were pending? (b) Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was legally correct in cancelling the penalty of Rs. 1,00,000/- (Rupees One Lakh only) imposed on the assessee under section 271B of the Income Tax Act, 1961 by the....

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.... assessment year, the assessee has filed the belated tax audit report alongwith return. The assessee is in the habit of not complying with the mandatory provision of law. However, on specific query from the Bench, he admits that there was no whisper about the levy of the penalty in the assessment order. The assessment order is silent as already observed by the Tribunal in para-8 of its order. On the other hand, Sri Ashish Bansal, learned counsel for the assessee has justified the impugned order. He submits that since the revenue has not referred to any proceedings during which the penalty proceeding can be started and therefore penalty cannot be levied. We have heard both the parties at length and also gone through the materials av....

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....y of non-application of mind. The Commissioner (Appeals) and the Tribunal had rightly deleted the penalty. No question of law arose for consideration of the court." Moreover, in the case of C.I.T. Vs. Vikas Promoters P. Ltd. (205) 277 ITR 337, it was observed that:- "It is mandatory for the Assessing Officer to record satisfaction before drawing an inference for the purpose of levying penalty while completing the assessment under section 143(3) of the Income-tax Act, 1961. The provisions of section 271(1) (c) are penal in nature, thus must be strictly construed, and the element of satisfaction should be apparent from the order itself. It is not for the courts to go into the mind of the authorities or trace the reasons from the file of....