2005 (1) TMI 697

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....e IT Act, 1961 (hereinafter referred to as "the Act"). 2. Vide order dt. 28th Sept., 1994, the penalty amounting to Rs. 55,006 was levied and the order was accordingly conveyed to the assessee. The appeal filed by the assessee before the CIT(A) was disposed of on 8th Jan., 1997. 3. In the appeal, it was held that the surrender of income made by the assessee was neither bona fide nor voluntary. This finding of the first appellate authority was disturbed on merits by the Tribunal, which vide its order dt. 20th Nov., 2002, ordered deletion of the penalty. This order of the Tribunal has been challenged by the Department in the present appeal under s. 260A of the Act. 4. After hearing learned counsel for the appellant at some length, we....

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.... A bare reading of the provisions of s. 271(1), which vest the authorities concerned with the power to impose penalty, clearly postulates that an officer has to record his satisfaction in terms of the section that it was a fit case for initiation of a penalty proceedings. Furthermore, use of expression "may" clearly shows that penalty is not an automatic consequence of concealment of income or furnishing inaccurate particulars thereof. Wide discretion has been given to the AO and other authorities to apply their mind and come to a conclusion in the light of the statutory provisions as to whether they would or would not like to initiate the penalty proceedings keeping in view of the facts and circumstances of the case. The cumulative reading....

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.... The opening clause of sub-s. (1) of s. 271 itself contemplates a finding as regards satisfaction of availability of grounds under cl. (c) being recorded during the assessment proceedings. Recently, in CIT vs. Ram Commercial Enterprises Ltd. (ITC No. 13 of 1996 decided on 8th Oct., 1998)'since reported in (2001) 167 CTR (Del) 321: (2000) 246 ITR 568(Del), following the law laid down by their Lordships of the Supreme Court in D.M. Manasvi vs. CIT 1972 CTR (SC) 437: (1972) 86 ITR 557(SC) and CIT vs. S.V. Angidi Chettiar (1962) 44 ITR 739(SC), we have held that unless requisite satisfaction was recorded in the proceedings under the Act, which would mean the assessment proceedings, the jurisdiction to initiate the penalty proceedings could ....