2005 (2) TMI 50

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.... recorded his satisfaction for initiation of penalty as contemplated under section 271(1)(c) of the Act. It is also contended that the following findings recorded by the Tribunal in the impugned order are perverse and as such should be set aside: "However, whether the land in question was agricultural land or not is pending adjudication by the hon'ble High Court. But as the amounts were added by the Assessing Officer to the total income of the assessee, the penalty proceedings under section 271(1)(c), were initiated. The hon'ble Delhi High Court in the case of CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 has held that before initiating the penalty proceedings under section 271(1)(c), the Assessing Officer has to form an opin....

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....r of Commissioner of Income-tax (Appeals), we dismiss the ground of appeal raised by the Revenue." The necessary facts are that the assessee filed a return of his income for the assessment year 1994-95 disclosing the income of Rs. 10.13 lakhs. The assessment was completed on January 31, 1997, at a total income of Rs. 88,74,860. An addition was made on account of receipt of compensation of acquisition of agricultural land. The assessee indicated that it was credited by an amount of Rs. 74,16,406. He was called upon to explain this credit entry which was explained during the proceedings. The Assessing Officer vide his order dated January 30, 1997, made an addition of the amount to the payable income and passed the following orders: "Ass....

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....discretion exercisable by such authority under the provisions of that Act. The discretion that is indicated by the Legislature by using the expression "may" is of wide connotation. It is a settled cannon of interpreted jurisprudence that the exercise vested in the authorities performing particularly quasi-judicial or judicial functions has to be exercised for just and proper reasons and in consonance with the settled principles of law. A very order initiating the penalty proceedings at the face of it shows that there was no application of mind much less proper application of mind in furtherance of which the Assessing Officer has passed an order imposing penalty of Rs. 27,53,878 under section 271(1)(c) of the Act. In the order imposing the p....

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....vesaid plea of the petitioner having been rejected, the penalty imposed under section 271(1)(c) has still to be set aside though for a different reason and because the very foundation for initiation of the penalty proceedings is conspicuous by its absence. The opening clause of sub-section (1) of section 271 itself contemplates a finding as regards satisfaction of availability of grounds under clause (c) being recorded during the assessment proceedings. Recently, in CIT v. Ram Commercial Enterprises Ltd. (I.T.C. No.13 of 1996 decided on October 8, 1998- since reported in [2000] 246 ITR 568 (Delhi)), following the law laid down by their Lordships of the Supreme Court in D. M. Manasvi v. CIT [1972] 86 ITR 557 and CIT v. S. V. Angidi Chettiar ....