2006 (11) TMI 143

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....ion 271B can be initiated after completion of the assessment proceedings?" The appellant is an authority within the meaning of section 10(29) of the Income-tax Act, 1961, and its business activities are restricted by section 34 of the Warehousing Corporations Act 1962. The Corporation filed its return of income for the assessment year 1988-89 on August 30, 1988, showing a loss of Rs. 5,38,710. The Deputy Commissioner of Income-tax (Assessment), Special Range II, Guwahati, accepted the return of income and passed the assessment order under section 143(1) determining the total loss at Rs. 5,38,710 and closed the proceeding by refunding the advance tax paid. After about one and a half years, respondent No.2 issued a notice dated November 15....

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....ter completion of the assessment. The Tribunal directed the Commissioner of Income-tax (Appeals) to decide the issue afresh after consideration of all the grounds raised by the assessee. There is no dispute that the assessee is an authority within the meaning of section 10(29) of the Income-tax Act, 1961. There is also no dispute that the assessee did not furnish the report of the audit in the prescribed form as is required under section 44AB. The return submitted was processed and assessed. The question is, whether after lapse of a period of 18 months proceedings under section 271B could be initiated. Section 271B reads as follows: "271B: If any person fails, to get his accounts audited in respect of any previous year or years releva....

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....e of the assessment proceedings. "Satisfaction", according to the hon'ble Supreme Court, precedes the issue of notice meaning thereby that initiation of penalty proceedings may be at a subsequent date. The decision of the hon'ble Supreme Court shows that for initiation of a proceeding under section 271(1), the Assessing Officer should draw his satisfaction during the course of the proceeding under the Act. Issuance of notice and action subsequent thereto may not be simultaneous. While interpreting section 275, the Delhi High Court in CIT v. Rajinder Kumar Somani reported in [1980] 125 ITR 756 observed that imposition of penalty must be initiated in the course of assessment proceedings. In view of the decision of the hon'ble Supreme Court in....