TaxTMI 
TaxTMI 
2008 (11) TMI 54
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.... P. Ltd., M/s Bharat Cine Co. (P) Ltd., M/s Indus Valley Promoters Ltd., M/s Model Footwear (Pvt.) Ltd., M/s Gama Investments Pvt. Ltd., M/s Baid Credit and Portfolio Pvt. Ltd., M/s Basant Plasto Chemicals Pvt. Ltd., M/s Britika Exports (P) Ltd., Sh. Francis Wacziarg, M/s Abhishek Auto Industries Ltd., M/s Bora Knitwear (P) Ltd., M/s Singh Enterprises, M/s Narain Jewels International Ltd., M/s COSMO Films Ltd., Shri Prakash Chandra Yadav, M/s Ajay Home Products Pvt. Ltd., M/s Super Plastronices (P) Ltd., M/s Dass Trading and Holding (P) Ltd., M/s S.R. Ice and Cold Storage P. Ltd., M/s Shree Joints International P. Ltd., M/s Goenka Estates (Delhi) Pvt. Ltd., M/s Sandeep Ceramics Ltd., Francis Wacziarg, M/s Brahmputra Consortium Ltd., Shri Sa....
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....respondents in ITA Nos. 127/2006, 323/2006 ORDER AJIT PRAKASH SHAH, CHIEF JUSTICE In all these cases, the Income Tax Appellate Tribunal has either deleted or affirmed the deletion of penalty levied upon the assessee under Section 271(1)(c) of the Income Tax Act, 1961. The Tribunal has, while doing so, relied upon the decision of the Division Bench of this Court in CIT v. Ram Commercial Enterprises Ltd. (2000) 246 ITR 568 (Delhi) and held that the authority initiating the penalty proceedings had not recorded its satisfaction regarding concealment of income or furnishing of inaccurate particulars thereof by the assessee. The Revenue has assailed the correctness of the said orders in these appeals. According to the Revenue, penalty pr....
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....ision purports to create a fiction by which satisfaction of the assessing officer is deemed to have been recorded in cases where an addition or disallowance is made by the assessing officer and a direction for initiation of penalty proceedings is issued. The said provision is made effective retrospectively with effect from 1^st April, 1989. In some of the cases forming part of this batch, the assessment orders were passed after 1^st April, 1989. This reference is being answered only in respect of the cases where assessment orders were made prior to 1^st April, 1989. 4. Learned counsel appearing for the Revenue strenuously contended that the question whether the authority was or was not satisfied about any concealment or furnishing of ina....
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....nce of any finding recorded by the assessing officer in the order of the assessment conferring jurisdiction for initiation of penalty proceedings. According to the learned counsel the decision of this Court in Ram Commercial Enterprises (supra) laid down the correct position of law. 6. Section 271(1)(c) of the Income Tax Act, 1961 provides: "271 (1) If the income Tax Officer, or the Appellate Assistant Commissioner in the course of any proceedings under this Act is satisfied that any person- (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - ...............................
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....ase of Commissioner of Income-tax, Madras, and Anr. v. S.V. Angidi Chettiar (1962) 44 ITR 739 (SC) wherein Shah J. speaking for the Court while dealing with Section 28 of the Indian Income Tax Act, 1922, observed: "The power to impose penalty under Section 28 depends upon the satisfaction of the Income Tax officer in the course of proceedings under the Act; it cannot be exercised if he is not satisfied about the existence of conditions specified in clauses (a), (b) or (c) before the proceedings are concluded. The proceeding to levy penalty has, however, not to be commenced by the Income Tax Officer before the completion of the assessment proceedings by the Income Tax Officer. Satisfaction before conclusion of the proceeding u....
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....e being spelt out by the order of the assessing authority. Even at the risk of repetition we would like to state that the assessment order does not record the satisfaction as warranted by Section 271 for initiating the penalty proceedings...." 8. The view taken in Ram Commercial Enterprises (supra) has been followed in Diwan Enterprises v. Commissioner of Income Tax (2000) 246 ITR 571 (Delhi) and Commissioner of Income Tax v. J.K. Synthetics Ltd. (1996) 219 ITR 267 (Delhi). Same is the view taken by the Bombay High Court in Commissioner of Income-tax v. Dajibhai Kanjibhai (1991) 189 ITR 41 (Bom). 9. In our opinion, the legal position is well settled in view of the Supreme Court decisions in Commissioner of Income Tax, Madras. an....