Delhi High Court
Commissioner Of Income Tax vs Smt. Santosh Sharma on 17 September, 2007
Bench: Madan B. Lokur, S. Muralidhar
ORDER
1. In this appeal under Section 260(A) of the Income Tax Act, 1961 ('Act'), the Revenue is aggrieved by an order dated 17th February, 2006 passed by the Income Tax Appellate Tribunal, Delhi Bench 'G' in ITA No. 2747/Del/2005 relevant for the assessment year 2001-02.
2. By the order under appeal, the Tribunal allowed the appeal filed by the assessed challenging the levy of penalty under Section 271(1)(c) of the Act. The penalty was set aside by the Tribunal on the ground that the Assessing Officer had not recorded any satisfaction in the assessment order regarding the concealment of income or for furnishing inaccurate particulars by the assessed. The Tribunal relied on the decision of this Court in Commissioner of Income Tax v. Ram Commercial Enterprises Limited .
3. Admit.
4. The following substantial question of law is framed for consideration: Whether, in view of the endorsement in the assessment order to the effect that penalty proceedings under Section 271(1)(c) of the Act are being initiated for furnishing inaccurate particulars, the Income Tax Appellate Tribunal erred in cancelling the penalty by relying on the judgment of this Court in CIT v. Ram Commercial Enterprises Ltd.
5. Filing of paper book is dispensed with. The appeal is taken up for final hearing with the consent of the learned Counsel.
6. At the outset, we may notice that the view expressed by this Court in Ram Commercial Enterprises Ltd. that the failure on the part of the Assessing Officer to record his satisfaction in the assessment order vitiates the penalty proceedings has been approved by the Supreme Court in Dilip N. Shroff v. Joint Commissioner of Income Tax [2007] 291 ITR 519 (SC) and T. Ashok Pai v. Commissioner of Income Tax [2007] 292 ITR 11 (SC).
7. However, in the instant case, at the end of the assessment order, the Assessing Officer has in regard to initiation of penalty proceedings, observed as follows:
Assessed at Rs. 45,53,332/- as above. Issue Demand Notice and Challan. Charge interest u/s 234 BandC. Penalty proceedings Under Section 271(1)(c) for furnishing inaccurate particulars of income have separately been initiated. Give credit of tax paid voluntarily on 8.3.2004 of Rs. 15,61,617/- vide copy of Challan placed on record. Also give credit of Rs. 333/- paid under self assessment at the time filling of original return.
8. Mr. Goel, learned Senior Standing Counsel for the Revenue submits that the aforementioned portion of the assessment order indicates the satisfaction of the Assessing Officer and that, therefore, this was not a case where the dictum of Ram Commercial Enterprises Limited would apply. He submis that this matter should be remanded to the Tribunal for a decision on merits.
9. Learned Counsel for the assessed submitted that in fact no inaccurate particulars were furnished and therefore, the above recording is not correct.
10. We are unable to accept the contention of advanced on behalf of the assessed. The recording by the Assessing Officer in the last part of the assessment order satisfies the requirement of the law as laid down by the Supreme Court in Commissioner of Income Tax v. S.V. Angidi Chettar in as much as there is a satisfaction recorded therein that penalty proceedings be initiated for furnishing inaccurate particulars. Moreover, in the paragraph just preceding the above, the Assessing Officer has also made a note of the failure on the part of the assessed to explain the source of credits in her bank account, and that she adduced no evidence to support the genuineness of such credits.
11. We are of the view that the Tribunal erred in coming to the conclusion that the Assessing Officer had not recorded his satisfaction about the initiation of penalty proceedings and in applying the decision in Ram Commercial Enterprises Ltd. to the facts of the present case. The Tribunal ought to have decided the issue on merits.
12. We, accordingly, answer the question in the negative, in favor of the Revenue and against the assessed. We set aside the impugned order dated 17th February, 2006 of the Tribunal and remit the matter to the Tribunal for a decision on the merits of the case.
13. The parties are directed to appear before the Tribunal on 23rd October, 2007 for directions with regard to the hearing of the appeal on merits. The appeal is disposed of.