Income Tax Appellate Tribunal - Delhi
Inchcape India Private Limited vs Acit on 25 February, 2004
JUDGMENT
K. C. Singhal, J.M.
1. The only issue arising in this appeal relates to levy of penalty of Rs. 1,87,57,142/- u/s 271(1)(c).
2. At the outset, the learned counsel for the assessee Mr. Dinodia has challenged the validity of the penalty proceedings by contending that no satisfaction was recorded by the AO as contemplated u/s 271(1)(c). It has been contended by him that even there is no whisper in the entire assessment order which may reveal that the AO was satisfied to the effect that the assessee had concealed any particulars of income or furnished inaccurate particulars of income. Therefore, in the absence of such satisfaction, the entire penalty proceedings was void ab initio in view of the judgment of jurisdictional High Court in the case of Ram Commercial Enterprises Ltd., (2003-TAXINDIAONLINE-69-HC-DEL-IT) 246 ITR 568. On other hand, the learned DR has relied on the decisions of Supreme Court in the case of Jeevan Lal Sah, (2002-TAXINDIAONLINE-189-SC-IT) 205 ITR 244 and in the case of B.A. Balasubramanian & Bros., (2002-TAXINDIAONLINE-191-SC-IT) 236 ITR 977 for proposition that after the insertion of Explanation 1 to Section 271 (1) (c), AO is not required to record the satisfaction.
3. We have considered the rival submissions of the parties. In our view, the issue is squarely covered by the judgment of Hon'ble Delhi High Court in the case of Ram Commercial Enterprises Ltd. (supra) wherein it was held as under:
"A bare reading of the provisions of Section 271 and the law laid down by the Supreme Court makes its clear that it is the assessing authority which has to form its own opinion and record its satisfaction before initiating the penalty proceedings. Merely because the penalty proceedings have been initiated, it cannot be assumed that such a satisfaction was arrived at in the absence of the same 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."
The above view has been re-affirmed by the jurisdictional High Court in the case of Super Metal Re Roller P. Ltd. In the present case, no such satisfaction has been recorded by the AO and the DR also has not been able to point out about recording of such satisfaction. Therefore, following the binding decision of the Hon'ble Delhi High Court, it is held that penalty proceedings were void ab initio. The judgments relied upon by the learned DR are entirely on different issues and those decisions are not authority on the issue arising in the present appeal. In the case of Jeevan Lal Sah (supra), the Hon'ble Supreme Court held that after the amendment the decision of Supreme Court in the case of Anwar Ali, (2002-TAXINDIAONLINE-190-SC-IT) 76 ITR 696 is no longer valid. Similar position was re-affirmed in the other cases relied upon by the DR. Hence, the Supreme Court's decisions relied upon by the learned DR are quite distinguishable and not on the point of issue. In view of the above discussion, the order of CIT(A) is set aside and the penalty sustained by him is hereby cancelled.
4. In the result, appeal of the assessee is allowed.