2003 (9) TMI 51 - HC - Income Tax

Penalty u/s 271(1)(c) recording of satisfaction by AO - By the impugned order the Tribunal has deleted the penalty levied on the respondent-assessee under section 271(1)(c) of the Act, in respect of the assessment year 1993-94, on the ground that in the assessment order the Assessing Officer has not recorded his satisfaction, as contemplated under section 271(1)(c) no infirmity in Tribunal s order Revenue s appeal dismissed

Summary

Issues:
1. Penalty under section 271(1)(c) of the Income-tax Act, 1961 for assessment year 1993-94.
2. Whether satisfaction of the Assessing Officer as per section 271(1)(c) was recorded.
3. Applicability of previous court decisions on the present case.

Detailed Analysis:
1. The High Court heard an appeal by the Revenue against the order of the Income-tax Appellate Tribunal, which had deleted the penalty levied on the respondent-assessee under section 271(1)(c) of the Income-tax Act, 1961 for the assessment year 1993-94. The Tribunal's decision was based on the lack of recorded satisfaction by the Assessing Officer as required under section 271(1)(c).

2. The Revenue contended that the satisfaction of the Assessing Officer was implicit in the queries raised during the assessment proceedings and the subsequent issuance of a notice for penalty under section 271(1)(c). However, the High Court disagreed with this argument. It noted that the order sheets and assessment record did not explicitly show the satisfaction of the Assessing Officer, similar to the precedent set in a previous case of CIT v. Ram Commercial Enterprises Ltd. The court emphasized the importance of the Assessing Officer forming and recording their own opinion before initiating penalty proceedings.

3. The High Court referred to the decision in Ram Commercial Enterprises Ltd., where it was highlighted that the assessing authority must independently arrive at a satisfaction before imposing penalties under section 271. The court reiterated that the absence of explicit satisfaction in the assessment order precludes the assumption that such satisfaction was reached. Relying on this precedent and the principles established by the Supreme Court in prior cases, the High Court concluded that no substantial question of law remained for consideration and subsequently dismissed the appeal.

In summary, the High Court upheld the Tribunal's decision to delete the penalty imposed under section 271(1)(c) due to the lack of recorded satisfaction by the Assessing Officer, in line with established legal principles and precedents.