Issues involved: The issue involves a petition u/s 256(2) of the Income-tax Act, 1961, where the Revenue seeks a mandamus to the Income-tax Appellate Tribunal regarding the deletion of penalty u/s 271(1)(c) imposed on the assessee for allegedly furnishing inaccurate particulars of income.
Summary:
The assessment year in question is 1986-87. The assessee initially declared an income of Rs. 15,700 but later revised the return, surrendering additional income totaling Rs. 24,50,000. The Assessing Officer initiated penalty proceedings u/s 271(1)(c) and imposed a penalty of Rs. 9,77,100 on the assessee for allegedly concealing income. The penalty was confirmed by the Commissioner of Income-tax (Appeals) but set aside by the Income-tax Appellate Tribunal.
The Revenue moved a petition u/s 256(1) seeking to refer the question of law to the High Court, which was rejected by the Tribunal. The Revenue contended that the Tribunal erred in deleting the penalty as a clear case of income concealment existed. The assessee argued that the satisfaction for penalty initiation must be arrived at during assessment proceedings, as per legal precedents.
The Tribunal set aside the penalty based on the absence of a specific finding in the assessment order conferring jurisdiction for penalty proceedings. The High Court held that the assessing authority must record its satisfaction before initiating penalty proceedings, which was not done in this case. Therefore, the suggested question of law did not arise, and the Tribunal's decision was upheld.
In conclusion, the High Court rejected the petition u/s 256(2) without costs, affirming that the Tribunal's decision to delete the penalty was justified based on the legal requirement for satisfaction by the assessing authority before initiating penalty proceedings.
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