2007 (9) TMI 656 - HC - Income Tax

Summary

Issues involved:
The issue involves the validity of penalty proceedings initiated by the Assessing Officer without recording satisfaction u/s 271(1)(c) of the Income-tax Act, 1961.

Summary:

The High Court of Delhi heard an appeal under section 260A of the Income-tax Act, 1961 regarding the validity of penalty proceedings initiated by the Assessing Officer. The Tribunal set aside the penalty order based on the precedent set in CIT v. Ram Commercial Enterprises Ltd. The revenue challenged this decision citing CIT v. Indus Valley Promoters Ltd., which referred an alternative contention to a larger Bench regarding the satisfaction of the officer initiating penalty proceedings. The assessee relied on Supreme Court decisions to support the Tribunal's decision. The Court, without expressing a view on the larger Bench issue, examined the assessment order and found no discernible satisfaction by the Assessing Officer for initiating penalty proceedings u/s 271(1)(c). It emphasized the necessity of the Assessing Officer's satisfaction before initiating penalties and upheld the Tribunal's decision based on existing precedents. The Court clarified that even if the larger Bench issue is resolved affirmatively, the penalty proceedings in this case cannot be sustained. The appeal was dismissed.