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Issues involved: Appeal u/s 260A of the Income-tax Act, 1961 challenging penalty under section 271(1)(c) for assessment years 1995-96 and 1996-97.
For assessment year 1995-96: The Tribunal set aside the penalty as the Assessing Officer did not record satisfaction for initiating penalty proceedings against the assessee in the assessment order. The Court found that the recording in the assessment order did not meet the requirement of section 271(1)(c) as per precedents. The Court noted an alternative submission regarding the satisfaction of the officer initiating proceedings under section 271 and decided to await a decision from a larger Bench. On detailed perusal, no satisfaction of the Assessing Officer for initiating penalty proceedings was found. The Court also considered an earlier assessment order for the year 1994-95, which did not provide assistance to the revenue's case. For assessment year 1996-97: The assessed income was a loss due to an appeal effect given by the Joint Commissioner of Income-tax, making the imposition of penalty inappropriate. The Court concluded that no substantial question of law arose in these appeals and dismissed them.
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