1985 (10) TMI 139 - AT - Income Tax

Summary

Issues:
Appeals against cancellation of penalties under s. 271(1)(c) for asst. yr. 1965-66 and 1970-71.

Analysis:
The Revenue appealed against the cancellation of penalties by the ITO for default under s. 271(1)(c) for two assessment years. The AAC allowed the assessee's appeals, stating that the initiation of penalty proceedings was not part of the assessment proceedings and that concealment of income charge was not proven. The Revenue contended that the satisfaction for penalty imposition was reached during assessment proceedings, citing a Supreme Court decision. However, it was found that the ITO did not direct penalty proceedings initiation in the assessment order, indicating lack of satisfaction during assessment. The penalty orders lacked essential facts supporting the concealment charge, leading to the conclusion that the ITO failed to establish a case for penalty imposition. The CIT(A) rightly held the penalty proceedings invalid, as the satisfaction was not reached during the assessment proceedings. The appeals were dismissed as they lacked merit.

Conclusion:
The appeals were dismissed as the Revenue failed to prove the satisfaction for penalty imposition during assessment proceedings, and the ITO did not establish a case for levy of penalties. The CIT(A) correctly canceled the penalties, highlighting the lack of essential facts supporting the concealment charge in the penalty orders.