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TMI Blog2012 (12) TMI 339X X X X Extracts X X X X X X X X Extracts X X X X ..... d u/s 13 was arrived at and Diwan Enterprises (1998 (11) TMI 27 - DELHI HIGH COURT) held that unless requisite satisfaction was recorded in the proceedings under the Act, the jurisdiction to initiate the penalty proceedings could not have been exercised. Thus, the entire penalty proceedings were without jurisdiction. In favour of assessee - ITA Nos.1/Del\2012 And Cross Objection No.394 & 395/Del/2009 - - - Dated:- 26-10-2012 - S.V. Mehrotra And Shri Kul Bharat, JJ. Appellant Rep by: Shri Tarandeep Singh Maneesh Upneja, CA Respondent Rep by: Shri Aroop Kr. Sinha, Sr. DR ORDER Per: S V Mehrotra: These cross objections filed by the assessee in Interest Tax Appeal No. 4/Del/2009 and 5/ Del/ 2009 relates to assessment years 1996-97 1997-98 respectively. Tribunal vide its order dated 31st March, 2010, had decided the Interest Tax Appeals and had dismissed the Revenue s appeals against the deletion of penalty imposed by the Assessing Officer u/s 13 by Ld. CIT (A). The cross objections filed by the assessee were allowed for statistical purposes by Tribunal as they were in support of Ld. CIT (A) s action. The Revenue preferred appeal before Hon ble Delhi High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s passed by both the Assessing Officer { hereinafter referred to as Assessing Officer } and the CIT (A) {hereinafter referred to as the CIT (A) } are bad in law and void ab initio. 2. That on facts and in law the Assessing Officer erred in not recording in the assessment order passed u/s 8 (2) of the Interest Tax Act,1974{ hereinafter referred to as the Act } proper satisfaction as warranted u/s 13 of the Act, for initiation of the penalty proceedings. 2.1. That non-recording of the satisfaction till the conclusion of the assessment proceedings that the assessee has concealed the particulars of chargeable interest or has furnished inaccurate particulars of such interest, being as jurisdiction defect, which could not be cured, the initiation of penalty was itself bad rendering the penalty imposed as bad in law and liable to be quashed. 3. That on facts and in law the CIT (A) erred in holding that provisions of Section 13 of the Interest Tax Act, 1974 are pari material with provisions of Section 271 (1) (c) of the Income Tax Act, 1961. 4. That on facts and in law the CIT (A) erred in not accepting that the appellant had made full and complete disclosure and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Section 2(7) and applicability of Section 13 of the Act. Thus, it is not possible to accept the contention of the respondent assessee that there was a genuine difference of opinion on the question. whether or not bill discounting charges, could be treated as interest or not. Mere statement of the assessee that their contention was plausible and question/ issue was debatable, is not sufficient to quash the penalty. The contention has to be examined holistically and objectively keeping in the provision, interpretation put forward and decision, if any, of appellate forum/courts. The only reasoning given by the CIT (A) which has been accepted by the tribunal, is to the effect that the facts indicate that there was a genuine difference of opinion, whether bill discounting charges should be treated as interest or not. There is no discussion or examination of the said aspect with reference to the statutory provision, basis of the interpretation put forward by the respondent assessee etc. The tribunal in respect of appeal for the assessment year 1996-97 has not even gone into and examined the following findings recorded by the Assessing Officer in the penalty order in respect of recei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions as if the said provisions and the rules referred to interest- tax instead of to income- tax :- [2(44)[199], 129, 131, 132, 132A, 132B, 133 to 136] (both inclusive), 138, 140, 145, 156, 160, 161, 162, 163, 166, 167, 170, 173, 175,176, 178, 179, 220 to 227(both inclusive), 228A, 229, 232,237 to 245(both inclusive),245, to 262(both inclusive), 265, 266, 268, 269, 281, 281B, 282, 284, 287, 288, 288A, 288B, 289 to 293 (both inclusive), the Second Schedule and the Third Schedule:] Provided that references in the said provisions and the rules to the assessee shall be construed as references to an assessee as defined in this Act. Ld. Counsel submitted that Section 271 of the Interest Tax Act does not find place in this Section and, therefore, the same is not applicable to Interest Tax Act. Ld. Counsel referred to page no. 3 to 6 and 7 to 9 of the paper book, wherein the assessment orders for assessment years 1996-97 and 1997-98, are contained. He also referred to the assessment order for assessment year 1998-99 and pointed out that in all these assessment orders, inter-alia, bill discounting charges were treated as interest by Assessing Officer and addition was accordingly made. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt in D. Manasvi V. CIT (1972) 86 ITR 557 and CIT V. S. V. Angidi Chettiar (1962) 44 ITR 739 (SC), we have held that unless requisite satisfaction was recorded in the proceedings under the Act, which would mean the assessment proceedings, the jurisdiction to initiate the penalty proceedings could not have been exercise. Satisfaction has to be before the issue of notice or initiation of any step for imposing penalty. In the case at hand we find the Assessing Officer having nowhere recorded till the conclusion of the assessment proceedings his satisfaction that the assessee had concealed the particulars of his income or furnished inaccurate particulars of such income. This is a jurisdictional defect which cannot be cured. The initiation of the penalty proceedings was itself bad and, consequently, all the subsequent proceedings leading up to the passing of the penalty order must fail. C.W.P. No. 3869 of 1997 is, therefore, liable to be allowed. 9. Ld. Counsel further referred to the decision of Hon ble Delhi High Court in the case of CIT vs. Ram Commercial Enterprises Ltd. 246 ITR 568 = (2003-TIOL-69-HC-DEL-IT), wherein, it was observed as under: The satisfaction as to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me were confirmed by Hon ble High Court and it also been held that penalty is exigible in such case. 13. We have considered the submissions of both the parties and have perused the record of the case. As far as legal position is concerned, the same has succinctly been explained by Ld. AR and there cannot be any quarrel with the proposition that the Assessing Officer is required to record his satisfaction in course of assessment proceedings as warranted u/s 13 of the Interest Tax Act, regarding concealment of income or for furnishing of inaccurate particulars of income. Further no provision analogous to section 271(1)(B) has been inserted in the Interest Tax Act, which could warrant levy of penalty merely on the ground of additions being made without recording satisfaction regarding concealment of income or furnishing of inaccurate particulars of income. In the backdrop of this legal position when we examine the facts of the present case, we find that Assessing Officer has not recorded satisfaction in course of assessment proceedings and simply initiated penalty. Hon ble Delhi High Court in the case of CIT vs. Ram Commercial Enterprises Ltd. 246 ITR 568 (Supra) has observed that m ..... X X X X Extracts X X X X X X X X Extracts X X X X
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