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TMI Blog2014 (12) TMI 396X X X X Extracts X X X X X X X X Extracts X X X X ..... taking any steps in that direction – as decided in Commissioner of Income-Tax v. Reliance Petroproducts Pvt.Ltd. [2010 (3) TMI 80 - SUPREME COURT] – thus, the order of the Tribunal is upheld – Decided against revenue. - I.T.T.A. No. 282 of 2003 - - - Dated:- 11-11-2014 - L. Narasimha Reddy And Challa Kodanda Ram,JJ. For the Appellant : Sri J. V. Prasad For the Respondent : Sri Y. Ratnakar JUDGMENT (Per Honble Sri Justice L. Narasimha Reddy) This case presents an occasion to deal with certain important aspects in the context of initiation of proceedings under Section 271 (c) of the Income Tax Act (for short the Act). 2. The respondent is an assessee involved in the activity of construction. For the assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, dated 27.01.1997. Aggrieved by that, the Department filed ITA No.620/H/1997, before the Visakhapatnam Bench of the Income Tax Appellate Tribunal. The appeal was dismissed on 10.10.2002. Hence, this further appeal under Section 260-A of the Act, by the Revenue. 4. Sri J.V. Prasad, learned Standing Counsel for the appellant, submits that the Commissioner as well as the Tribunal took the view that a) if the facts and figures noticed during the course of survey are accepted by the assessee, no occasion would arise for levying penalty and b) the absence of an endorsement or observation in the order of assessment for initiation of proceedings under Section 271 (c) of the Act would disable the Assessing Officer from taking any steps in that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no doubt at all in this behalf. He placed reliance upon the judgment of this Court in Chennakesava Pharmaceuticals v. Commissioner of Income-Tax [2012] 349 IT 196 (AP). 6. The levy of penalty is one of the deterrents provided for under the Act, to ensure that no assessee furnishes incorrect and wrong information or facts and figures in the returns. If it is noticed that an assessee has furnished incorrect information or figures, not only the tax would be levied on the income ascertained after verification, but also penalty can be levied under Section 271 (c) of the Act. The relevant parts of Section 271 reads as under: 271: (1) If the Assessing Officer or the Commissioner (Appeals) is satisfied that any person (a) . (b) has fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under the said clause (c). 7. Obviously because, steps taken under Section 271 of the Act visit an assessee with penal consequences, Courts insist that the department must establish an element of deliberate step on the part of the assessee as to concealment of the information or furnishing of incorrect facts as distinguished from an inadvertent omission or a honest misunderstanding of law. It is to be noted that the department need not establish mens rea on the part of the asseessee. Sub-Section (1B) was inserted in Section 271 of the Act, to the effect that it is not necessary that the Assessing Officer must record reasons. That would take away the necessity in indicate mens rea. 8. In Union of India and Others v. Dharmendra Textil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1 (c) of the Act would be initiated. The effect of failure to mention that was discussed with reference to the decided cases and the very provision of law. 12. Basically Section 271(1) itself indicates that the satisfaction or decision to initiate proceedings must arise in the course of the proceedings. Added to that, sub-Section (1) (b) of Section 271 of the Act mandates that the intention or satisfaction to initiate proceedings must be evident from the order of assessment itself, meaning thereby that such satisfaction need not be supported with other reasons. In Chennakesavas case (supra 2), this Court held that absence of any mention in the order of assessment that proceedings under Section 271 (c) would be initiated makes the initiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble for penalty proceedings under section 271 read with section 274 of the Income-tax Act, 1961. The Assessing Officer has to satisfy whether the penalty proceedings be initiated or not during the course of the assessment proceedings and the Assessing Officer is not required to record his satisfaction in a particular manner or reduce it into writing. 15. Much emphasis is laid on the last words viz., or reduce it into writing and asserted that the satisfaction need not be in writing at all. However, they must be read in the context of entire sentence, and not in isolation. If so done, the conclusion would be that the nature of satisfaction need not be in writing, though the factum of satisfaction must be in writing. The Tribunal has ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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