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TMI Blog2015 (8) TMI 427X X X X Extracts X X X X X X X X Extracts X X X X ..... the case, the Income-tax Appellate Tribunal is justified in holding that the Assessing Officer has not recorded any positive and categorical satisfaction about concealment in the assessment order under section 271(1)(c) of the Income-tax Act and cancelling the penalty on this ground alone when in the assessment order the satisfaction for initiating penalty is clearly mentioned ? Q. 2. Whether, on the facts and in the circumstances of the case, the ratio laid down by the hon'ble apex court in the case of CIT v. Prithipal Singh and Co. [2001] 249 ITR 670 (SC) applies to the case under consideration ? Q. 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal has erred in law in ignoring that Expl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks, as under : (Rs.) "1. Foreign exchange 2,99,454 2. Job work 12,99,147 3. Sale of components 1,73,329 4. Sale of scrap 4,18,453 5. Sale of miscellaneous scrap 4,72,900 26,63,283" 5. The assessee has debited this income of Rs. 26,63,283 out of total pre- operative expenses of Rs. 7,57,43,555 as he claimed net pre-operative expenses as Rs. 7,30,84,272. The Tribunal found that said deduction was not correct and the amount of Rs. 26,63,283 ought to have been treated as income, earned during April 1, 1999, to May 31, 1999, for the purpose of assessment. 6. Penalty order dated January 30, 2003, passed by the Additional Commissioner of Income-tax, NOIDA, in purported exercise of power under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment order that penal proceedings must be initiated but he is obliged to record existence of ingredients attracting penal provisions so as to justify for penal proceedings. 11. In CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568 (Delhi) it was observed that (headnote) : "The satisfaction as to the assessee having concealed the particulars of his income or furnished inaccurate particulars of such income is to be arrived at by the Assessing Officer during the course of any proceedings under the Act, which would mean the assessment proceedings, without which, the very jurisdiction to initiate the penalty proceedings is not conferred on the assessing authority by reference to clause (c) of sub-section (1) of section 271 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the element of satisfaction should be apparent from the order itself. It is not for the courts to go into the mind of the authorities or trace the reasons from the file of such authorities." 14. Similar view was expressed in Karanvir Singh Gossal v. CIT [2012] 349 ITR 692 (SC) and Nainu Mal Het Chand v. CIT [2007] 294 ITR 185 (All). 15. A Division Bench of this court in Income Tax Appeal No. 62 of 2000- CIT v. E. C. C. Project Pvt. Ltd. (decided on July 25, 2014): "We are of the view that, in the instant case, no penalty is leviable under section 271B of the Act when Assessing Officer failed to record its satisfaction in the assessment order pertaining to it. There is no whisper in the assessment order regarding the levy of the penalty. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition of concealed income reduces the returned loss. . . The above being the position, the inevitable conclusion is that Explanation 4 to section 271(1)(c) is clarificatory and not substantive. The view expressed to the contrary in Virtual's case [2007] 9 SCC 665 is not correct." 18. The court also considered the decision in CIT v. Prithpal Singh and Co. (supra) and found that same would have no application in the case in hand. 19. In view thereof, question No. 2 is answered in the negative and we hold that the decision in CIT v. Prithpal Singh and Co. (supra) would have no application to the case in hand. 20. So far as questions Nos. 3 and 5 are concerned, we find that these questions stand answered by the apex court's decision ..... X X X X Extracts X X X X X X X X Extracts X X X X
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