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TMI Blog2007 (12) TMI 97X X X X Extracts X X X X X X X X Extracts X X X X ..... quired by it for its hotel project. While stating that the solar equipment was acquired and installed after September, 1994, the Assessee Company claimed 50% depreciation amounting to Rs.22,21,065/- for the assessment year 1995-96. 4. While so, the assessee filed another return of income for the same Assessment Year 1995-96 on 4.5.1998 declaring total income of Rs.4,77,510/- stating that it gave up its claim for depreciation on the solar equipment since M/s. Solardur Energy Systems (P) Limited, Hyderabad, who supplied the solar equipment did not properly maintain its records and books and expressed its inability to produce evidence for the equipment supplied. It was also stated that with a view to avoid protracted litigation the revised return of income was being filed voluntarily and the same may be accepted since the additional income offered in the revised return did not represent concealed income. 5. The said revised return was accepted by the assessing officer - Deputy Commissioner of Income Tax, and an order of assessment was passed on 16.3.2001 unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... how- cause as to why penalty under Section 271(1) (C)of the Act amounting to a minimum of Rs.9,10,800/- being 100% of tax evaded and a maximum of Rs.27,32,400/- being the 300% of tax evaded should not be levied. The assessee company submitted its explanation dated 27.9.2001 requesting to drop the proceedings stating that it was not a case of concealment of particulars of income or furnishing of inaccurate particulars. 7. However, the assessing officer-Deputy Commissioner of Income-tax, Hyderabad, rejected the contention of the assessee company that it was a voluntary declaration and passed an order dated 27.9.2001 levying a penalty of Rs.9,10,800/- in exercise of the powers conferred under Section 271 (1) (C) of the Act. 8. Aggrieved by the same, the assessee company preferred an Appeal before the Commissioner of Income-tax (Appeals) on 21.2.2002. The said Appeal was dismissed by order dated 22.8.2002 thereby upholding the penalty levied by the assessing officer. Challenging the said order, the assessee company preferred a further appeal before the Income-tax Appella ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent order that the assessee concealed the particulars of his income or furnished inaccurate particulars?" 14. For proper appreciation of the controversy involved, it is necessary to refer to Section 271 of the Act which deals with failure to furnish returns, comply with notices, concealment of income, to the extent it is relevant for the present case. "271. (1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act, is satisfied that any person -…………. (c) has concealed the particulars of his income or furnished inaccurate particulars of such income, or he may direct that such person shall pay by way of penalty, -- (iii) in the cases referred to in clause (C) or clause (d) in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits. 15. On a plain reading of sub-section (1) of Section 271 of the Act, it is clear that the assessing officer, in the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a jurisdictional defect in the assumption of jurisdiction it cannot be cured. 18. The above proposition of law has been reiterated by the High Court of Delhi in CIT v. VIKAS PROMOTERS P. LTD. [2005] 277 ITR 337 emphasizing as under (page340) "...... the satisfaction is not to be in the mind of the Assessing Officer but must be reflected from the record. It is a well-settled rule of law that the authorities performing quasi-judicial or judicial function must give reasons in support of its order so as to provide in the order itself the ground which weighed with the authorities concerned for passing an order must give reasons in support of its order so as to provide in the order itself the ground which weighed with the authorities concerned for passing an order adverse to the interest of the assessee. Further more the provisions of section 21 (1) (C) are penal in nature thus must be strictly construed, 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 files of such authorities." 19. The Delhi High Court in C.I.T. v. RAM COMMERCIAL ENTERPRISES LTD. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d decision is clearly distinguishable on facts and the ratio laid down therein is not applicable to the instant case. 25. It is also relevant to note that whether the assessee has concealed his income or has deliberately furnished inaccurate particulars thereof is essentially a finding of fact which has to be spelt out by way of recording the satisfaction of the Assessing Officer as required under Section 271 (1) of the Act. Therefore, in the absence of such a finding in the assessment order no penalty proceedings can be initiated. 26. As noticed above, the declaration of income made by the assessee company in revised return and the explanation that it had done so to buy peace with the department and to avoid protracted litigation was accepted by the Assessing Officer in his order dated 16.3.2001 without raising any objection. Admittedly the assessing officer accepted the returns filed by the assessee after verification of the information filed and books of accounts produced. Thus, the assessment was completed accepting the returned net income as per the revised return of income. Not only the assessment order did not reflect any satisfaction as requi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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