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TMI Blog2008 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax versus M/s Gama Investments Pvt. Ltd. 8. I.T.A. NO. 1120/2005 Commissioner of Income Tax versus M/s Baid Credit and Portfolio Pvt. Ltd. 9. I.T.A. NO. 1138/2005 Commissioner of Income Tax versus M/s Basant Plasto Chemicals Pvt. Ltd. 10. I.T.A. NO. 1155/2005 Commissioner of Income Tax versus M/s Britika Exports (P) Ltd. 11. I.T.A. NO. 1159/2005 Commissioner of Income Tax versus M/s Baid Credit Portfolio (P) Ltd. 12. I.T.A. NO. 1170/2005 Commissioner of Income Tax versus Sh. Francis Wacziarg 13. I.T.A. NO. 45/2006 Commissioner of Income Tax versus M/s Abhishek Auto Industries Ltd. 14. I.T.A. NO. 79/2006 Commissioner of Income Tax versus M/s Bora Knitwear (P) Ltd. 15. I.T.A. NO. 80/2006 Commissioner of Income Tax versus M/s Singh Enterprises 16. I.T.A. NO. 105/2006 The Commissioner of Income Tax-V versus M/s Narain Jewels International Ltd. 17. I.T.A. NO. 127/2006 Commissioner of Income Tax versus M/s COSMO Films Ltd. 18. I.T.A. NO. 167/2006 Commissioner of Income Tax versus Shri Prakash Chandra Yadav 19. I.T.A. NO. 177/2006 The Commissioner of Income Tax-V versus M/s Narain Jewels International Ltd. 20. I.T.A. NO. 193/2006 Commissioner of I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 Commissioner of Income Tax versus M/s Goodyear India Limited 47. I.T.A. NO. 591/2006 Commissioner of Income Tax versus M/s Goodyear India Limited 48. I.T.A. NO. 600/2006 Commissioner of Income Tax versus M/s Eastern Holdings (P) Ltd. 49. I.T.A. NO. 604/2006 Commissioner of Income Tax versus M/s D.D. Gears Ltd. 50. I.T.A. NO. 635/2006 Commissioner of Income Tax versus M/s SRJ Securities (Now Adinath Capital Pvt. Ltd.) 51. I.T.A. NO. 647/2006 Commissioner of Income Tax versus M/s Maharani Paints (India) Pvt. Ltd. 52. I.T.A. NO. 657/2006 Commissioner of Income Tax versus M/s Ambuja Agro Industries Ltd. 53. I.T.A. NO. 660/2006 Commissioner of Income Tax versus Mr. S. Venkatnarayan 54. I.T.A. NO. 664/2006 Commissioner of Income Tax versus M/s Utkal Investment Ltd. 55. I.T.A. NO. 751/2006 The Commissioner of Income Tax-III versus M/s SIEL Industrial Estate Ltd. 56. I.T.A. NO. 752/2006 The Commissioner of Income Tax-III versus M/s Siel Industrial Estate Ltd. 57. I.T.A. NO. 766/2006 Commissioner of Income Tax versus M/s India Crafts Advocates who appeared for the parties For the Appellant : Mr. R.D. Jolly, Mr. Sanjeev Sabharwal, Ms ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specific terms but is otherwise discernible from the order passed by the authority?" 2.Keeping in view the decision of this Court in CIT v. Ram Commercial Enterprises Ltd. (supra) and other cases on the subject, the Division Bench felt that it would be more appropriate if the question is authoritatively determined by a Full Bench of this Court and accordingly the matter has been referred to the Full Bench. 3.We hasten to add that pending reference, sub-Section 1B has been inserted in Section 271 of the Income Tax Act by Finance Act, 2008. The said provision purports to create a fiction by which satisfaction of the assessing officer is deemed to have been recorded in cases where an addition or disallowance is made by the assessing officer and a direction for initiation of penalty proceedings is issued. The said provision is made effective retrospectively with effect from 1st April, 1989. In some of the cases forming part of this batch, the assessment orders were passed after 1st April, 1989. This reference is being answered only in respect of the cases where assessment orders were made prior to 1st April, 1989. 4.Learned counsel appearing for the Revenue strenuously contended th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me. This provision fell for consideration of the Supreme Court in D.M. Manasvi v. Commissioner of Income Tax, Gujarat, II Ahmedabad (1972) 86 ITR 557 (SC) wherein the Supreme Court held that what is contemplated by sub-section (1) of Section 271 is that the Income Tax Officer or the Appellate Assistant Commissioner should have been satisfied in the course of proceedings under the Act regarding matters mentioned in the clauses of that sub-section. It is, however, not essential that notice to the person proceeded against should have been issued during the course of the assessment proceedings. Satisfaction in the very nature of things precedes the issue of notice and it would not be correct to equate the satisfaction of the Income Tax Officer or Appellate Assistant Commissioner with the actual issue of notice. The issue of notice is a consequence of the satisfaction of the Income Tax Officer or the Appellate Assistant Commissioner and it would be sufficient compliance with the provisions of the statute if the Income Tax Officer or the Appellate Assistant Commissioner is satisfied about the matters referred to in clauses (a) to (c) of sub-section (1) of Section 271 during the course of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as arrived at in the absence of the same being spelt out by the order of the assessing authority. Even at the risk of repetition we would like to state that the assessment order does not record the satisfaction as warranted by Section 271 for initiating the penalty proceedings...." 8.The view taken in Ram Commercial Enterprises (supra) has been followed in Diwan Enterprises v. Commissioner of Income Tax (2000) 246 ITR 571 (Delhi) and Commissioner of Income Tax v. J.K. Synthetics Ltd. (1996) 219 ITR 267 (Delhi). Same is the view taken by the Bombay High Court in Commissioner of Income-tax v. Dajibhai Kanjibhai (1991) 189 ITR 41 (Bom). 9.In our opinion, the legal position is well settled in view of the Supreme Court decisions in Commissioner of Income Tax, Madras. and Anr. v. S.V. Angidi Chettiar (supra) and D.M. Manasvi v. Commissioner of Income Tax, Gujarat, II Ahmedabad (supra), that power to impose penalty under Section 271 of the Act depends upon the satisfaction of the Income Tax Officer in the course of the proceedings under the Act. It cannot be exercised if he is not satisfied and has not recorded his satisfaction about the existence of the conditions specified in c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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