9911796707
TMI Blog1997 (10) TMI 86X X X X Extracts X X X X X X X X Extracts X X X X ..... led the same on 30th July, 1990, declaring total income at Rs. 1,92,049. According to the AO the return in question was late by 24 complete months. The assessment was completed at total income of Rs. 1,92,049 vide order dt. 16th Aug., 1990. The AO issued a show-cause notice under s. 274 r/w s. 271(1)(a) of the Act to the assessee. In response to the said notice issued, the assessee had submitted its reply on 7th Nov., 1990, and the contents of the same are reproduced herein below: "The firm had submitted an application in Form No. 6 to file return of income within extended time as under: 1. On 30-06-1988 upto 30-09-1988 vide R. No. 35511 2. On 05-10-1988 upto 31-12-1988 vide R. No. 46868 3. On 02-01-1989 upto 31-03-198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee-firm should have taken care to file the return of income. 5. Before us, Shri V.J. Desai, advocate, learned counsel for the assessee reiterated the submissions made before the authorities below. Further, his contention was that the penalty proceedings had not been initiated in the course of assessment proceedings and, therefore, the penalty levied was not proper and valid. According to the learned counsel for the assessee, regarding levy of penalty under s. 271(1)(a) of the Act, what is required is that the AO should have been satisfied in the course of assessment proceedings and if he has not recorded his satisfaction before the completion of assessment proceedings, the AO had no jurisdiction to impose the penalty under s. 271(1)(a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of the partners was ill and the accounts were not ready, could not be regarded as a reasonable cause for late filing of the return of income. According to the learned Departmental Representative the assessee had filed number of applications seeking extension of time for filing of the return, but for the period w.e.f. 1st July, 1989, to 30th July, 1990, there was no such application on behalf of the assessee. He, therefore, submitted that the AO was justified in levying the penalty. 7. We have carefully considered the rival submissions and have also perused the orders of the authorities below. The decisions cited at the bar by both the parties were also considered. It is an undisputed fact that in the instant case return of income was fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... default under ss. 139 & 217." There is no material on record to suggest that the penalty proceedings under s. 271(1)(a) were initiated during the course of assessment proceedings. There is no specific direction in the assessment order for the issue of a notice for proposed penal action under s. 271(1)(a) of the Act. Admittedly the assessment order was completed on 16th Aug., 1990. No show-cause notice was issued to the assessee for alleged default even before the completion of the assessment order. In the instant case the AO has passed the penalty order on 29th Jan., 1991. In the said order also there is no indication that any step for initiation of penalty proceedings was taken by the AO before the completion of the assessment order. We ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings relating to other assessment years. The satisfaction of the ITO must be arrived at in the course of proceedings relating to the assessee itself and to the assessment year in question. 11. In view of the above discussion, we find that the AO did not direct his office to issue any notice for penalty and the penalty proceedings had not been initiated during the course of the assessment proceedings, the levy of penalty was bad in law and the order is liable to be set aside. In these circumstances, we do not deem it proper to discuss the other contentions raised by both the parties at the time of hearing of the appeal. Moreover, the AO has also failed to record his satisfaction regarding imposition of penalty under s. 271(1)(a) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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