Delhi High Court
Commissioner Of Income Tax vs Preeti Aggarwala on 15 September, 2007
Bench: M B Lokur, S Muralidhar
ORDER
1. In this appeal under Section 260A of the Income Tax Act, 1961 ('Act'), the Revenue is aggrieved by an order dated 16th September, 2005, passed by the Income Tax Appellate Tribunal, New Delhi Bench 'A' (Tribunal) in ITA No. 1684/Del/2002 relevant for the assessment year 1998-99.
2. In the concluding paragraph of the assessment order, the Assessing Officer recorded as follows:
Assessed. Tax as per law and charge interest as applicable. Penalty proceedings Under Section 271(1)(c) have been initiated separately.
3. On this basis, the Assessing Officer initiated the penalty proceedings against the assessed. These were set aside by the Tribunal, inter alia, in view of the decision of this Court in Commissioner of Income Tax v. Ram Commercial Enterprises Ltd. . Since the Assessing Officer had not recorded his satisfaction that penalty proceedings should be initiated, the entire exercise conducted by the Assessing Officer in penalty proceedings were held to be vitiated.
4. We may note at this stage that the decision of this Court in Ram Commercial Enterprises Ltd. has been approved by the Supreme Court in Dilip N. Shroff v. Joint Commissioner of Income Tax [2007] 291 ITR 519 (SC) and T. Ashok Pai v. Commissioner of Income Tax [2007] 292 ITR 11 (SC).
5. Learned Counsel for the Revenue states that another Bench of this Court has in Commissioner of Income Tax, Delhi IV v. Indus Valley Promoters Limited (2006) 155 Taxman 223 referred the following substantial question of law to a larger Bench which according to the referring Bench was not considered in Ram Commercial Enterprises Limited:
Whether satisfaction of the officer initiating the proceedings under Section 271 of the Income-tax Act can be said to have been recorded even in cases where satisfaction is not recorded in specific terms but is otherwise discernible from order passed by the authority?
6. He accordingly submits that this Court should await the decision of the larger Bench.
7. Assuming the Revenue were to succeed before the larger Bench, and the question referred to it is answered in the affirmative, it would mean that it is sufficient that the satisfaction of the Assessing Officer for initiating penalty proceedings against an assessed under Section 271(1)(c) of the Act is discernible from the assessment order itself and that such satisfaction need not be separately or expressly indicated in the assessment order. In that event the assessment order in the present case would have to be examined to find out if the satisfaction of the Assessing Officer is discernible. Therefore, without expressing any view on the issue pending consideration by the larger Bench, and presuming that the question referred to it is answered in the affirmative, we proceed to examine the assessment order in the instant case in order to find out whether the satisfaction of the Assessing Officer that penalty proceedings should be initiated against the assessed under Section 271(1)(c) of the Act is discernible there from.
8. Upon perusing the assessment order, nowhere therein are we able to find any satisfaction even suggested remotely by the Assessing Officer that penalty proceedings should be initiated against the assessed. On the contrary, we find that the assessed was not very clear about the interpretation of the accounting standards issued by the Institute of Chartered Accountants of India. Consequently, the assessed was under a bona fide belief that she is entitled to file a return in the manner in which she did.
9. We do not think that any substantial question of law arises.
10. Under the circumstances, the appeal is dismissed.
