- (1.) THE Revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, "the Act"), against the order of the Income Tax Appellate Tribunal, Delhi Bench, "A", New Delhi, passed in the assessee's appeal, i.e., I. T. A. No. 3737/Delhi/2002 for the assessment year 1982 -83 dated February 28, 2005, proposing to raise the following substantial question of law: Whether, on the facts and in the circumstances of the case, the hon'ble Tribunal has erred in law in deleting the penalty of Rs. 2,90,296 levied under Section 271(1)(c) of the Act when concealed income had been brought to tax under Section 147/148 of the Act ?
(2.) ORIGINAL assessment in the case of the assessee for the assessment year 1982 -83 took place on September 21,1984, under Section 143(3) of the Act. The assessment was reopened under Section 147 of the Act and completed on July 28,1989. Addition was made on account of interest income. Finally, the Assessing Officer completed the assessment on March 24, 2000, and also initiated penalty proceedings. After undergoing the procedure, penalty to the extent of 200 per cent. of the tax sought to be evaded, was imposed. On appeal, the Commissioner of Income Tax (Appeals) reduced the penalty to 100 per cent. The Tribunal set aside the penalty with the following observations: 7. We have examined the rival submissions. From the assessment order, we find that for the assessment year 1982 -83, the Assessing Officer has only mentioned, 'penalty proceedings under Sections 271(1)(c) and 273(2) (a) are being initiated separately,' (CIT, Spl. Range, Rohtak, vide order dated March 24, 2000). In the assessment year 1983 -84 also, the same officer has initiated the penalty in a similar manner. We are accordingly, of the view that satisfaction has not been recorded at the time of initiation of penalty. Accordingly, we delete the penalties imposed by the Assessing Officer in respect of both the years before us. The appeals of the assessee are allowed for both the years and the appeals of the Revenue are dismissed for both the years. We have heard learned Counsel for the parties.
(3.) LEARNED Counsel for the Revenue submitted that the only reason given by the Tribunal for setting aside the penalty was that the Assessing Officer, in the order of assessment, had only mentioned "penalty proceedings under Sections 271(1)(c) and 273(2)(a) are being initiated separately", which did not amount to compliance with the condition precedent for initiating penalty proceedings, i.e., recording of satisfaction during the course of assessment, which was a condition required to be followed in terms of Section 271(1)(c) of the Act. The view of the Tribunal was erroneous. There was no statutory requirement of any format to be followed for recording satisfaction. The only requirement is of existence of satisfaction for initiating penalty proceedings. The satisfaction has to be followed by issuance of notice and giving of opportunity to the assessee and in case for penalty was made out, the proceedings could not be held to be invalid on the ground of form of recording satisfaction. Learned Counsel for the Revenue relied upon the judgment of the Madras High Court in M. Sajjanraj Nahar v. : [2006]283ITR230(Mad) and the judgment of the Allahabad High Court in Nainu Mal Het Chand v. : [2007]294ITR185(All) . It has also been pointed out that by way of amendment, Section 271(1B) has been added by the Finance Act, 2008, with effect from April 1,1989, to the following effect: (1B) Where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or reassessment and the said order contains a direction for initiation of penalty proceedings under Clause (c) of Sub -section (1), such an order of assessment or reassessment shall be deemed to constitute satisfaction of the Assessing Officer for initiation of the penalty proceedings under the said clause.;