Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Assessment year 1982-83 - Whether only requirement of law for initiating penalty proceedings is that in course of assessment, satisfaction that a case for initiating penalty proceedings was made out, must exist and must be expressly reflected in order of assessment; there is no requirement of format in which such satisfaction is to be recorded - Held, yes - Whether absence of satisfaction could be inferred from fact that only words used in assessment order were that proceedings were being separately initiated, specially where satisfaction existed in course of assessment itself - Held, no FACTS The Assessing Officer reopened the original assessment of the assessee-firm under section 147 and made an addition on account of interest income. He also imposed penalty under section 271(1)(c) upon the assessee. On appeal, the Commissioner (Appeals) reduced the penalty. On second appeal, the Tribunal deleted the penalty on the ground that in the assessment order, the Assessing Officer had only mentioned that penalty proceedings under sections 271(1)(c) and 273(2)(a) were being initiated separately which did not amount to compliance of condition precedent for initiating penalty proceedings, i.e., recordings of satisfaction during the course of assessment. On revenue's appeal : HELD A bare perusal of section 271(1) shows that only requirement of law is that in the course of assessment satisfaction, that a case for initiating penalty proceedings has been made out, must exist and must be expressly reflected in the order of assessment. However, there is no requirement of any format in which such satisfaction is to be recorded. [Para 7] Whether satisfaction existed and was not recorded during assessment is not a matter of form but of substance and the issue has to be gone into from case-to-case. Absence of satisfaction could not be inferred from the fact that only words used in the assessment order were that proceedings were being separately initiated. In fact, said statement coupled with the findings of assessment showed that satisfaction existed in the course of assessment itself. [Para 12]…

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