Law:

Section:

Section 271 (1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Whether power to impose penalty under section 271(1) depends upon satisfaction of Assessing Officer in course of assessment proceedings and it cannot be exercised if he is not satisfied and has not recorded his satisfaction about existence of conditions specified in clauses (a), (b) and (c) of sub-section (1) of section 271 before proceedings are concluded - Held, yes - Whether though mere absence of words 'I am satisfied' in assessment order may not be fatal, yet such a satisfaction must be spelt out from order of Assessing Officer as to concealment of income or deliberately furnishing of inaccurate particulars and in absence of a clear finding as to concealment of income or deliberately furnishing of inaccurate particulars, initiation of penalty proceedings under section 271(1)(c) would be without jurisdiction - Held, yes FACTS The Tribunal deleted the penalty levied upon the assessee under section 271(1)(c) relying upon the decision of the Division Bench of the Delhi High Court in CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568/[2002] 122 Taxman 620 and holding that the Assessing Officer, while initiating the penalty proceedings, had not recorded his satisfaction regarding concealment of income or furnishing of inaccurate particulars thereof by the assessee. On appeal to the High Court, the revenue contended, inter alia, that the question whether the Assessing Officer, was or was not satisfied about any concealment or furnishing of inaccurate particulars will depend upon the facts of each case and the order, which the Assessing Officer has made, will have to be seen as a whole and so long as a proper reading of the order demonstrates application of mind by the Assessing Officer and satisfaction is discernible from the finding recorded by the Assessing Officer initiating the proceeding, the same should suffice and the fact that the Assessing Officer had not used the words 'I am satisfied that the assessee has concealed his income or furnished inaccurate particulars thereof', would be of no consequence. The assessee, on the other hand, contended that the…

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