Law:

Section:

Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income - Whether question as to whether satisfaction of officer initiating proceedings under section 271 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 authority, is a substantial question of law requiring authoritative determination by full Bench of High Court - Held, yes FACTS The Tribunal deleted the penalty and held that the authority initiating the penalty proceedings did not record its satisfaction regarding concealment of income or furnishing of inaccurate particulars thereof by the assessee. In appeal, the revenue contended that the issue of a notice proposing to initiate penalty proceedings against the assessee was in itself indicative of the satisfaction of the authority initiating the proceedings regarding concealment of income or furnishing of inaccurate particulars thereof. Alternatively, it was submitted that in the absence of any specific format for recording satisfaction in the Act or in the Rules framed thereunder, the penalty proceedings initiated by the competent authority should be deemed to be valid so long as the satisfaction of the said authority was discernible from the order made by it. HELD From a conspectus of catena of decisions, it is evident that the following propositions of law relevant to levy of penalty under section 271(1)(c ) are fairly well-settled : (i) that the officer initiating the penalty proceedings must record his satisfaction that the assessee has concealed his income or furnished inaccurate particulars of such income, (ii) that such satisfaction must be recorded in the course of any proceeding under the Act, (iii ) that the issue of a notice initiating penalty proceedings is not by itself indicative of the authority's satisfaction that the assessee has concealed his income or furnished inaccurate particulars of such income. In other words, satisfaction referred to in section 271 must precede issue of the notice, and (iv) that recording of satisfaction by the authority concerned is a jurisdictional fact. If no satisfaction is recorded, the…

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