Commissioner of Income Tax vs Delhi Crockery House

In this appeal u/s 260A of the Income Tax Act, 1961 (hereinafter referred to as ''Act''), the revenue is aggrieved by an order dated 13-11-2006 passed by the Income Tax Appellate Tribunal (hereinafter referred to as ''Tribunal''), Delhi Bench "E", New Delhi in ITA No. 1036/Delhi/2005 for the assessment year 1995-96 concerning penalty proceedings u/s 271(1)(c) of the Act.

The assessing officer while finalising the assessment for the assessment year 1995-96 stated towards the end of the order dated 20-3-1998 as follows:

Assessed at Rs. 20,80,216. Issue necessary forms. Give credit of pre-paid taxes. Charge interest as per rules - penalty proceedings u/s 271(1)(c) of the Income Tax Act have been initiated separately.

Thereafter the assessing officer passed an order on 27-5-2004 u/s 271(1)(c) of the Act imposing a penalty of Rs. 1,95,800 on the assessee. This was confirmed by the Commissioner (Appeals) (hereinafter referred to as ''Commissioner (Appeals)'') by his order dated 29-12-2004. discernible

The appeal preferred by the assessed was allowed by the Tribunal on the ground that the assessing officer had not recorded his satisfaction in the assessment order that there was either concealment of facts or furnishing of inaccurate particulars by the assessed and that in view of the decision of this Court in Commissioner of Income Tax Vs. Ram Commercial Enterprises Ltd., the penalty proceedings cannot be sustained.

We may note at the outset that the decision of this Court in Ram Commercial Enterprises Ltd.''s case (supra) has been approved by the Supreme Court in Dilip N. Shroff Karta of N.D. Shroff Vs. Joint Commissioner of Income Tax, Special Range Mumbai and Another, and Sri T. Ashok Pai Vs. Commissioner of Income Tax, Bangalore, .

While not contesting the proposition laid down by this Court in Ram Commercial Enterprises Ltd.''s case (supra), Ms. Sonia Mathur, learned standing counsel for the revenue nevertheless urges that another Bench of this Court has in CIT v. Indus Valley Promoters Ltd. (2006) 155 Taxman 223 (Del) referred the following substantial question of law to a Larger Bench which according to the referring Bench was not considered in Ram Commercial Enterprises Ltd.''s case (supra):

Whether satisfaction of the officer initiating the proceedings u/s 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? (page 227)

She accordingly submits that this Court should await the decision of the Larger Bench.

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 u/s 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 u/s 271(1)(c) of the Act is discernible there from.

Having examined the assessment order ourselves, we are unable to discern therein any satisfaction recorded by the assessing officer that penalty proceedings should be initiated. While it is true that the assessed could not file confirmation from the parties from whom the amounts were received, that by itself does not indicate that there was furnishing of incorrect particulars. In fact we do not find that the assessment order was so much about concealment of particulars as about the interpretation of the information furnished by the assessee.

In the circumstance, we find no substantial question of law arises in the present appeal.

Dismissed.