The Commissioner of Income Tax vs Smt. Parmatma Kaur

The revenue has preferred this appeal u/s 260A of the Income Tax Act, 1961 (for short, "the Act") against the order of Income Tax Appellate Tribunal, Amritsar Bench, Amritsar dated 16.9.2008 passed in M.A. No. 64 for the assessment year 2002-03, proposing to raise following substantial questions of law:

(i) Whether on the facts and in the circumstances of the case the ITAT is right in law in holding that the order passed by the Tribunal before insertion of Section 271(1B) to the status by Finance Bill 2008 cannot be said to be erroneous and the amended provisions of Section 271(1B) are not applicable in the cases decided prior to insertion of this amendment.

(ii) Whether the Hon''ble ITAT was correct in law in ignoring the ratio of the judgment of the jurisdictional Punjab and Haryana High Court in the case of M/s Nakodar Co-op. Sugar Mills Ltd., ITA No. 441 of 2007.

The Assessing Officer initiated penalty proceedings u/s 271(1)(c) for concealing the particulars of income and after considering the matter, order of levy of penalty was passed. The said order was set aside by the CIT(A) following the decision of this Court in Commissioner of Income Tax Vs. Munish Iron Store, . The Tribunal upheld the said order. The revenue inter alia relied upon amendment incorporating Section 271(1B) inserted by Finance Act, 2008 w.e.f. 1.4.1989.

Notice was issued in view of earlier judgment of this Court in Commissioner of Income Tax Vs. Pearey Lal and Sons (EP) Ltd., . In spite of service, none appears for the assessee.

We have heard learned Counsel for the revenue.

In Pearey Lal and Sons (supra), earlier observations in Munish Iron Store (supra) were duly explained and after referring to further developments in various judgments, it was held that whether satisfaction existed and was not recorded during assessment was not a matter of form but of substance and absence of satisfaction could not be inferred from omission to use particular words in the order of assessment. The same could be inferred from over all findings in the order of the assessment. Accordingly, the Tribunal was directed to take fresh decision on the issue of penalty. Present appeal is covered by the said judgment.

In view of above, this appeal is allowed and the matter is remitted to the Tribunal for fresh decision on the issue of penalty, in accordance with law.