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2019 (7) TMI 1574 - HC - Income TaxDeletion of penalty by the ITAT invoking the power of rectification u/s 254 - purpose of initiating penalty proceedings under Section 271(1)(c) - recover the penalty amount from one of the directors of the Assessee the business of which was closed - HELD THAT:- Karnataka High Court in CIT v. Manjunatha Cotton and Ginning Factory [2013 (7) TMI 620 - KARNATAKA HIGH COURT] which in turn followed the judgment of this Court in Madhushree Gupta v. Union of India [2009 (7) TMI 38 - DELHI HIGH COURT] where this Court considered the challenge to the constitutional validity of Section 271(1B) of the Act which had been inserted with retrospective effect from 1st April 1989 on the issue of the recording by the Assessing Officer (AO) of his satisfaction for the purpose of initiating penalty proceedings under Section 271(1)(c) of the Act. It is contended by the Revenue that in exercise of the power under Section 254(2) of the Act, the ITAT could not have reviewed its earlier order as the judgment on the basis of which the earlier decision was reversed was not of the ‘jurisdictional’ High Court (i.e. this Court) but of the Karnataka High Court. While the Court is conscious that the question that has been raised by the Revenue merits consideration, in the facts of the present case where the business of the Respondent Assessee has closed way back in 2001 and the proceedings pertain to AY 1998-1999 which is more than two decades ago, the Court is not inclined to interfere with the impugned order of the ITAT.
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