TMI Blog2007 (1) TMI 290X X X X Extracts X X X X X X X X Extracts X X X X ..... ther Sh. Ram Dhan. It was also submitted that the amount was kept in his home chest and he was suffering from left side paralysis since 1994. The father of the assessee expired on 21st March, 1996. It was submitted that the amount was given to the assessee before his death. It was also submitted that the amount was taken as help to assessee being youngest in the family and all other brothers had asked the father to give their share to the assessee. This explanation of the assessee did not find favour with the Assessing Officer on the ground that no convenient reason had been given for keeping the huge amount at home chest. He also wondered why the amount was deposited in the bank to be given to the assessee by cheques. There was also no evidence regarding earnings of Sh. Ram Dhan or he was even a taxpayer. Thus, the Assessing Officer made an addition of Rs. 4 lakhs which was upheld upto the level of the Tribunal. Though the assessee has denied initiation of proceedings in the assessment order as per original copy of the order received by the assessee, yet a copy of the assessment order filed by the Revenue along with the appeal shows that penalty proceedings under section 271(1)( c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the assessee Sh. R.K. Gupta, on the other hand relied on the order of the CIT(A). He further submitted that the judgment of Hon ble Madras High Court in the case of M. Sajjanraj Nahar ( supra ) is not applicable because as per the assessment order served on the assessee, no satisfaction was at all recorded. In fact, even the penalty proceedings under section 271(1)( c ) have not been initiated. He drew my attention to pp. 1 to 3 of the paper book which is a copy of the assessment order served on the assessee which does not show that such proceedings were initiated in the assessment order. He further relied on the judgment of jurisdictional High Court of Punjab Haryana in the case of CIT v. Munish Iron Store [2003] 263 ITR 484, judgments of Hon ble Delhi High Court in the case of CIT v. Ram Commercial Enterprises Ltd. [2000] 246 ITR 568, CIT v. Super Metal Re-rollers (P.) Ltd. [2004] 265 ITR 82, CIT v. Vikas Promoters (P.) Ltd. [2005] 277 ITR 337 Dewan Enterprises ( supra ) in support of the contention that order for imposing penalty under section 271(1)( c ) was without jurisdiction and bad in law. Hence, the learned counsel for the assessee subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T [1972] 86 ITR 557 (SC). Thus, the sum and substance of the ratio of the various decisions is that recording of satisfaction by the Assessing Officer in the assessment order is sine qua non for initiating the penalty proceedings In the absence of such satisfaction the initiation of penalty proceedings would be illegal, invalid and without jurisdiction. 6.1 Now in this case I find from the copy of the assessment order served on the assessee, penalty proceedings under section 271(1)( c ) have not at all been initiated The fact that in the copy filed with the appeal memo shows such addition was made in the handwriting of Assessing Officer lends support to the fact that such proceedings were initiated subsequently. Since the copy of assessment order sent to assessee does not mention initiation of proceedings in the assessment order, I am inclined to accept assessee s contention that penalty proceedings have not been initiated at the time of completing the assessment and, therefore, the order for imposing the penalty is without jurisdiction, illegal and bad in law, assuming that proceedings were initiated at the time of completing the assessment, the same is again not a valid sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licable to the facts of the present case because in that case penalty proceedings were initiated in the assessment order. In the present case, as noted above, such proceedings have not at all been initiated by the Assessing Officer. Further, the judgment of jurisdictional High Court in the case of Munish Iron Store ( supra ) is binding on the authorities including the Tribunal in its jurisdiction. Therefore, following the same and other judgments cited ( supra ), I do not find any merit in the plea of the Revenue. 6.3 Even on merits, I find that the learned CIT(A) has rightly cancelled the penalty. It is no doubt true that addition of Rs. 4 lakhs was upheld by the Tribunal. But it is a settled law that both assessment and penalty proceedings are separate and independent proceedings though the reasoning given in the assessment order constitutes evidence and base for levy of penalty under section 271(1)( c ). However, the findings recorded in the assessment order are not conclusive for the purpose of levy of penalty under section 27(1)( c ). Apart from the judgment of Hon ble Allahabad High Court in the case of Sushil Kumar Sharad Kumar v. CIT [1998] 232 ITR 588, the judgme ..... X X X X Extracts X X X X X X X X Extracts X X X X
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