TMI Blog2008 (11) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... s M/s Balka Services (P) Ltd. 3. I.T.A. NO. 921/2005 Commissioner of Income Tax versus M/s Canyam Constructions P. Ltd. 4. I.T.A. NO. 1015/2005 Commissioner of Income Tax versus M/s Bharat Cine Co. (P) Ltd. 5. I.T.A. NO. 1044/2005 Commissioner of Income Tax versus M/s Indus Valley Promoters Ltd. 6. I.T.A. NO. 1077/2005 Commissioner of Income Tax versus M/s Model Footwear (Pvt.) Ltd. 7. I.T.A. NO. 1094/2005 Commissioner of Income Tax versus M/s Gama Investments Pvt. Ltd. 8. I.T.A. NO. 1120/2005 Commissioner of Income Tax versus M/s Baid Credit and Portfolio Pvt. Ltd. 9. I.T.A. NO. 1138/2005 Commissioner of Income Tax versus M/s Basant Plasto Chemicals Pvt. Ltd. 10. I.T.A. NO. 1155/2005 Commissioner of Income Tax versus M/s Britika Exports (P) Ltd. 11. I.T.A. NO. 1159/2005 Commissioner of Income Tax versus M/s Baid Credit Portfolio (P) Ltd. 12. I.T.A. NO. 1170/2005 Commissioner of Income Tax versus Sh. Francis Wacziarg 13. I.T.A. NO. 45/2006 Commissioner of Income Tax versus M/s Abhishek Auto Industries Ltd. 14. I.T.A. NO. 79/2006 Commissioner of Income Tax versus M/s Bora Knitwear (P) Ltd. 15. I.T.A. NO. 80/2006 Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ommissioner of Income Tax versus Late Sh. A.R. Chadha Th. L/H Sh. C.M. Chadha 41. I.T.A. NO. 534/2006 Commissioner of Income Tax versus M/s Deeksha Holding Ltd. 42. I.T.A. NO. 548/2006 Commissioner of Income Tax versus Ms. Madhushree Gupta 43. I.T.A. NO. 562/2006 Commissioner of Income Tax versus M/s Essan Remedies Ltd. 44. I.T.A. NO. 565/2006 Commissioner of Income Tax versus Mrs. Lata Chauhan 45. I.T.A. NO. 583/2006 Commissioner of Income Tax versus M/s Goodyear India Limited 46. I.T.A. NO. 590/2006 Commissioner of Income Tax versus M/s Goodyear India Limited 47. I.T.A. NO. 591/2006 Commissioner of Income Tax versus M/s Goodyear India Limited 48. I.T.A. NO. 600/2006 Commissioner of Income Tax versus M/s Eastern Holdings (P) Ltd. 49. I.T.A. NO. 604/2006 Commissioner of Income Tax versus M/s D.D. Gears Ltd. 50. I.T.A. NO. 635/2006 Commissioner of Income Tax versus M/s SRJ Securities (Now Adinath Capital Pvt. Ltd.) 51. I.T.A. NO. 647/2006 Commissioner of Income Tax versus M/s Maharani Paints (India) Pvt. Ltd. 52. I.T.A. NO. 657/2006 Commissioner of Income Tax versus M/s Ambuja Agro Industries Ltd. 53. I.T.A. NO. 660/20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her a reading of the order demonstrates application of mind by the authority to the question of concealment and whether satisfaction about such concealment or furnishing of inaccurate particulars is discernible from the order. In the light of these submissions, the Division Bench admitted the appeals for determination of the following substantial question of law: "Whether satisfaction of the officer initiating the proceedings under Section 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 the order passed by the authority?" 2.Keeping in view the decision of this Court in CIT v. Ram Commercial Enterprises Ltd. (supra) and other cases on the subject, the Division Bench felt that it would be more appropriate if the question is authoritatively determined by a Full Bench of this Court and accordingly the matter has been referred to the Full Bench. 3.We hasten to add that pending reference, sub-Section 1B has been inserted in Section 271 of the Income Tax Act by Finance Act, 2008. The said provision purports to create a fiction by which satisfaction of the assessing office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... prises (supra) laid down the correct position of law. 6.Section 271(1)(c) of the Income Tax Act, 1961 provides: "271 (1) If the income Tax Officer, or the Appellate Assistant Commissioner in the course of any proceedings under this Act is satisfied that any person- (c) has concealed the particulars of his income or deliberately furnished inaccurate particulars of such income, he may direct that such person shall pay by way of penalty, - ......................................................" This is the provision as it stood at the relevant time. This provision fell for consideration of the Supreme Court in D.M. Manasvi v. Commissioner of Income Tax, Gujarat, II Ahmedabad (1972) 86 ITR 557 (SC) wherein the Supreme Court held that what is contemplated by sub-section (1) of Section 271 is that the Income Tax Officer or the Appellate Assistant Commissioner should have been satisfied in the course of proceedings under the Act regarding matters mentioned in the clauses of that sub-section. It is, however, not essential that notice to the person proceeded against should have been issued during the course of the assessment proceedings. Satisfaction in the very nature of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation of penalty proceedings that cannot be a substitute for the requisite finding which should have been recorded by the assessing authority in the order of assessment but has not been so recorded. 12. A bare reading of the provisions of Section 271 and the law laid down by the Supreme Court makes it clear that it is the assessing authority which has to form its own opinion and record its satisfaction before initiating the penalty proceedings. Merely because the penalty proceedings have been initiated, it cannot be assumed that such a satisfaction was arrived at in the absence of the same being spelt out by the order of the assessing authority. Even at the risk of repetition we would like to state that the assessment order does not record the satisfaction as warranted by Section 271 for initiating the penalty proceedings...." 8.The view taken in Ram Commercial Enterprises (supra) has been followed in Diwan Enterprises v. Commissioner of Income Tax (2000) 246 ITR 571 (Delhi) and Commissioner of Income Tax v. J.K. Synthetics Ltd. (1996) 219 ITR 267 (Delhi). Same is the view taken by the Bombay High Court in Commissioner of Income-tax v. Dajibhai Kanjibhai (1991) 189 ITR 41 ( ..... 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