COMMISSIONER OF INCOME TAX DELHI VI vs. W.DIAMANT INDIA LTD.

The Revenue is aggrieved by an order dated 31st January, 2007 passed by the Income Tax Appellate Tribunal ('Tribunal'), Delhi Bench `H', New Delhi in ITA No. 161/Del/2006 relevant for the Assessment Year 1991-92. The Assessing Officer sought to initiate penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 (`Act') by his assessment order dated 21st March, 1994 where at the foot of the order, he observed as under :- ?Assessed at total income of Rs.1,22,49,587/-. Issue demand notice and challan.

Charge interest. Penalty proceedings u/s 271 (1)(c) have been initiated separately. Inform accordingly.? . .

Following this, by a separate order under Section 271(1)(c) of the Act, the Assessing Officer levied a penalty of Rs.11,63,755/-. . .

The appeal against the said order filed by the Assessee was dismissed by the Commissioner of Income Tax (Appeals) [CIT(A)] on the ground that the Assessee did not file any written submission either before the Assessing Officer or before the CIT (A).

Allowing the appeal of the Assessee, the Tribunal followed the decision of this Court in Commissioner of Income Tax Vs. Ram Commercial Enterprises Ltd., [2000] 246 ITR 568 and held that since there was no recording of satisfaction of the Assessing Officer in the order of assessment that penalty proceedings must be initiated, the penalty proceedings are illegal.

At the outset, it requires to be noted that the decision of this Court in Ram Commercial Enterprises Ltd. has been approved by the Supreme Court in Dilip N.

Shroff Vs. Joint Commissioner of Income Tax, [2007] 291 ITR 519 (SC) and T.Ashok Pai Vs. Commissioner of Income Tax, [2007] 292 ITR 11 (SC).

Learned counsel for the Revenue states that another Bench of this Court has in Commissioner of Income Tax, Delhi IV v. Indus Valley Promoters Limited (2006) 155 Taxman 223 referred the following substantial question of law to a larger Bench which according to the referring Bench was not considered in Ram Commercial Enterprises Limited: ?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 order passed by the authority?? . 12/2007 decided on 14th September, 2007), Commissioner of Income Tax Vs. M/s Bharat Hotels Ltd. (ITA NO. 1074/2006 decided on 14th September, 2007), Commissioner of Income Tax Vs. M/s Bharat Hotels Ltd. (ITA No. 935/2006 decided Chemicals (ITA No. 954/2006 decided on 14th September, 2007), Commissioner of Income Tax Vs. M/s Preeti Aggarwala (ITA NO. 850/2006 decided on 15th September, 2007) and Commissioner of Income Tax Vs. Smt. Santosh Sharma (ITA No. 1088/2006 decided on 17th September, 2007).

No substantial question of law arises.

Dismissed. MADAN B. LOKUR, J . . . . .

November 19, 2007 S. MURALIDHAR, J rk . . . . . .