CIT vs. G.K.N.DRIVELINE INDIA LTD


IN THE HIGH COURT OF DELHI AT NEW DELHI

COMMISSIONER OF INCOME TAX

.... Appellant

Through Mrs. P.L. Bansal, Advocate

versus

GKN DRIVELINE INDIA LTD.

..... Respondent

Through Mr. V.P. Gupta, Advocate

CORAM:

HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE DR. JUSTICE S.MURALIDHAR

<u>ORDER</u>

15.11.2007

The Revenue is aggrieved by an order dated 7^th December, 2006 passed by the Income Tax Appellate Tribunal ('Tribunal'), Delhi Bench 'E', New Delhi in ITA No. 1760/Del/2006 relevant for the Assessment Year 1995-1996.

The Assessing Officer sought to initiate penalty proceedings under Section 271(1)(c) of the Income Tax Act, 1961 ('Act') by his re-assessment order dated 28th March, 2002 where at the foot of the order, he observed as under:-

"Assessed as above. Issue demand notice and challan. Charge

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interest as per law. Penalty proceedings under section 271(1)(c) have been separately initiated."

Following this, by a separate order dated 29^th July, 2005 under Section 271(1)(c) of the Act, the Assessing Officer levied a penalty of Rs.53,88,695/-.

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 had furnished inaccurate particulars and, therefore, penalty was leviable. Further it was held that the satisfaction of the Assessing Officer (AO) was evident from the assessment order.

Allowing the appeal of the Assessee, the Tribunal reversed the order of the CIT(A). The Tribunal followed the decision of this Court in Commissioner of IncomeTax 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, 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.A

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?"

She accordingly submits that this Court should await the decision of the larger Bench.

Assuming the Revenue were to succeed before the larger Bench, and the question referred to it is answered in the affirmative, it would mean that it is sufficient that the satisfaction of the Assessing Officer for initiating penalty proceedings against an Assessee under Section 271(1)(c) of the Act is discernible from the assessment order

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2007), Commissioner of Income Tax Del Vs. Fibro Tech Chemicals (ITA 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.

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MADAN B. LOKUR, J

November 15, 2007 ak

S. MURALIDHAR, J