“satisfaction for initiation of penalty”
The decision most relied on for satisfaction for initiation of penalty is MAK Data (P.) Ltd. v. CIT (38 Taxmann.com 448), cited in 186 judgments on BharatTax.
Leading authorities on satisfaction for initiation of penalty
A voluntary disclosure of income does not automatically exempt an assessee from penalty proceedings under Section 271(1)(c). The Assessing Officer must satisfy himself about initiating penalty proceedings during the assessment, but is not required to record this satisfaction in a specific written manner.
The assessing officer must record explicit satisfaction in the assessment order for initiating penalty proceedings under sections like 271D, 271E, 269SS, 269T, or 269ST; a mere recommendation or information to another authority is insufficient to validate the penalty.
The Assessing Officer must record clear satisfaction in the assessment order that the assessee concealed particulars of income or furnished inaccurate particulars, for initiating penalty proceedings under section 271(1)(c). Without such recorded satisfaction, the penalty proceedings lack jurisdiction and are unsustainable in law.
The date of initiation of penalty proceedings for the purpose of Section 275(1)(c) is when the Assessing Officer records a satisfaction or recommends penalty, not the later date when the Joint/Additional Commissioner of Income Tax issues the penalty notice.
The Delhi High Court upheld the constitutional validity of Section 271(1B) of the Income-tax Act. For initiating penalty proceedings under Section 271(1)(c), the Assessing Officer's satisfaction is deemed recorded if the assessment or reassessment order includes a direction for such initiation.
The power to impose a penalty under Section 28 (now 271(1)(c)) depends on the Assessing Officer's satisfaction about the existence of the specified conditions. This satisfaction must be recorded in the course of the assessment proceedings and before their conclusion.
To levy a penalty under section 271(1)(b), the Assessing Officer (AO) must record satisfaction in the assessment order. Mere initiation of penalty proceedings without such recorded satisfaction does not confer jurisdiction on the AO to levy the penalty.
For initiating penalty proceedings under Section 271D or 271E, the Assessing Officer must record satisfaction in the assessment order; non-recording of such satisfaction is fatal to the penalty.
