ORDER
1. In this appeal under Section 260A of the Income Tax Act, 1961 (‘Act’), the revenue is aggrieved by an order dated 21-11-2006 passed by the Income Tax Appellate Tribunal, Delhi Bench ‘G’ in ITA No. 2704/Delhi/2005 relevant for the assessment year 2001-02.
2. By the impugned order, under appeal, the Tribunal allowed the appeal filed by the assessed challenging the levy of penalty under Section 271(1)(c) of the Act. The penalty was set aside by the Tribunal on the ground that the assessing officer had not recorded any satisfaction in the assessment order regarding the concealment of income or for furnishing inaccurate particulars by the assessed.
3. Ms. Prem Lata Bansal, learned senior standing counsel for the revenue submits that in CIT v. Ram Commercial Enterprises Ltd. (2000) 246 ITR 568′ (Delhi) this Court has taken the view that if the assessing officer does not record his satisfaction in the assessment order that penalty proceedings should be initiated against the assessed the subsequent order levying penalty would be bad in law. However, she says that another Bench of this Court has in CIT v. Indus Valley Promoters Ltd. (2006) 155 Taxman 223 (Del) referred the following substantial question of law to a larger Bench which according to the referring Bench was not considered in Ram Commercial Enterprises Ltd. ‘s case (supra):
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 ?
4. She accordingly submits that this Court should await the decision of the larger Bench.
5. It may be noted that this decision has been approved by the Supreme Court in Dilip N. Shroff v. Joint CIT and T. Ashok Pai v. CIT (2007) 292 ITR 112 (SC).
6. 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 assessed under Section 271(1)(c) of the Act is discernible from the assessment order itself and that such satisfaction need not be separately or expressly indicated in the assessment order. In that event the assessment order in the present case would have to be examined to find out if the satisfaction of the assessing officer is discernible. Therefore, without expressing any view on the issue pending consideration by the larger Bench, and presuming that the question referred to it is answered in the affirmative, we proceed to examine the assessment order in the instant case in order to find out whether the satisfaction of the assessing officer that penalty proceedings should be initiated against the assessed under Section 271(1)(c) of the Act is discernible there from.
7. On a perusal of the assessment order, we find that the assessing officer has, in regard to initiation of penalty proceedings, observed as follows:
Assessed at the total income of Rs. 98,97,220 (rounded off). Issue necessary forms. Give credit to pre-paid taxes. Charge interest under Section 234A/B/C/D of the Income Tax Act as per law. Loss from speculation business for Rs. 25,95,113 to carried forwarded to next year.
Initiate penalty under Section 271(1)(c) of the Income Tax Act, 1961.
8. The above recording does not satisfy the requirement of Section 271(1)(c) of the Act as explained by this Court in Ram Commercial Enterprises Ltd. ‘s case (supra). Further even on a detailed perusal of the assessment order no satisfaction of the assessing officer that penalty proceedings are required to be initiated against the assessed is discernible. None has also been pointed out to us.
9. Moreover the tax effect in the present case is Rs. 1,83,164 which is below the limit in the CBDT Circular.
10. In this view of the matter, no substantial question of law arises in this appeal.
11. The appeal is dismissed.