COMMISSIONER OF INCOME TAX Vs. MUNISH IRON STORE

JUDGEMENT

(1.) IN this appeal, the Revenue has prayed for determination of the following question :

(2.) THE facts necessary for deciding the appeal are that the assessee filed a return on 29th Oct., 1992, for the asst. yr. 1992-93 disclosing an income of Rs. 74,155. During the pendency of the assessment proceedings, the concerned authority got the information that the assessee had purchased drafts from the bank and had cash which was unaccounted. In this connection, a statement of the father of the assessee's partner--Shri Roop Chand, was recorded on 16th March, 1993. Upon this, books of account of the assessee were impounded under s. 131 of the IT Act, 1961 (for short, "the Act"). Thereafter, the assessee filed a revised return showing an income of Rs. 9,43,155. By an order dt. 30th March, 1994, the Asstt. CIT, Circle II, Chandigarh, finalised the assessment under s. 143(3) on the basis of the revised return filed by the assessee. He also ordered initiation of proceedings under s. 271(1)(c) of the Act for levy of penalty. After considering the reply of the assessee, the AO levied penalty of Rs. 4,38,172. The CIT(A), Chandigarh, dismissed the appeal of the assessee and upheld the order of penalty. The ITAT, Chandigarh (for short, "the Tribunal"), rejected the assessees' plea that it had filed the revised return voluntarily but upheld its challenge to the penalty on the ground that while finalising the assessment, the AO did not record satisfaction in terms of s. 271(1)(c) of the Act.

(3.) IN our opinion, there is no merit in the argument of learned counsel. A reading of the order passed by the Tribunal shows that after making a reference to the judgments of the Supreme Court and some High Courts in Jain Bros. vs. Union of India & Ors. (1970) 77 ITR 107 (SC), D.M. Manasvi vs. CIT (1972) 86 ITR 557 (SC), CIT vs. Ram Commercial Enterprises Ltd. (2001) 167 CTR (Del) 321 : (2000) 246 ITR 568 (Del) and Diwan Enterprises vs. CIT and Ors. (2001) 167 CTR (Del) 324 : (2000) 246 ITR 571 (Del), the Tribunal culled out the proposition of law in the following words :