I.T.A No. 5 of 2008 ::1:: IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH I.T.A No. 5 of 2008 Date of decision : August 26, 2008 Commissioner of Income Tax-I, Ludhiana ...... Appellant through Mr.Rajesh Sethi, Advocate v. M/S Marshal Timber Merchants, Samrala Road, Ludhiana ...... Respondent through Mr.K.L.Goel, Advocate CORAM : HON'BLE MR.JUSTICE ADARSH KUMAR GOEL HON'BLE MR.JUSTICE AJAY TEWARI *** 1. Whether Reporters of Local Newspapers may be allowed to see the judgment ? 2. To be referred to the Reporters or not ? 3. Whether the judgment should be reported in the Digest ? *** AJAY TEWARI, J This appeal, filed by the revenue, raises the following questions of law :- “1. Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was justified in deleting the penalty when the application of assessee u/s 254(2) was allowed to decide afresh only the issue of `limitation u/s 275(1)(a) and whether on merits of levy of penalty u/s 271(1)(c) review was permissible when the same was already decided in order dated 16.11.2005 ? ii) Whether on the facts and law, the Hon'ble Income Tax Appellate Tribunal was justified in deleting the I.T.A No. 5 of 2008 ::2:: penalty on the ground that requisite satisfaction u/s 271 (1)(c) was not recorded, when the Assessing Officer had mentioned in the assessment order that penalty notice u/s 271(1)(c) had been separately issued ? The respondent/assessee-firm was engaged in the business of manufacturing and resale of timber goods and had filed its return on 3.10.1989 for the assessment year 1989-90 declaring income of Rs.38,310/-. Subsequently, on 21.3.1990, the Assessing Officer received some information, and on inquiries it was found that certain bogus purchases were alleged to have been made by the assessee. Accordingly, the assessment order was made on 27.11.1990 after making addition of the inflated purchases, which was confirmed by the CIT(A) and the ITAT, Chandigarh Bench. On 20.7.2001, the Assessing Officer imposed a penalty of Rs.20,160/-, under Section 271(1)(c) of the Income Tax Act, 1961 @ 100% of tax sought to be evaded. This order was also upheld upto the Tribunal which, vide its order dated 16.11.2005, dismissed the appeal. Thereafter, the assessee filed Miscellaneous Application under Section 254(2) of the Income Tax Act, seeking rectification on the ground that the order imposing penalty was barred by limitation. By order dated 3.10.2006, the original order was recalled by the Tribunal. However, by the subsequent impugned order dated 29.12.2006, the Tribunal allowed the appeal of the assessee on the ground that the Assessing Officer had not recorded his satisfaction before proceeding under Section 271 of the Income Tax Act. Learned counsel appearing for the revenue argued that it was not open to the Tribunal to review the order on a completely different ground, since as mentioned above, the Miscellaneous Application filed by I.T.A No. 5 of 2008 ::3:: the assessee had been allowed only on the ground of limitation. We find considerable force in the argument of learned counsel for the revenue. It is correct to say that review cannot mean rehearing. The ground that the Assessing Officer had not recorded his satisfaction was available to the assessee for filing the appeal. In any case, as mentioned above, the Miscellaneous Application filed by the assessee was only on the ground of limitation. In the circumstances, we answer the questions posed in favour of the revenue. Consequently, this appeal is allowed, the impugned order of the Tribunal, dated 29.12.2006 is set aside and the case is remitted to the Tribunal to decide the Miscellaneous Application filed by the assessee afresh, in accordance with law. ( AJAY TEWARI ) JUDGE ( ADARSH KUMAR GOEL ) JUDGE August 26, 2008 'kk'