IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. I.T.A. No.416 of 2008 & connected case being I.T.A. No.565 of 2008 Date of decision: 23.12.2010 The Commissioner of Income Tax. -----Appellant. Vs. M/s Amar Singh Kulwant Singh. -----Respondent CORAM:- HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE AJAY KUMAR MITTAL Present:- Mr. Vivek Sethi, Standing Counsel for the appellant. Mr. G.R. Sethi, Advocate for the respondent in I.T.A. No.565 of 2008. --- ADARSH KUMAR GOEL, J. 1. This order will dispose of I.T.A. Nos.416 and 565 of 2008 as according to the appellant, both the appeals involve common questions. 2. I.T.A. No.416 of 2008 has been preferred by the revenue under Section 260-A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Amritsar in I.T.A. No.138(ASR)/2007 for the assessment year 1991-92 claiming following substantial questions of law:- “1. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in deleting the penalty I.T.A. No.416 of 2008 of Rs.73,218/- imposed under section 271(1)(c) of the Income Tax Act, 1961? 2. Whether, on the facts and in the circumstances of the case, the ITAT was right in law in holding that no satisfaction for initiation of penalty proceedings was recorded by the AO in the assessment order when the finding regarding the furnishing of inaccurate particulars of income had been elaborately given in the assess order in a detailed manner?” 2. In the course of assessment, the Assessing Officer made addition to the declared income of the assessee which was sustained by the CIT(A) and the Tribunal with some modification. The additions became final. While passing the order of assessment, the Assessing Officer found that the assessee had furnished inaccurate particulars and directed initiation of penalty proceedings. Thereafter, penalty was levied. On appeal, the CIT (A) set aside the penalty only on the ground that the Assessing Officer failed to record satisfaction for levy of penalty. 3. We have heard learned counsel for the parties. 4. The matter has been gone into by this Court in CIT v. Pearey Lal & sons (EP) Ltd. [2009] 308 ITR 438 and in order dated 25.9.2010 in I.T.A. No.441 of 2007 CIT v. Nakodar Co- operative Sugar Mills Pvt. Ltd. and it was held that recording of satisfaction was a matter substance and when addition was made and direction for initiation of penalty issued, it could not be held that no satisfaction had been recorded for initiation of penalty. 2 I.T.A. No.416 of 2008 Reference was also made to the amendment by way of addition of sub Section (1B) to Section 271 of the Act by Finance Act, 2008. 5. In view of above, the impugned orders cannot be sustained. The questions of law have to be answered in favour of the revenue. Accordingly, the appeals are allowed and the matter is remanded to CIT(A) for fresh decision on the issue in accordance with law. 7. The assessee in I.T.A. No.565 of 2008 is represented before us and may appear before CIT(A) for further proceedings. The assessee in 416 of 2008 is not represented before us and may be summoned by issuing appropriate notice by the CIT(A). A photocopy of this order be placed on the file of the other connected case. (ADARSH KUMAR GOEL) JUDGE December 23, 2010 (AJAY KUMAR MITTAL) ashwani JUDGE 3