1 IN SUPREME COURT OF INDIA CIVIL APPELLATE JURISDICTION CIVIL APPEAL NO(S). 1457/2008 COMMISSIONER OF INCOME TAX,PANCHKULA APPELLANT(S) VERSUS M/S JAI LAXMI RICE MILLS AMBALA CITY RESPONDENT(S) WITH CIVIL APPEAL No. 3614/2012 O R D E R In these appeals, we are concerned with question as to whether penalty proceeding under Section 271D of Income Tax Act (hereinafter referred to as Act ) is independent of assessment proceeding and this question arises for consideration in respect of Assessment Years 1991-1992 and 1992-1993 under following circumstances: In respect of Assessment Year 1992-1993, assessment order was passed on 26.02.1996 on basis of CIB information informing Department that assessee is engaged in large scale purchase and sale of wheat, but it is not filing income tax Signature Not Verified return. Ex-parte proceedings were initiated, which Digitally signed by ASHWANI KUMAR Date: 2015.11.26 resulted in aforesaid order, as per which net taxable 17:12:02 IST Reason: income of assessee was assessed at Rs. 18,34,584/-. While 2 framing assessment, Assessing Officer also observed that assessee had contravened provisions of Section 269SS of Act and because of this Assessing Officer was satisfied that penalty proceedings under Section 271E of Act were to be initiated. assessee carried out this order in appeal. Commissioner of Income Tax (Appeals) allowed appeal and set aside assessment order with direction to frame assessment de novo after affording adequate opportunity to assessee. After remand, Assessing Officer passed fresh assessment order. In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of Act was recorded. It so happened that on basis of original assessment order dated 26.02.1996, show cause notice was given to assessee and it resulted in passing penalty order dated 23.09.1996. Thus, this penalty order was passed before appeal of assessee against original assessment order was heard and allowed thereby setting aside assessment order itself. It is in this backdrop, question has arisen as to whether penalty order, which was passed on basis of original assessment order and when that assessment order had been set aside, could still survive. 3 Tribunal as well as High Court has held that it could not be so for simple reason that when original assessment order itself was set aside, satisfaction recorded therein for purpose of initiation of penalty proceeding under Section 271E would also not survive. This according to us is correct proposition of law stated by High Court in impugned order. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of Act, though in that order Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. These appeals are, accordingly, dismissed. ......................J. [A.K. SIKRI] ......................J. [ROHINTON FALI NARIMAN] NEW DELHI; NOVEMBER 20, 2015. 4 ITEM NO.105 COURT NO.13 SECTION IIIA S U P R E M E C O U R T O F I N D I RECORD OF PROCEEDINGS Civil Appeal No(s). 1457/2008 COMMISSIONER OF INCOME TAX,PANCHKULA Appellant(s) VERSUS M/S JAI LAXMI RICE MILLS AMBALA CITY Respondent(s) WITH C.A. No. 3614/2012 Date : 20/11/2015 This appeal was called on for hearing today. CORAM : HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE ROHINTON FALI NARIMAN For Appellant(s) Mr. K. Radha Krishna, Sr. Adv. Mr. Arijit Prasad, Adv. Mr. Gargi Khanna, Adv. Ms. Anil Katyar, Adv. Mr. B. V. Balaram Das,Adv. For Respondent(s) Mr. Harpreet Singh, Adv. Mr. Rajesh Gupta, Adv. For M/s. K. J. John & Co. UPON hearing counsel Court made following O R D E R civil appeals are dismissed in terms of signed order. Interlocutory Application(s) pending, if any, shall stand disposed of accordingly. (Ashwani Thakur) (Rajinder Kaur) COURT MASTER COURT MASTER (Signed order is placed on file) Commissioner of Income-tax, Panchkula v. M/s Jai Laxmi Rice Mills Ambala City