COMMISSIONER OF INCOME TAX V. M/S GOENKA ESTATES DELHI P.LTD

ITA/306/2006

AI Insights

The case involves multiple appeals by the Commissioner of Income Tax against various respondents, primarily concerning the recording of satisfaction by the Assessing Officer under Section 271 of the Income Tax Act, 1961, prior to the amendment by the Finance Act, 2008. The Full Bench of the High Court of Delhi, referencing the judgment in CIT v. M/s Rampur Engineering Co. Ltd, directed that these cases be remitted to the Tribunal for a decision on the merits, as the assessments were made after the effective date of the amendment (01.04.1989). The amendment retrospectively created a fiction where the satisfaction of the Assessing Officer is deemed to have been recorded if penalty proceedings were initiated following an addition or disallowance.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 740199 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 04-12-2008
• Assessment Year: misc
• Other Referred Cases: CIT v. M/s Rampur Engineering Co. Ltd (ITA no. 211/2006)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: RAKESH GUPTA; AARTI SAINI; AJAY VOHRA; KAVITA JHA; SRIRAM KRISHNA; O P BHADANI; R M MEHTA; PRAKASH KUMAR; RAMANAND ROY; PANKAJ JAIN; R K CHAUHAN; JATIN ZAVERI; SATYEN SETHI; JOHNSON BARA; MAHUA KALRA
• Assessee Lawyers: PREM LATA BANSAL; MOHAN PRASAD GUPTA; SANJEEV SABHARWAL; JAGDISH RAI GOEL; R D JOLLY
• Keywords: Assessment orders; Income Tax; Penalty proceedings; Satisfaction of Officer
• Section: 271

Judgement Text

"ITA 766/2006 & connected matters Page 1 of 9 * THE HIGH COURT OF DELHI AT NEW DELHI % Judgment delivered on : 04.12.2008 + 1. I .T.A. NO. 766/2006 Commissioner of Income Tax ....Appellant versus M/s India Crafts .....Respondent 2. I.T.A. NO. 1015/2005 Commissioner of Income Tax ....Appellant versus M/s Bharat Cine Co. (P) Ltd. .....Respondent 3. I.T.A. NO. 1044/2005 Commissioner of Income Tax ....Appellant versus M/s Indus Valley Promoters Ltd. .....Respondent 4. I.T.A. NO. 1077/2005 Commissioner of Income Tax ....Appellant versus M/s Model Footwear (Pvt.) Ltd. .....Respondent 5. I.T.A. NO. 1138/2005 Commissioner of Income Tax ....Appellant versus M/s Basant Plasto Chemicals Pvt. Ltd. .....Respondent ITA 766/2006 & connected matters Page 2 of 9 6. I.T.A. NO. 1155/2005 Commissioner of Income Tax ....Appellant versus M/s Britika Exports (P) Ltd. .....Respondent 7. I.T.A. NO. 1170/2005 Commissioner of Income Tax ....Appellant versus Sh. Francis Wacziarg .....Respondent 8. I.T.A. NO. 45/2006 Commissioner of Income Tax ....Appellant versus M/s Abhishek Auto Industries Ltd. .....Respondent 9. I.T.A. NO. 105/2006 The Commissioner of Income Tax-V ....Appellant versus M/s Narain Jewels International Ltd. .....Respondent 10. I.T.A. NO. 177/2006 The Commissioner of Income Tax-V ....Appellant versus M/s Narain Jewels International Ltd. .....Respondent 11. I.T.A. NO.213/2006 The Commissioner of Income Tax-III ....Appellant versus ITA 766/2006 & connected matters Page 3 of 9 M/s Super Plastronices (P) Ltd. .....Respondent 12. I.T.A. NO. 252/2006 Commissioner of Income Tax ....Appellant versus M/s Shree Joints International P. Ltd. .....Respondent 13. I.T.A. NO. 306/2006 Commissioner of Income Tax ....Appellant versus M/s Goenka Estates (Delhi) Pvt. Ltd. .....Respondent 14. I.T.A. NO. 312/2006 Commissioner of Income Tax-III ....Appellant versus M/s Sandeep Ceramics Ltd. ....Respondent 15. I.T.A. NO. 323/2006 Commissioner of Income Tax ....Appellant versus M/s Brahmputra Consortium Ltd. .....Respondent 16. I.T.A. NO. 326/2006 Commissioner of Income Tax ....Appellant versus Shri Sanjeev Kumar Gupta .....Respondent ITA 766/2006 & connected matters Page 4 of 9 17. I.T.A. NO. 331/2006 Commissioner of Income Tax ....Appellant versus M/s Great Eastern Energy Corp. Ltd. .....Respondent 18. I.T.A. NO. 332/2006 Commissioner of Income Tax ....Appellant versus M/s D.G. Housing Projects Ltd. .....Respondent 19. I.T.A. NO. 339/2006 Commissioner of Income Tax ....Appellant versus Shri Sanjay Sharma .....Respondent 20. I.T.A. NO. 345/2006 Commissioner of Income Tax ....Appellant versus M/s Electrolux Kelvinator Limited .....Respondent 21. I.T.A. NO. 417/2006 Commissioner of Income Tax ....Appellant versus M/s Model Footwear (Pvt.) Ltd. .....Respondent ITA 766/2006 & connected matters Page 5 of 9 22. I.T.A. NO. 460/2006 Commissioner of Income Tax ....Appellant versus M/s Fracht Forwarding & Travels Pvt. Ltd. .....Respondent 23. I.T.A. NO. 562/2006 Commissioner of Income Tax ....Appellant versus M/s Essan Remedies Ltd. .....Respondent 24. I.T.A. NO. 565/2006 Commissioner of Income Tax ....Appellant versus Mrs. Lata Chauhan .....Respondent 25. I.T.A. NO. 583/2006 Commissioner of Income Tax ....Appellant versus M/s Goodyear India Limited .....Respondent 26. I.T.A. NO. 600/2006 Commissioner of Income Tax ....Appellant versus M/s Eastern Holdings (P) Ltd. .....Respondent ITA 766/2006 & connected matters Page 6 of 9 27. I.T.A. NO. 604/2006 Commissioner of Income Tax ....Appellant versus M/s D.D. Gears Ltd. .....Respondent 28. I.T.A. NO. 635/2006 Commissioner of Income Tax ....Appellant versus M/s SRJ Securities (Now Adinath Capital Pvt. Ltd.) .....Respondent 29. I.T.A. NO. 647/2006 Commissioner of Income Tax ....Appellant versus M/s Maharani Paints (India) Pvt. Ltd. .....Respondent 30. I.T.A. NO. 660/2006 Commissioner of Income Tax ....Appellant versus Mr. S. Venkatnarayan .....Respondent 31. I.T.A. NO. 664/2006 Commissioner of Income Tax ....Appellant versus M/s Utkal Investment Ltd. .....Respondent ITA 766/2006 & connected matters Page 7 of 9 Advocates who appeared in this case: For the Appellant :Ms Prem Lata Bansal & Mr Mohan Prasad Gupta, Advocates for the Appellant in ITA Nos. 766/2005, 1044/2005, 1077/2005, 1138/2005, 306/2006, 326/2006, 331/2006, 332/2006, 339/2006, 345/2006, 460/2006, 562/2006, 565/2006, 583/2006, 600/2006 & 604/2006. Mr Sanjeev Sabharwal, Sr. Standing Counsel for the Appellant in ITA Nos. 105/2006, 177/2006, 213/2006, 252/2006 & 312/2006. Mr. Jagdish Rai Goel, Advocate for the Appellant in ITA Nos. 1015/2005, 1155/2005, 1170/2005, 323/2006 & 635/2006. Mr R.D. Jolly, Advocate for the Appellant in ITA Nos. 417/2006, 647/2006, 660/2006 & 664/2006 For the Respondent : Dr Rakesh Gupta & Ms Aarti Saini, Advocates for the Respondent in ITA Nos. 1044/2005, 1138/2005, 1155/2005, 562/2006 & 647/2006 Mr Ajay Vohra, Ms Kavita Jha & Mr Sriram Krishna, Advocates for the Respondent in ITA No. 583/2006. Mr O.P. Bhadani, Advocate for the Respondent in ITA No. 460/2006. Mr R.M. Mehta, Advocate for the Respondent in ITA No. 664/2006. Mr Prakash Kumar, Advocate for the Respondent in ITA No. 1170/2005. Mr Ramanand Roy, Advocate for the Respondent in ITA No. 326/2006. Mr Pankaj Jain & Mr R.K. Chauhan, Advocates for the Respondent in ITA No. 332/2006. Mr Jatin Zaveri, Advocate for the Respondent in ITA No. 345/2006. Mr Satyen Sethi & Mr Johnson Bara, Advocates for the Respondent in ITA No. 323/2006. Mr Mahua Kalra, Advocate for the Respondent in ITA No. 345/2006. CORAM :- HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE RAJIV SHAKDHER 1. Whether the Reporters of local papers may be allowed to see the judgment ? 2. To be referred to Reporters or not ? 3. Whether the judgment should be reported in the Digest ? BADAR DURREZ AHMED, J (ORAL) +ITA 766/2006, 1015/2005, 1044/2005, 1077/2005, 1138/2005, 1155/2005, 1170/2005, 45/2006, 105/2006, 177/2006, 213/2006, 252/2006, 306/2006, 312/2006, 323/2006, 326/2006, 331/2006, 332/2006, 339/2006, 345/2006, 417/2006, 460/2006, 562/2006, ITA 766/2006 & connected matters Page 8 of 9 565/2006, 583/2006, 600/2006, 604/2006, 635/2006, 647/2006, 660/2006 & 664/2006 * These appeals were referred to the Full bench by the Division Bench on the following substantial question of law:- “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 not otherwise discernable from the order passed by the authority?” The Full Bench has considered the same and by virtue of its judgment dated 27.11.2008 in CIT v. M/s Rampur Engineering Co. Ltd (ITA no. 211/2006) and other connected matters, directed that the individual cases be listed before the appropriate Bench for hearing and disposal. The Full bench, in its judgment has noted that, pending the reference, sub-section 1B has been inserted in Section 271 of the Income Tax Act, 1961 by the Finance Act, 2008. It was also observed that the said provision creates a fiction by which satisfaction of the Assessing Officer is deemed to have been recorded in cases where an addition or disallowance is made by the Assessing Officer and a direction for initiation of penalty proceeding is issued. The said provision has been made effective retrospectively w.e.f 01.04.1989. The Full Bench observed that in some of the cases forming part of the batch, the assessment orders were passed after 01.04.1989 and that the reference was being answered only in respect of the cases where the assessment orders were made prior to 01.04.1989. In so far as the present batch of cases is concerned, they all relate to assessment orders made after 01.04.1989 and, therefore, are not covered by the reference, as answered by the Full Bench. They would be covered by the amendment brought about in Section 271 by the insertion of sub-section 1B. Since all these appeals arise out of the orders passed by the Income Tax Appellate Tribunal which limited itself only to the question of recording of satisfaction and did not go into the question on merits, in view of the amendment brought about in Section 271 by virtue ITA 766/2006 & connected matters Page 9 of 9 of Finance Act, 2008, these matters would have to be remitted to the Tribunal for consideration on merits. Consequently the impugned orders, passed by the Tribunal, in each of these appeals is set aside and the appeals are remitted to the Tribunal for hearing on merits. All these matters be listed before the Tribunal on 21.1.2009 for directions, with regard to further listing. These appeals stand disposed of. BADAR DURREZ AHMED, J RAJIV SHAKDHER, J December 04, 2008/kk "