Swatanter Kumar, J.:— On November 30, 1990, the assessee filed a return showing an income of Rs. 2,29,280 which was subsequently revised to Rs. 2,29,960 during the period of assessment. Notice under sections 143(2) and 140(2)(i) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) was issued to the assessee in response to which the partner of the assessee attended and produced the books of account. Besides that, the Assessing Officer added back profit on the undisclosed sales of Rs. 28,195. It was also detected during a survey under section 133A at the assessee's premises on September 25, 1992, that certain loose slips showing sale to different parties and pertaining to the assessment years 1992-93 and 1993-94. Thereupon, the assessee surrendered the amount in the assessment years to the tune of Rs. 38.37 lakhs. Finally, besides making certain additions in the account of the assessee, the Assessing Officer added a sum of Rs. 3,20,868 to the total income of the assessee while observing as under:
“This would mean addition of Rs. 3,20,868 to the total income of the assessee on account of suppression of sales. Penalty proceedings under section 271(1)(c) are accordingly initiated. Further it may be mentioned that the assessee has given the closing stock figures on estimate in the trading account filed. The assessee no doubt has tendered closing stock inventory but this inventory cannot be said to be complete as the assessee has not taken into account the incentive received on purchase and other incidental expenses incurred for the procurement of purchases. All the credit notes are debited at the end of the year and a number of items on which discount has been received cannot be co-related and accordingly the valuation as shown is beyond verification, this would further substantiate the Department's action to estimate the g.p”
2. In regard to commission paid to Mrs. Archana Gupta alias Meena Gupta, the Assessing Officer held as under:
“On a perusal of statement of M/s. Attraction of proprietary concern of Mrs. Archana Gupta alias Meena Gupta it transpired that the commission paid at Rs. 40,630 to her is not genuine as she had no experience in this line of business. Merely because she is the wife of a hardware merchant does not mean that people will come to her and ask for purchase of motor pumps of Crompton make and the whereabouts from where it is available. Besides as per the statement it appears she is doing the business under the name and style of M/s. Attraction. This business relates to trading in gift items and is not in any way connected with the business of the assessee. She has never been in this line and she knew nothing about pumps. Under the circumstances, it is held that the commission paid to the extent of Rs. 40,630 is not genuine but only is an accommodatory entry in the name of Smt. Archana Gupta, Prop. Attraction for giving a colour of genuineness to the commission paid or otherwise no services were actually rendered by her. Hence, this amount is disallowed and added to the income of the assessee.”
3. This order of the Assessing Officer is dated March 26, 1993, where he also directed penalty proceedings to be initiated under section 271(1)(c) of the Act. The assessee preferred an appeal which was partially accepted by the Commissioner, Income-tax (Appeals), wherein relying upon the earlier order passed by the Income-tax Appellate Tribunal dated November 12, 1999, he held that no penalty could be levied on the basis of an assessment which had been set aside and as such recorded the finding that sum of Rs. 3,20,868 relating to suppression of sale was not or could not be taken on record for the purposes of levying penalty.
4. In regard to the other entry of Rs. 40,630, he held that the Assessing Officer was justified in initiating the proceedings for levy of penalty under section 271(1)(c) of the Act. This order of the first appellate authority dated April 4, 2002, was challenged before the Income-tax Appellate Tribunal which vide its order dated April 6, 2004, allowed the appeal of the assessee by giving to the assessee further relief in regard to the sum of Rs. 40,630 by recording the following findings :.
“After considering the submissions of both sides and perusing other material on record, we find substance in the argument of the learned AR that no satisfaction has been recorded in regard to addition on account of disallowance of commission of Rs. 40,630. In the case of Ram Commercial Enterprises Ltd., [2000] 246 ITR 568, the hon'ble Delhi High Court has held that before forming an opinion in regard to concealment, a satisfaction has to be recorded by the Assessing Officer as contemplated under the provisions of section 271(1)(c). This decision was taken by the hon'ble Delhi High Court by placing reliance on the decision of the hon'ble Supreme Court in the case of CIT v. S.V Angidi Chettiar, [1962] 44 ITR 739. We have seen the facts of the present case and found that he has recorded no such satisfaction there that penalty proceedings on this amount are accordingly initiated. On the amount of addition of Rs. 3,20,868 made in trading account, the Assessing Officer in the body of the order has specifically mentioned that penalty on this amount is initiated, as he was satisfied that the assessee has not disclosed the true profits. However, we noted that while making disallowance of commission of Rs. 40,630, no such satisfaction has been recorded. Even it is not mentioned that penalty proceedings under section 271(1)(c) are initiated separately. Therefore, in view of these facts and circumstances, and in view of the decision of the jurisdictional High Court in the case of Ram Commercial Enterprises Ltd., [2000] 246 ITR 568, we hold that without recording satisfaction as contemplated under section 271(1)(c), penalty levied and confirmed by the lower authorities was not justified. Therefore, the same is cancelled.
In the result, the appeal of the assessee is allowed.”
5. The Tribunal while granting this relief to the appellant had relied upon the judgment of the Supreme Court in the case of CIT v. S.V Angidi Chettiar, [1962] 44 ITR 739. It is a settled principle of law and the provisions of section 271(1)(c) on their plain reading would require proper application of mind and recording of at least bare minimum opinion on the part of the Assessing Officer that a case for initiation of penalty proceedings was made as there was concealment of income, or that incorrect particulars had been furnished by the assessee, with intention to avoid payment of tax. In the present case the Assessing Officer had recorded satisfaction with regard to one sum while with regard to the other he made no such indication, as is clear from the above reproduced relevant portion of the order of the Assessing Officer.
6. We find no merit in this appeal as it raises no question of law, much less a substantial question of law, as such an interpretation is clear from the bare reading of the provisions and it has already been the subject-matter of pronouncements by various courts. The view consistently is in the above terms. Thus, in view of the judgment of this court in Commissioner Of Income-Tax v. S.R Fragnances Ltd., [2004] 270 ITR 560, this appeal is dismissed, while leaving the parties to bear their own costs.