Commissioner of Income Tax vs Harig Crank Shafts Ltd.

This appeal arises from the Tribunal''s order dated 14-12-2006 wherein the Tribunal had relied on the decision of this Court in Commissioner of Income Tax Vs. Ram Commercial Enterprises Ltd., and held that imposition of penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter to be referred as ''the Act'') was bad in law in view of the fact that there was no satisfaction recorded in the assessment order. The Tribunal had not examined the question of penalty on merits.

Section 271 of the Act has been amended by the Finance Act of 2008 by the introduction of Sub-section (1B) with retrospective effect from 1-4-1989. In view of the said amendment, this matter would have to be decided on merits. Since the Tribunal did not do so on account of the view taken on the preliminary issue based on the decision of this Court in Ram Commercial Enterprises Ltd.''s case (supra), we remand the matter to the Tribunal for a decision on merits on the question of penalty u/s 271(1)(c) of the said Act. The impugned order is accordingly set aside and the matter stands remitted to the Tribunal for a decision on merits.