Avadh Behari Rohatgi, J.
(1) These four writ petitions raise a common question of law. The point of law is regarding the power of the sales-tax authorities to impose penalty on a dealer under s. 22A of the Bengal Finance (Sales Tax) Act 1941 (the Act) as extended to the union territory of Delhi. These relate to tour assessment years of 1962-63, 1963-64, 1964-65 and 1965-66. Jiten and Co., petitioner in this case, was the sole proprietorship concern of one H. M. Sanghavi. He was carrying on business of fountain pens in Delhi. In the name of Jiten and Co. he had obtained a registration certificate under the Act. As a registered dealer he was tiling his quarterly returns of Ins turn over for purposes of payment to sales tax under the Act.
(2) The sales tax officer issued notice to the petitioner under s.l I for the purpose of assessment for the relevant years. The petitioner appeared. The sales-tax officer completed the assessments. The assessing I authority was not satisfied with the books of account produced before it. It came to the conclusion that the sales had been suppressed by the petitioner. It made best judgment assessments under s. 11(1) of the Act and raised additional demands against the petitioner for each of the four years.
(3) The petitioner preferred appeals to the assistant sales-tax commissioner. His appeals were heard in 1968. In all the appeals the appellate authority reduced the amount of tax by a few thousands of rupees in each of the four cases. The petitioner went in revision to the sales-tax commissioner. The revision petitions could not be heard as they were withdrawn by the petitioner. This happened sometimes in December, 1968.
(4) On February 11, 1969, a different sales-tax officer Mr. U, R. Jain issued for each assessment year a penalty notice under S. 22A(1) of the Act. He required the petitioner to show cause why penalty be not imposed on him. In answer the petitioner submitted his reply on February 17, 1969. He denied that there was any case for imposition of penalty on him. His main contention was that the original assessment orders were passed by Mr. R. K. Bhatia and Mr. Madan Mohan, sales tax officers in 1967 and 1968 and Mr. U. R. Jain not being one of them he could not issue notice of penalty after the completion of the assessment proceedings. The sales tax officer Mr. Jain did not accept this contention. By his order dated April 2, 1969, he imposed penalty on the petitioner in respect of all the four years. The aggregate amount so imposed was Rs. 38000. The following statement gives the relevant particulars of the four cases at a glance : C.W. C.W. C.W. C.W. 436/69 465/69 464/69 466/69 SI. Particulars 1962-63 1963-64 1964-65 1965-66 No. 1. Date of Assessment Order 14-3-67 23-2-68 23-2-68 23-2-68 2. Tax assessed . 22,025.30 40.642.42 27.232.18 21.772.00 3. Date of Appellate Order 2-2-68 5-7-68 5-7-68 5-7-68 4. Tax reduced to 14,025.30 33,267.42 19,732.18 10,522.00 5. Date of the issue of penalty notice by the Sto u/s 22A(1) 11-2-69 11-2-69 11-2-69 11-2-69 6. Date of filing objections before the Sto . 17-2-69 17-2-69 17-2-69 17-2-69 7. Date of the penalty order passed by the Sto 2-4-69 2-4-69 2-4-69 2-4-69 8. Amount of penalty imposed Rs. 7,000 Rs. 16,000 Rs. 9,000 Rs. 6,000
(5) On May 29, 1969, the petitioner brought four writ petitions in this court challenging the orders of imposition of penalty on him.
(6) Counsel for the petitioner contends that after the completion of the assessments by the two sales tax officers-Mr. R. K. Bhatia and Mr. Madan Mohan it was not open to Mr. V. R. Jain to issue penalty notices under s. 22A (1) on February Ii, 1969. The ground for this objection is that Mr. Bhatia and Mr. Madan Mohan while passing orders of assessment did not record their satisfaction that the petitioner had concealed the particulars of his sales or had furnished inaccurate particulars thereof and had thereby returned figures below the real amount. This satisfaction, it is submitted, is a condition precedent for issuing notice under s. 22A (1). That could have been done, it is suggested, by Mr. Bhatia and Mr. Madan Mohan while they were passing the assessment orders under s. II. But after the proceedings had been completed and the appeal had been disposed of by the appellate authority Mr. Jain could not initiate proceedings under s. 22A. This is the main contention of the petitioner.
(7) Now s. 22A of the Act in so far as it is material reads :
'22A. Penalty for concealment of sales or furnishing inaccurate particulars or making false representation. (1) If the Commissioner or any person appointed under sub-section (1) of section 3 to assist him, in the course of any proceedings under the Act is satisfied that a dealer has concealed the particulars of his sales or has furnished inaccurate particulars of his sales and has thereby returned figures below the real amount, he may, after giving the dealer a reasonable opportunity of being heard, direct that the dealer shall, in addition to the tax payable by him under this Act, pay, by way of penalty, a sum not exceeding one and a half times the amount of tax which would have been avoided if the figures returned by the dealer were accepted as correct.'
(8) While dealing with s. 28 of the Income-tax Act 1922 the Supreme Court had had occasion to deal with penalty provisions which in income-tax law are very much similar to s. 22A of the Bengal Finance (Sales Tax) Act. In Commissioner of Income-tax v. Angidi Chettiar : 44ITR739(SC) the Supreme Court laid down that the power to impose penalty depends upon the satisfaction of the income tax officer in the course of the proceedings under the Act. Satisfaction before completion of the proceedings under the Act is a condition precedent for the exercise of jurisdiction. In M. Manasvi v. Commissioner of Income-tax, Gujarat Ii : 86ITR557(SC) the same principle was reiterated and the earlier Supreme Court decision was followed. It is now settled that it is the satisfaction of the assessing authority in the course of the assessment proceedings regarding the concealment of income which constitutes the basis and foundation of the proceedings for levy of penalty. Satisfaction, in the very nature of things, precedes the issue of notice. If in the course of the proceedings the officer has not recorded his satisfaction, in that case penalty proceedings cannot be initiated. There must be something which shows from the order of assessment itself that in the course of the proceedings the assessing authority or the appellafe authority was satisfied that it is a case in which penalty proceedings' ought to be taken. For recording its satisfaction the assessing authority need not use any particular form of words. But its satisfaction that it is a case which calls for the imposition of penalty must be found in the assessment order. That alone will form the foundation of further proceedings.
(9) The short question for consideration in this case is this. Did Mr. Bhatia when he passed the assessment order on March 14. 1967 in respect of the year 1962-63 and Mr. Madan Mohan who passed the assessment orders on February 23, 1968 for the remaining three r assessment years record their satisfaction that, to use the words of the statute, 'the dealer has concealed the particulars of his sales or has furnished inaccurate particulars of his sales and has thereby returned figures below the real amount' and, thereforee, penalty proceedings ought to be launched against him Counsel for the petitioner says that no such satisfaction was recorded by Mr. Bhatia and Mr. Madan Mohan. Counsel for the Revenue contends the contrary.
(10) The Act uses the expression 'is satisfied'. To be satisfied with a state of things means to be honestly satisfied in your only mind. The satisfaction of one sales tax officer cannot be said to be the satisfaction of another officer. Satisfaction is essentially a condition of the mind. It means that there is a substantial ground for the conclusion on the material available that the dealer against whom it is sought to bring the penalty proceedings has concealed sales and furnished inaccurate particulars and has thereby returned figures below the real amount. The phrase 'satisfied' occurs in many taxing statutes and is a familiar one for a great many years (Sec for example s. 271 of the Income Tax Act 1961 and s. 56 of Delhi Sales Tax Act 1975). The phrase 'is satisfied' means, in my view, simply 'makes up its mind [per Lord Pearson in Bivth v. Bivth (1966) I All E.R. 524 . Dixon J. defined it as 'actual persuasion'. That means a mind not troubled by doubt or to adopt the language of Smith J. 'a mind which has reached a clear conclusion' [See Angland v. Payne 1944 N.Z.L.R. 610.
(11) Now the sales tax officer under s. 22(1) has to make up his mind. But make up his mind for what What for does he reach a clear conclusion in his mind It means, in the context it is used, that the authority has to form a prima fade view that it is a case where, subject to what the dealer may have to say, it should initiate action under s. 22A so that the majesty of the law is upheld and the dealer finds it unprofitable to conceal sales. It reaches a clear conclusion that a good ground exists for launching penalty proceedings. It is this satisfaction which is the foundation of action, under s. 22A(1).
(12) Counsel for the Revenue heavily relies on the assessment orders passed by the two sales tax officers. He has drawn my attention to the finding recorded in the assessment orders that the dealer was guilty of suppression of sales. It is true that there is such a finding in, each of the four assessment years as books were found to be unreliable. There was other material before the authorities to show that sales had been suppressed. The authorities thereforee proceeded to make the best judgment assessment. But then the question is: Whether the finding recorded for purposes of making the assessment under s. 11(1) can be said to be the satisfaction recorded as required by s. 22A(1) The assessing authority-Mr. Bhatia for the year 1962-63 and Mr. Madan Mohan for the remaining three years-were making assessment orders under s. 11(1) of the Act. That appears clearly from their orders themselves. In the very opening of the orders it is clearly stated that the provision under which assessments were being made was s. 11(1) of the Act. For the purpose of that section and for the purpose of making a' best judgment assessment the authorities reached the conclusion that the petitioner was guilty of suppression of sales. But is that a satisfaction also for purposes of s. 22A(1)? I am clearly of opinion that the assessing authorities did not direct their minds to the penalty provisions under s. 22A. The findings recorded in the assessment orders are limited for the purpose of s. 11(1). The Revenue cannot take advantage of those findings and base its case on them for purposes of levying penalty. There is not a word about s. 22A in the assessment orders. Nowhere has the assessing authority said that penalty proceedings should be initiated or that notice should be issued to the petitioner under s. 22A(1). It is true that no particular words are to be used by the assessing authority for recording its satisfaction under s. 22A(1) but it must be reasonably clear from the order that the assessing authority applied its mind and was prima fade of the view that the dealer had concealed the particulars of sales or had furnished inaccurate particulars and thereby returned figures below the real amount and that action for penalty should be initiated against the dealer. If the authority has not directed its mind to the question of imposition of penalty how can it be said that it was satisfied that it was a case where action for penalty ought to be taken. Satisfaction for purposes of s. 11(1) is one thing. Satisfaction for purposes of s. 22A is quite a different thing. Under s. 11(1) :
'IF no returns are finished by a registered dealer in respect of any period by the prescribed date', or if the Commissioner is not satisfied that the retuins furnished are correct and complete, the Commissioner shall, within eighteen months after the expiry of -such period, proceed in such manner ;is may be presaribed to assess to the best of his judgment the amount of the tax due from the dealer and in making such assessment shall give the dealer a reasonable opportunity of being heard......................'
(13) Here for the purposes of best assessment judgment the Comissioner has to be satisfied that the returns furnished are not 'correct and complete'. Cencealment of sales and furnishing of inaccurate particulars are the ingredients of s. 22A. The result of these ingredients must be that the dealer has returned figures below the real amount. But these ingedients are not the ingredients of s. Ii, thereforee, I find it difficult to reach the conclusion that the finding recorded for the purpose of s. 11 by the assessing authority can be a good ground for its successor for proceeding under s. 22A of the Act. If the question of penally was not present to the mind of the assessing officers-Mr. Bhatia and Mr. Madan Mohan in 1967 and 1968-it was not open to Mi, Jain to issue the penalty notices in 1969 as his predeccssors-in-office had not recorded their satisfaction.
(14) The consideration that arise in penalty proceedings are different from those in assessment proceedings. In Commissioner of Income Tax v. Khody, Eawarsa : 83ITR369(SC) the Supreme Court said :
'No doubt the original assessment proceedings for computing the tak may be a good item of evidence in the penalty