Revisional jurisdiction cannot direct initiation of penalty proceedings where penalty is distinct from assessment.

Section 263 revisional power did not authorise the Commissioner to direct initiation of penalty proceedings under section 271(1)(a), because penalty proceedings are distinct from assessment proceedings. The Delhi High Court followed earlier authority and held that the revisional jurisdiction could not be used to require the Income-tax Officer to start penalty action. The Commissioner therefore had no power to issue such a direction, and the issue was decided in favour of the assessee and against the Revenue.

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Issues: Whether the Commissioner could, in exercise of revisional jurisdiction under section 263 of the Income-tax Act, 1961, direct the Income-tax Officer to initiate penalty proceedings under section 271(1)(a).

Analysis: The scope of section 263 did not extend to directing initiation of penalty proceedings, because penalty proceedings are distinct from assessment proceedings. The question had already been settled by earlier authority, and that view was followed.

Conclusion: The Commissioner had no power under section 263 to issue such a direction. The issue was answered in the affirmative, in favour of the assessee and against the Revenue.

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