2007 (12) TMI 503

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.... Income Tax cannot exercise powers under Section 263 of the I. T. Act, to direct the Assessing officer to reconsider the penalty proceedings initiated by the Assessing Officer under Section 271(1) (C) of the Act when such penalty proceedings dropped by the Assessing officer without application of mind? 2. We have heard the learned counsel for the parties. 3. The Assessing Officer initiated penalty proceedings invoking his powers under Section 271(1)(C) of the I. T. Act. The assessee filed a detailed reply to the show cause notice. Thereafter the Assessing officer dropped the proceedings by passing a one sentence order which reads as heredunder: "Order under Sec.271C In view of the explanation submitted by the assessee and on the....

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....enue, he may after giving an opportunity to the assessee and after making such equity as it deems necessary pass such order thereon as the circumstances of the case justify, including an order enhancing or modifying the assessment or cancelling the assessment and directing a fresh assessment. Relying upon the above Section he contends that, if the penalty proceedings had not been initiated by the Assessing Officer and no orders had been passed by the Assessing officer, the Commissioner cannot exercise powers under Section 263(1) of the Act. It an order has been passed by any office under the Income Tax Act and it the Commissioner is of the opinion the order passed by the Assessing Officer is erroneous and is prejudicial to the interest of t....