2018 (12) TMI 823

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....rns of income were filed by the assessee and the Pr.CIT has received the information from service tax authorities indicating the taxable income earned by the assessee for the impugned assessment years. Therefore, the Ld.Pr.CIT has issued a letter dated 10.12.2015 to ascertain status of filing the return of income. In response to the letter issued by the Ld.Pr.CIT, the assessee filed the return of income on 28.03.2016 for all the impugned assessment years with the concerned Assessing Officer (AO). Subsequently, the AO issued notice u/s 148 in response to which the assessee had filed a letter on 28.04.2016 requesting to treat the return of income already filed on 28.03.2016 as a return in response to the notice u/s 148. Since the return filed on 28.03.2016 was invalid, the assessee was asked by the AO to file the e-return, accordingly, the assessee filed the e-return for the A.Ys 2012-13 to 2014-15 as under : A.Y. Income Returned (Rs.) 2012-13 56,36,210 2013-14 1,02,89,884 2014-15 8,62,594 2.1. Subsequently, the cases were converted into scrutiny and the notice u/s 143(2) and 142(1) were issued, to the assessee and completed the assessment on total income f....

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....nd to set aside the order passed by the AO for initiating the penalty proceedings u/s 271(1)(c) of the Act. The Ld.Pr.CIT relied on the decision of this Tribunal in the case of U.V.Ramanamurthy Raju, Visakhapatnam in I.T.A. No.27/Viz/2014 dated 21.06.2017. The Ld.Pr.CIT has also taken support from the following decisions and held that conjoint reading of section 263 and 271 of the Act establishes that the Ld.Pr.CIT is empowered to take action u/s 263 for non initiation of penalty proceedings u/s 271(1)(c) in a suitable case. (a) CIT Vs. Ashok Constructions [280 ITR 368 (Allahabad High Court)] (b) CIT Vs. Surendra Prasad Agarwal [273 ITR 113 (Allahabad High Court)] (c) Star Diamond Tools Vs. ITO [1 ITD 696/14 TTJ 59 (ITAT Mumbai)] 2.3. The Ld.Pr.CIT further observed in this case that the assessee has not filed the return of income for the assessment years under consideration, though the assessee had taxable income. The assessee filed the return of income only after issue of letter of enquiry and notice u/s 148, thus, there is no voluntary return and the case needs to be examined for concealment of income. Since, there is prima facie case for considering....

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....due date for filing the return of income was 30.09.2012, for the A.Y. 2013-14, it was 30.09.2013 and for the A.Y. 2014-15, the it was 30.09.2014 as submitted by the Ld.DR/AR during the appeal hearing. Though the assessee had taxable income and time allowed u/s 139(1) and 139(4) had expired, the assessee did not file the return of income for the A.Y. 2012-13, 2013-14 and 2014-15 before the specified dates. The assessee had filed the returns of income manually before the AO after the receipt of the letter issued by the Ld.Pr.CIT, though it is required to be filed electronically. The assessee filed the return of income on 28.03.2016 manually and later valid return was filed electronically on 29.07.2016 after the issue of notices u/s 148. The above facts clearly show that the assessee is in the habit of not filing the return of income and non-payment of the taxes due to the government. Since the assessee has not filed the return of income though it has taxable income, the AO ought to have initiated the penalty proceedings for concealment of income. Since the AO did not initiate the penalty proceedings, the Ld.Pr.CIT has taken up the case for revision u/s 263 and held that non initiatio....

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....prejudicial to the interests of the revenue, he, may, after giving the assessee an opportunity of being heard and after making or causing to be made such inquiry as he deems necessary, pass such order thereon as the circumstances of the case justify, including an Order enhancing or mod/lying the assessment, or cancelling the assessment and directing a fresh assessment." 8. U/s 263 of the Act, the CIT can call for the record of any proceedings. In the present case, he does so. He called for the record pertaining to the assessment proceedings, examined them and which he is empowered to do. He considered the order of assessment passed therein and found that the provisions of section 271(1)(c) & 273 of the Act have not been invoked. As per the amendment made to the Income, tax Act, the CIT is empowered to initiate penalty u/s 271(1)(c) of the Act. As per section 263 of the Act, the CIT is empowered to pass an order after giving opportunity of being heard to the assessee, such an order as the circumstances of the case justify including an order enhancing or modifying the assessment or cancelling the assessment and directing the fresh assessment. From section u/s 263 of....

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....e said case, the entire assessment was cancelled and set aside the assessment with a direction to the A.O. to reframe the assessment. In the instant case, the CIT has set aside the order u/s 143(3) of the Act only with a limited purpose of initiating penalty proceedings u/s 271(1)(c) of the Act, therefore, the facts of the case relied upon by the assessee are not applicable to the assessee's case. Hon'ble Allahabad High Court in 275 ITR 113 relied upon by the CIT held that non-initiation of penalty proceedings renders the assessment as erroneous and prejudicial to the interest of the revenue. Similarly, in the case of CIT Vs, Ashok Construction Limited 280 ITR 368 of Allahabad High Court held that non-initiation of penalty u/s 271B of the Act render the order erroneous and prejudicial to the interest of the revenue and upheld the revision u/s 263 of the Act Therefore, we hold that the CIT(A) has rightly exercised the power u/s 263 of the Act and directed the A.O. to initiate penalty proceedings and no interference is called for." 5.1. The Ld.AR relied on the decision of Hon'ble High Court of Karnataka in the case of Commissioner of Income Tax & Anr Vs. Manjunatha Cotton ....