TaxTMI 
TaxTMI 
2021 (12) TMI 746
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....) of the Act. This order was challenged before CIT(A) and consequently before Tribunal and Tribunal in ITA No.2079/Mum/2015 for the Assessment Year 2010-11 vide order dated 24.04.2017 remanded the matter back to the file of the Assessing Officer. The Assessing Officer while giving appeal effect to the order of the Tribunal passed appeal effect order under section 143(3) read with section 254 of the Act vide order dated Nil, the impugned order before CIT(A), which is subject matter of revision under section 263 of the Act by PCIT. 3. The only issue in this appeal of assessee is against the order of PCIT passing revision order. The first issue raised is as regards to the legality or validity of the revision order passed by PCIT under section 263 of the Act and directing the Assessing Officer to initiate the penalty proceedings under section 271(1)(c) of the Act. For this, assessee has raised the following ground No. 2, which read as under: - "2. Order passed under section 263 is bad in law and needs to be quashed as void ab initio 2.1 On the facts and in the circumstances of the case and in law, the Ld. PCIT has erred in passing the order under section 263 of the Income-tax Act,....
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....o these income, no deduction was allowed in respect of manufacturing and other expenses debited to the Profit and Loss A/c. Penalty proceedings u/s. 271(1)(c) of the Income-tax Act, 1961 was also initiated for furnishing inaccurate particulars of income/concealment of income. This assessment order was confirmed by the Ld. CIT(A) vide appellate order no. CIT(A)-22/ITO- 10(3)(1)/lT-140/2013-14 dated 16.01.2015. The Hon'ble ITAT vide its order ITA No. 2079/MUM/2015 dated 24/4/2017 had set aside the assessment order to the file of A.O. with the direction to examine the factual matrix and decide the case of the assessee afresh after giving reasonable opportunity to the assessee of being heard. 4. The Assessing Officer passed fresh assessment order in consequence to the order of Hon'ble ITAT referred to above u/s. 143(3) r.w.s. 254 of the Income-tax Act, 1961 dated on 28/12/22018, the assessment was framed on total income of Rs. 2,10,16,919/-. The assessment order was passed without initiating the penalty proceedings u/s. 271(1)(c) of the Income Tax Act, 1961. It is important to mention that in the original assessment order, the penalty proceedings u/s. 271(1)(c) of the Income-....
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....6/Mum/2016 vide order dated 25.10.2017 in the case of Nusrat Mustafa Rasiwala Vs. PCIT. The learned Counsel also relied on the decision of Gujarat High court decision in the case of CIT Vs. Parmanand M. Patel (2005) 278 ITR 3 (Guj). 8. On the other hand, the learned CIT Departmental Representative, Ms. Shailja Rai, however, tried to distinguish these case laws cited by the learned Counsel for the assessee and stated that in the original assessment penalty proceedings under section 271(1)(c) of the Act was initiated. She took us through the original assessment order enclosed in assessee's paper book at pages 2 to 5 and in Para 9. The Assessing Officer has initiated the penalty proceedings under section 271(1)(c) of the Act vide his order dated 26.03.2013. She stated that the Assessing Officer has erred in not initiating the penalty proceeding while giving the appeal effect or passing a set aside assessment order under section 143(3) read with section 254 of the Act vide order dated 28.12.2018. According to the learned CIT Departmental Representative, this set aside assessment framed by Assessing Officer is rightly revised by PCIT. She also relied on the decision of Hon'ble Madhya P....
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....1986] 157 ITR 484/27 Taxman 447 (Raj.), Calcutta in CIT v. Linotype & Machinery Ltd. [1991] 192 ITR 337 (Cal.) and Gauhati in Surendra Prasad Singh v. CIT [1988] 173 ITR 510/40 Taxman 346 (Gau.) whereas dissenting with the diametrically opposite approach of Madhya Pradesh High Court in Addl. CIT v. Indian Pharmaceuticals [1980] 123 ITR 874 (MP.), Addl. CIT v. Kantilal Jain [1980] 125 ITR 373/[1981] 5 Taxman 92 (MP.) and Addl. CWT v. Nathoolal Balaram [1980] 125 ITR 596/3 Taxman 170 (MP.) had concluded that where the CIT finds that the Assessing Officer had not initiated penalty proceedings under Section 271(1)(c) of the Act in the assessment order, he cannot direct the Assessing Officer to initiate penalty proceedings under Section 271(1)(c) of the Act in exercise of revisional power under Section 263 of the Act. The relevant observations recorded therein read thus:- "9. Now adverting to the second limb, it may be noticed that the Delhi High Court in judgment reported in Addl. CIT vs. J.K.D.'Costa (1981) 25 CTR (Del) 224 : (1982) 133 ITR 7 (Del) has held that the CIT cannot pass an order under s. 263 of the Act pertaining to imposition of penalty where the assessment order un....
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.... decision was dismissed by the Apex Court ((1984) 147 ITR (St) 1. The same view was reiterated by the Delhi High Court in CIT vs. Sudershan Talkies (1993) 112 CTR (Del) 165 : (1993) 201 ITR 289 (Del) and followed in CIT vs. Nihal Chand Rekyan (1999) 156 CTR (Del) 59 : (2000) 242 ITR 45 (Del). The Rajasthan High Court in CIT vs. Keshrimal Parasmal [1985] 48 CTR (Raj) 61 : [1986] 157 ITR 484 (Raj), Gauhati High Court in Surendra Prasad Singh & Ors. vs. CIT (1988) 71 CTR (Gau) 125 : (1988) 173 ITR 510 (Gau) and Calcutta High Court in CIT vs. Linotype & Machinery Ltd. (1991) 192 ITR 337 (Cal) have followed the judgment of Delhi High Court in J.K.D's Costa's case (supra). 11. However, Madhya Pradesh High Court in Addl. CIT vs. Indian Pharmaceuticals (1980) 123 ITR 874 (MP) which has been followed by the same High Court in Addl. CIT vs. Kantilal Jain (1980) 125 ITR 373 (MP) and Addl. CWT vs. Nathoolal Balaram (1980) 125 ITR 596 (MP) has adopted diametrically opposite approach. 12. We are in agreement with the view taken by the High Courts of Delhi, Rajasthan, Calcutta and Gauhati, and express our inability to subscribe to the view of Madhya Pradesh High Court. 13. According....
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....nce in the course of the proceedings, the Income-tax Officer has not issued notice of penalty proceedings, the entire assessment has to go. The Commissioner himself cannot initiate the penalty proceedings because they have to be commenced 'in the course of any proceedings, in connection with the regular assessment' by the Income-tax Officer, if he is 'satisfied' 'that any assessee has furnished under section 212 an estimate of the advance tax payable by him which he knew or had reason to believe to be untrue' under section 273(a). Section 275 enacts a bar of limitation for imposing penalty. Penalty proceedings can be commenced only on the completion of the assessment proceedings. They must be concluded within two years from commencement. This shows that the Legislature attaches the greatest importance to the time-limit of two years after which no order for penalty can be passed. But the Commissioner by cancelling the assessment and directing a fresh assessment will open the door to the Income-tax Officer to start everything de novo. Even then the Income-tax Officer may say: 'I find no case for the imposition of penalty.' With this the Commissioner ma....