TaxTMI 
TaxTMI 
2022 (8) TMI 623
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.... made. 3. The appellant craves to alter, amend and modify any ground of appeal. 4. Necessary cost be awarded to the assessee." 2. The brief facts of the case are that the assessee appellant filed his return of income on 30.06.2018 declaring total income of Rs.3,54,880/-. A search was conducted on the assessee on 15.11.2017. AO framed the assessment for AY 2012-13 to 2018-19 u/s 143(3) read with section 153A of the Act and initiated the penalty proceedings as under:- AY Date of Order Returned Income Assessed Income Section under which penalty proceedings initiated 2012-13 23.12.2019 2,44,890/- 8,04,780/- 271(1)(c) 2013-14 23.12.2019 2,64,020/- 2,64,020/- - 2014-15 23.12.2019 2,96,110/- 5,84,930/- 271(1)(c) 2015-16 23.12.2019 3,02,280/- 6,73,610/- 271(1)(c) 2016-17 23.12.2019 3,54,880/- 4,79,883/- 271AAB(1A) 2017-18 23.12.2019 10,55,830/- 24,22,010/- 271AAC and 271A 2018-19 23.12.2019 3,81,510/- 78,68,107/- 271AAB(1A) and 271AAC 3. The Ld. PCIT issued notice u/s 263 dt.03.03.2022 stating that the assessment order passed by AO is considered as....
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....est of the revenue. 6. I have examined the facts at hand and have studied the position of law. I have studied the reply of the taxpayer. The error caused by the Assessing Officer resulting in prejudice to Revenue has been detailed in the Show Cause Notice issued to the taxpayer as reproduced in this order. An examination of order of the Assessing Officer makes it clear to me that he did not take a conscious decision relating to non-initiation / incorrect initiation of penalty, as detailed in the show cause notice. He had always wanted to initiate the penalty under the rightly applicable provisions of the Income Tax Act, 1961. It was an inadvertent error on AO's part whereby the penalty which had to be initiated, and which he had wanted to initiate, was not done. Clearly, this error has caused prejudice to Revenue. I do not agree with the proposition of the taxpayer that the Assessing Officer had consciously chosen not to initiate / levy the penalty in question. It has been brought forth that penalty which needed to have been initiated remained uninitiated in the assessment order. If penalty is not initiated at the time of assessment order, then the same cannot....
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....n statement u/s 132(4), however, the assessee has not included Rs.1,25,000/- in the return filed u/s 153A, therefore, penalty proceedings u/s 271AAB(1A) is initiated accordingly." Thus, AO has taken conscious decision to initiate the penalty proceedings u/s 271AAB(1A) of the Act. It may be noted that both u/s 271(1)(c) and u/s 271AAB it is the AO who is to satisfy himself whether on the additions made, penalty proceedings is required to be initiatedor not and also the section under which it is to be initiated. Section 263 of the Act do not give any power to CIT to impose his satisfaction over the satisfaction of AO as to whether the penalty proceedings are toinitiated or not and if initiated under which section/ clause. 2. It may be noted that u/s 263, where the Commissioner finds while examining the records of an assessment order that AO has not initiated penalty proceedings, he cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. Therefore, the Commissioner cannot pass an order u/s 263 pertaining to penalty. In this connection, reliance is placed on the following cases:- CIT Vs. Rakesh Nain ....
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....l established that proceedings for the levy of a penalty whether under s. 271(1)(a) or under s. 273(b) are proceedings independent of and separate from the assessment proceedings. Though the expression "assessment" is used in the Act with different meanings in different contexts, so far as s. 263 is concerned, it refers to a particular proceeding that is being considered by the CIT and it is not possible when the CIT is dealing with the assessment proceedings and the assessment order to expand the scope of these proceedings and to view the penalty proceedings also as part of the proceedings which are being sought to be revised by the CIT. There is no identity between the assessment proceedings and the penalty proceedings; the latter are separate proceedings, that may, in some cases, follow as a consequence of the assessment proceedings. As the Tribunal has pointed out, though it is usual for the ITO to record in the assessment order that penalty proceedings are being initiated, this is more a matter of convenience than of legal requirement. All that the law requires, so far as the penalty proceedings are concerned, is that they should be initiated in the Court of the proceedings fo....
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....nder s. 263 was not justified. The Tribunal was right in holding that after examining the record of the assessment in exercise of powers under s. 263, where the CIT finds that the AO had not initiated penalty proceedings, he cannot direct the AO to initiate penalty proceedings under s. 271(1)(c) of the Act." 7. In view of the above, equally we are unable to subscribe to the view adopted by Allahabad High Court in Surendra Prasad Aggarwal's case (supra) where judgment of Madhya Pradesh High Court in Indian Pharmaceuticals' case (supra) noticed hereinbefore has been concurred with. 8. Accordingly, it is held that the initiation of proceedings under s. 263 of the Act was not justified and we uphold the order of the Tribunal cancelling the revisional order passed by the CIT. CIT Vs. KeshrimalParasmal (1986) 157 ITR 484 (Raj.) (HC) (PB 7-10) CIT in revision is not entitled to set aside the assessment order on the ground of non-mention of initiation of penalty proceedings. Also, he cannot direct the ITO to make fresh assessment to initiate penalty proceedings. Thus, the order of Tribunal cancelling CIT's order u/s 263 whereby the CIT set as....