TaxTMI 
TaxTMI 
2023 (2) TMI 1424
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....n of penalty u/s 270A of the Act by itself was prejudicial to the interest of the Revenue, without forming an independent prima face belief that the initiation of penalty proceeding can result in imposition of penalty w/s 270A of the Act. 4. That when there are two views possible on whether the Ld. A.O. is bound to initiate proceedings for imposition of penalty in every case where an addition is made by the A.O. in the course of assessment, the Pr CIT erred in holding the Assessment order to the erroneous. 5. The Ld. Pr CIT erred in directing the A.O. to initiate proceedings for imposition of penalty, when the A.O. has the discretion to initiate penalty proceedings. The authority to initiate proceedings for imposition of penalty is with the A.O. alone, who has to form a belief that the addition made in the course of assessment is a fit case for examination as to whether penalty is impossible. Where the A.O. has formed a belief that the addition made in the course of assessment does not even warrant initiation of proceedings for imposition of penalty, the Pr CIT, though a supervisory authority to the A.O., could not have stepped into the shoes of the A.O. to have d....
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....e of facts by the assessee in the return of income and for in the course of assessment proceedings cannot give immunity from revisional Jurisdiction of the CIT/ Pr. CIT u/s 263. 1. In this context, it may be mentioned here that in the cases of CIT vs. Smt. Kiran Jaiswal, CIT vs. Ganeshi Lal Ram Krishna and CIT Vs. Surendra Prasad Agarwal (2005) 275 IT 113 (All), the Hon'ble Allahabad High Court held that the omission of the AO to initiate penalty proceedings during the course of the assessment renders the assessment order erroneous and prejudicial to the interest of the revenue. In such factual background, I am of the considered view that the impugned assessment was made by the AO is erroneous in so far as it is prejudicial to the interests of the revenue. 5. As per amended law, Explanation 2 clause (a) below section 263(1) of the Act, any assessment made without conducting requisite enquiry and verification by the AO is erroneous in so far as it is prejudicial to the interests of revenue. Even under pre-amended law, SC in the case of Smt. Tara Devi Agarwal (88 ITR 0323] and also Rampyari Devi Saraogi (67 IT 0084] have held that any assessment completed withou....
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....ssessee that all material facts were disclosed before the Assessing Officer. It was further submitted that case of the assessee falls within the exclusion mentioned u/s 270A(6) of the Act and therefore addition made cannot be considered as under reporting of the income for the purpose of section 270A of the Act and it was possible that Assessing Officer had after considering the fact of the case and exclusion mentioned 270A(6) of the Act, arrived at the decision that the assessee was not liable for initiating the penalty proceedings. But we find that there is no such whisper in the assessment order or in the assessment record that case falls under exclusion mentioned in section 270A(6) of the Act. Further, we find that in the case of Addl. CIT v. J.K. D's Costa (supra), the Hon'ble High Court has held penalty proceedings do not from part of assessment proceedings and failure of the Assessing Officer or ITO to record in the assessment order, his satisfaction or lack of it in regard to the leviability of the penalty, cannot be said to be a factor vitiating the assessment order in any respect. The Hon'ble Delhi High Court in the case of Achal Kumar Jain (supra) following t....
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....f the revenue because of the failure of the Income Tax Officer to record his opinion about the leviability of penalty in the case. It has held as follows: " .. The only question before us is whether the Tribunal was right in revoking the order of the Addl. Commissioner in so far as it pertains to the question of penalties under sections 271(1)(a) and 273(b). Here, we find ourselves in complete agreement with the view taken by the Tribunal. It is well established that procecdings for the levy of a penalty whether under section 271(1)(a) or under section 273(6 ) 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 section 263 is concerned, it refers to a particular proceeding that is being considered by the Commissioner and it is not possible when the Commissioner 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 Commissioner. There is no identity between the assessment proce....
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....radesh High Court has taken a contrary view in the case of Addl. CIT v. Indian Pharmaceuticals [1980] 123 ITR 874; Addl. CIT v. Kantilal Jain [1980] 125 ITR 373 (MP); Addl. CWT v. Nathoolal Balaram [1980] 125 ITR 596 (MP) and CIT v. Narpat Singh Malkhan Singh [1981] 128 ITR 77 (MP). 12. This court in the case of Saraya Distillery [1978] 115 ITR 34 has held that an order can be said to be erroneous either when it does not decide a point or record a finding on an issue which ought to have been done or decides it wrongly. In the aforesaid case the Assessing Officer had not charged interest while passing the assessment order. This court following the decision of the Kerala High Court in the case of CIT v. Cochin-Malabar Estates Ltd. [1974] 97 ITR 466 and the Calcutta High Court in the case of Singho Mica Mining Co. Ltd. v. CIT [1978] 111 ITR 231 has held that the order passed by the Income-tax Officer being prejudicial to the interests of the Revenue, the Additional Commissioner had jurisdiction under section 263 to pass the order. The Madhya Pradesh High Court in the case of Indian Pharmaceuticals [1980] 123 ITR 874 after referring to the decision of the apex court in the cas....
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....to the leviability of penalty cannot be a factor vitiating the assessment orders." 6.1 Thereafter, Hon'ble High Court in para 18 held as under: "18. It is well established that the Assessing Officer has to initiate proceedings for imposition of penalty during the course of the assessment itself. If he fails to initiate or record his satisfaction for the initiation of the penalty proceedings during the course of the assessment proceedings it would be a case where the assessment order can be said to be erroneous as he has not decided a point nor recorded a finding on an issue which ought to have been done or decides it wrongly as held by this Court in the case of Saraiya Distillery (supra). Thus the omission of the Income Tax Officer to initiate penalty proceedings during the course of the assessment renders the assessment order erroneous and prejudicial to the interest of the Revenue. 19. In this view of the matter, we are in respectful agreement with the view taken by the Madhya Pradesh High Court in the case of Indian Pharmaceuticals (supra). 20. In view of the foregoing discussions we are of the considered opinion that the Tribunal was not justif....