TaxTMI 
TaxTMI 
2026 (9) TMI 315
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....d to as the "Act") and relates to Assessment Year (A.Y.) 2021-22. 2. The assessee has challenged the Revision order passed by the Ld. PCIT on the following grounds: "1. The Ld. PCIT erred on facts and in law in invoking provisions of section 263 of the Act without any justification. 2. The Ld. PCIT erred on facts and in law in holding the assessment order passed u/s 143(3) to be erroneous and prejudicial to the interests of the revenue. 3. The Ld. PCIT erred on facts and in law in holding that the Assessing Officer while making addition of Rs. 2,01,00,000/- on account of non genuine contract expenses erred in not initiating penalty u/s 271AAD of the Act without appreciating that addition of Rs. 2,01,00,000/- is....
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....he Ld. PCIT directed the Assessing Officer to modify the assessment in the following words: "The error in the assessment order has resulted into loss of revenue to the extent of initiation and levy of penalty under section 271AAD of the Act. The order passed by the Assessing Officer is, thus, erroneous and prejudicial to the interest of the Revenue to the extent of levy of penalty under section 271AAD of the Act. Therefore, provisions of section 263 of the Act are applicable in this case. 8. Hence, in exercise of power conferred in me u/s.263 of the Act, the A.O. is directed to initiate and levy penal proceedings under section 271AAD of the Act. However, the A.O. may levy penalty under section 271AAD of the Act or may keep....
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.... the aggregate amount of such false or omitted entry. (2) Without prejudice to the provisions of sub-section (1), the Assessing Officer or the Joint Commissioner (Appeals) or the Commissioner (Appeals) may direct that any other person, who causes the person referred to in sub-section (1) in any manner to make a false entry or omits or causes to omit any entry referred to in that sub-section, shall pay by way of penalty a sum equal to the aggregate amount of such false or omitted entry. Explanation.-For the purposes of this section, "false entry" includes use or intention to use- (a) forged or falsified documents such as a false invoice or, in general, a false piece of documentary evidence; or (b) invoice ....
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.... case he is satisfied to do so. 9. The extent of power of the Commissioner/Principal Commissioner to direct initiation of penalty proceedings has been examined by various Courts and Benches of this Tribunal several of which have been cited by the assessee's Counsel before us. 10. Our attention has been drawn in particular to the decision of the Hon'ble Gujarat High Court in CIT vs. Dr. Suresh G. Shah [2007] 289 ITR 110 (Gujarat). The relevant observations and the decisions of the Hon'ble High Court are quoted below: "3. The short facts necessary for disposal of the present reference are that the Assessing Officer assessed the total income for the current year 1986-87 at Rs. 2,02,240 under section 143(3) of the Income-tax Act.....
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....gh the assessing authority by exercising revisional powers. 5. In view of the authoritative pronouncement by this court, the question will have to be answered against the interest of the Revenue and in favour of the assessee. It is accordingly answered. The reference stands disposed of. No costs." 11. The counsel of the assessee has also invited our attention of decision of ITAT Ahmedabad Bench in the case of Air Wind Green Energy Limited vs. PCIT, Ahmedabad-1 in ITA No. 615/Ahd/2025. In that case the Ld. PCIT sought to revise the assessment order on the ground that the A.O. had erred in not initiating penalty proceedings u/s. 270A(9) of the Act. The Co ordinate Bench of the Tribunal held as under: "6. We have gone thro....
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....therefore, that assessment proceedings are separate from penalty proceedings the Hon'ble High Court held the assessment order cannot be held to be erroneous for not having initiated penalty proceedings therein. This proposition of law has been reiterated by the ITAT in the case of Vijay Vikas Gupta(supra) & Mikuni India (P) Ltd. (supra). 7. Since the judicial position on this issue is in favour of the assessee and no contrary view of any higher judicial authority has been brought to our notice, we hold that the order passed in the present case u/s. 263 of the Act directing initiation of penalty u/s 270A of the Act in the assessment order made in the case of the assessee, is beyond the powers prescribed as per law. The order pas....