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2022 (12) TMI 336 - ITAT DELHIRevision u/s 263 by CIT - Bogus share transactions - AO has dropped the penalty proceedings u/s 271(1)(c) - failure to levy penalty was because the assessee surrendered an income - capital gain surrendered u/s 143(3) - HELD THAT:- Facts on record and even the notesheet entry made by the Ld. AO would reveal that the explanation offered by the assessee in penalty proceedings was acceptable to the Ld. AO. If that be so, dropping of penalty proceedings initiated by him cannot be branded as erroneous - when the Ld. AO examined and considered the issue of imposing the impugned penalty or not, though not mentioned in so many words, his decision to drop the penalty proceedings cannot be said to be erroneous. A mere possibility of a different view does not justify assumption of revisional jurisdiction. Decision by the Ld. AO not to levy penalty and drop the penalty proceedings cannot be said to be prejudicial to the interest of the Revenue as penalty which is not levied cannot be put on par with income that has not been brought to tax. Hon’ble Supreme Court has observed in Malabar Industrial Co. Ltd. [2000 (2) TMI 10 - SUPREME COURT] that the scheme of the Act is to levy and collect tax in accordance with the provisions of the Act and this task is entrusted to the Revenue. If due to an erroneous order of the AO, the Revenue is losing tax lawfully payable by a person, it will certainly be prejudicial to the interest of Revenue. In the case before us the Ld. AO has collected tax and interest relatable to the impugned addition. Assessment and penalty proceedings are distinct and separate. To our mind, when the Ld. AO has dropped the penalty proceedings after due consideration of facts and circumstances of the case, the direction of the Ld. Pr. CIT to consider levying penalty under section 271(1)(c) afresh was not in order. We are of the view that in the case before us the twin conditions to assume jurisdiction suo moto by the Ld. Pr. CIT, namely that the order of the Ld. AO is erroneous in so far as it is prejudicial to the interest of Revenue are not satisfied. In CIT vs. Subhash Kumar Jain [2010 (9) TMI 772 - PUNJAB AND HARYANA HIGH COURT] held that where failure to levy penalty was because the assessee surrendered an income, subject to no penalty being levied, there can be no justification for a revisional order for purposes of levy of penalty. The impugned order of the Ld. Pr. CIT under section 263 of the Act is hereby vacated. - Decided in favour of assessee.
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