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TMI Blog2010 (9) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the assessment in exercise of powers under section 263, where the Commissioner of Income-tax finds that the Assessing Officer had not initiated penalty proceedings, he cannot direct the Assessing Officer to initiate penalty proceedings under section 271(1)(c) of the Act - Decided in favour of the assessee - 225 of 2003 - - - Dated:- 10-9-2010 - ADARSH KUMAR GOEL, AJAY KUMAR MITTAL, JJ. JUDGMENT Ajay Kumar Mittal J.- 1. This appeal has been filed by the Revenue under section 260A of the Income-tax Act, 1961 (in short "the Act"), against the order dated May 5, 2003, passed by the Income-tax Appellate Tribunal, Chandigarh Bench "B", Chandigarh (hereinafter referred to as "the Tribunal"), in I. T. A. No. 149/Chandi/99 for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eling aggrieved, the matter was taken up in appeal by the assessee and the Tribunal, vide order dated May 5, 2003, set aside the order of the Commissioner of Income-tax holding that the Commissioner of Income-tax cannot direct the Assessing Officer to initiate penalty proceedings under section 271(1)(c) as the same were not part of the assessment proceedings. Hence, the present appeal by the Revenue. 3. We have heard learned counsel for the parties. 4. The issue involved in this appeal has two facets. Firstly, when the Assessing Officer, while passing the assessment order under section 143(3) of the Act, had given an office note that the surrender of the agricultural income which was made by the assessee was subject to no penal acti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no documentary evidence against the assessee except the report of the Inspector. Once that was so, the Department could not take a somersault and seek to levy penalty. 7. A Division Bench of this court in Banta Singh Kartar Singh v. CIT [1980] 125 ITR 239 (P H) relying upon the Bombay High Court decision in Jivatlal Purtapshi v. CIT [1967] 65 ITR 261 (Bom) had an occasion to consider as to whether an agreement between assessee and the income-tax authorities arrived at regarding the imposition of penalty while surrendering the income was to be acted upon or not. It was observed that an order based on an agreement cannot give rise to grievances and the same cannot be agitated. 8. Accordingly, it could not be said that the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ribunal has pointed out, though it is usual for the Income-tax Officer 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 course of the proceedings for assessment. It is sufficient if there is some record somewhere, even apart from the assessment order itself, that the Income-tax Officer has recorded his satisfaction that the assessee is guilty of concealment or other default for which penalty action is called for. Indeed, in certain cases it is possible for the Income-tax Officer to issue a penalty notice or initiate penalty proceedin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the same High Court in Addl. CIT v. Kantilal Jain [1980] 125 ITR 373 (MP) and Addl. CWT v. Nathoolal Balaram [1980] 125 ITR 596 (MP) has adopted diametrically the 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 the Madhya Pradesh High Court. 13. Accordingly, it is held that the initiation of proceedings under section 263 was not justified. The Tribunal was right in holding that after examining the records of the assessment in exercise of powers under section 263, where the Commissioner of Income-tax finds that the Assessing Officer had not initiated penalty proceedings, he cannot direct the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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