TMI Blog2017 (9) TMI 1579X X X X Extracts X X X X X X X X Extracts X X X X ..... The Assessee : Shri Sanjay R.Parikh, C.A For The Department : Shri Arju Garodia ORDER PER C.N. PRASAD (JM) 1. These appeals are filed by the assessee against the orders of the Learned Commissioner of Income Tax -16 Mumbai dated 27.03.2017 for the Assessment Years 2010-11, 2011-12 and 2012-13 passed u/s. 263 of the Act. 2. In all these appeals the assessee raised the following common grounds: - A) Principles of natural justice violated 1) The Learned Commissioner of Income Tax 16, Mumbai (CIT) erred on facts and in law in passing an order u/s. 263 without serving a show cause notice on the appellant and hence the order u/s. 263 is bad in law. 2) The appellant prays that the order u/s. 263 passed by the CIT without serving a notice on the appellant, may be held to be bad in law. B) Without Prejudice, holding that the order u/s. 143(3) r.w.s. 147 is erroneous and prejudicial to the interest of the revenue. 3) Without prejudice to the above, the learned CIT erred on facts and in law in holding that the order u/s. 143(3) r.w.s. 147 is bad in law in as much as the AO failed to initiate penalty proceedings u/s. 271(1)(C) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of the Hon'ble Supreme Court in the case of CIT v. Vegetable products [82 ITR 1]. 6. We have heard the rival submissions, perused the order of the Learned Commissioner of Income Tax and decisions relied upon. In this case the assessments for the Assessment Years 2010-11, 2011-12 and 2012-13 were completed u/s. 143(3) r.w.s. 147 of the Act on 31.03.2015. While completing the reassessments the Assessing Officer made addition towards notional income from house property, disallowance u/s. 14A and addition towards unsecured loans for the Assessment Year 2012-13 and disallowance under section 14A and addition towards notional income from house property and disallowance u/s. 14A for the Assessment Year 2010-11. The Assessing Officer did not initiate penalty proceedings u/s. 271(1)(c) of the Act at the disallowance/addition made in the Assessment Orders. According to the Learned Commissioner of Income Tax the Assessing Officer should have initiated penalty proceedings u/s. 271(1)(c) of the Act and since he has not initiate penalty proceedings he held that the omission on the part of the Assessing Officer to initiate penalty proceedings during the course of assessment has ren ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Courts on the subject. Therefore, following the order of the Hon ble Supreme Court in the case of CIT Vs. Vegetable Products [82 ITR 1], when two views are possible, the view in favour of the Assessee is to be followed. Therefore, respectfully following the decision of the Gujarat High Court in the case of CIT Vs. Paramanand Patel (supra) and the decision of Punjab Haryana High Court in the case of CIT Vs. Subash Kumar Jain (supra) we set aside the order of the Commissioner passed u/s 263 in directing the Assessing Officer to initiate penalty proceedings u/s 271(1)(c) of the Act. 7. In the case of CIT v. Rakesh Nain Trivedi (supra) the Hon'ble Punjab and Haryana High Court concluded that where the Commissioner of Income Tax finds that the Assessing Officer had not initiated penalty proceedings u/s. 271(1)(c) of the Act in the Assessment Order he cannot direct the Assessing Officer to initiate penalty proceedings u/s. 271(1)(c) of the Act in exercising of revisional power u/s 263 of the Act. The Hon'ble High Court held as under: - 5. After hearing learned counsel for the parties, we find the issue that arises for consideration of this Court in this appeal is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der 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 for assessment. It is sufficient if there is some record somewhere, even apart from the assessment order itself, that the ITO has recorded his satisfaction that the assessed is guilty of concealment or other default for which penalty action is called for. Indeed, in certain cases it is possible for the ITO to issue a penalty notice or initiate penalty proceedings even long before the assessment is completed though the actual penalty order cannot be passed until the assessment finali ..... X X X X Extracts X X X X X X X X Extracts X X X X
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