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2018 (6) TMI 1744 - AT - Income TaxRevision u/s 263 - AO initiated penalty proceedings u/s 271AAB without specifying any clause (a), (b) or (c) of section 271AAB(1) - no satisfaction has been recorded by the Ld. Assessing Officer with respect to any default of the assessee in terms of clause (a), (b) or (c) of section 271AAB(1) - HELD THAT:- Certificate issued in terms of clauses of Direct Tax Dispute Resolution Scheme, 2016, the issue regarding levy of penalty U/s 271AAB of the Act got finalize. From the order of the ld. Pr.CIT that during the proceedings U/s 263 of the Act, ld. Pr.CIT has not arrived at a clear and final conclusion that penalty levied by the Assessing Officer @ 10% was not justified in view of the materials collected and statement recorded during the search. Ld. Pr.CIT in his order U/s 263 of the Act has directed that the penalty order dated 20/08/2015 is set aside on this issue with a direction to the A.O. to pass the same in the case of assessee de novo in accordance with law after making the necessary examination and verification regarding issue under discussion. Thus, the ld Pr.CIT had not given clear finding on the issue. The Assessing Officer have levied penalty @ 10% and ld. Pr.CIT wants to levy 30% of penalty U/s 271AAB of the Act. The A.O. has not specified the sub clause in notice. In such a factual situation, in our considered view, the ratio laid down by the Hon'ble Supreme Court in the case of Malabar Industrial Co. Ltd. v. CIT [2000 (2) TMI 10 - SUPREME COURT] that an incorrect assumption of fact or an incorrect application of law will satisfy the requirement of the order being erroneous, shall not be applicable in this case. In absence of a clear cut finding of ld. Pr.CIT on the basis of documents found and seized and statements recorded during the search, the Pr.CIT. was not justified in issuing such direction. The Pr.CIT cannot reach at a conclusion that the provisions of Section 271AAB (1)(c) are applicable in assessee’s case without clear and final finding on this issue. We would also like to hold that once the assessee has preferred the appeal against the order of AO for levy of penalty u/s 271AAB of the Act, there is no scope for the ld. Pr.CIT to invoke the provisions of Section 263 of the Act to cover any legal lacuna. Moreover, in a situation where the assessee has been granted certificate under the Direct Tax Dispute Resolution Scheme, 2016 which continues to be valid then also provisions of Section 263 could not be invoked. We would also like to mention that once the certificate issued under DRS Scheme is withdrawn in future then the appeal of assessee before CIT(A) shall revive. In such a situation also the Pr.CIT shall not have jurisdiction to invoke provisions of Section 263 - Decided in favour of assessee.
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