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2017 (8) TMI 475 - AT - Income TaxRevision u/s 263 - unexplained investments - A.O. in the re-assessment order did not initiate penalty proceedings u/s 271(1)(c) - Held that:- In this case, the assessment was completed u/s 143(3) r.w.s. 147 of the Act. A survey u/s 133A of the Act was conducted and during the course of survey, evidence was found regarding unexplained investment in the form of deposits made in the bank account. Consequently re-assessment was made by the A.O. The A.O. in the re-assessment order did not initiate penalty proceedings u/s 271(1)(c) of the Act. Therefore, the CIT called for the record u/s 263 of the Act and held that though it is a prima facie case for initiation of penalty proceedings, the A.O. has not initiated the penalty proceedings. Therefore, held that omission to initiate penalty proceedings during the course of assessment proceedings renders the assessment order erroneous and prejudicial to the interest of the revenue. In the instant case, the CIT has set aside the order u/s 143(3) of the Act only with a limited purpose of initiating penalty proceedings u/s 271(1)(c) of the Act, therefore, the facts of the case relied upon by the assessee are not applicable to the assessee’s case. Hon’ble Allahabad High Court in [2004 (9) TMI 45 - ALLAHABAD High Court] relied upon by the CIT held that non-initiation of penalty proceedings renders the assessment as erroneous and prejudicial to the interest of the revenue. Similarly, in the case of CIT Vs. Ashok Construction Limited [2005 (1) TMI 18 - ALLAHABAD High Court ] held that non-initiation of penalty u/s 271B of the Act render the order erroneous and prejudicial to the interest of the revenue and upheld the revision u/s 263 of the Act. Therefore, we hold that the CIT(A) has rightly exercised the power u/s 263 of the Act and directed the A.O. to initiate penalty proceedings and no interference is called for. Appeal filed by the assessee is dismissed.
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