2023 (1) TMI 1014 - AT - Income Tax
Revision u/s 263 - AO had failed to enquire into the applicability of the provisions of section 56(2)(viib) - initiate penalty proceedings u/s 271F - whether the Assessing Officer had examined the applicability of provisions of section 56(2)(viib) relates to the receipt of share premium in question? - HELD THAT:- Appellant filed an explanation stating that the provisions of section 56(2)(viib) have no application to the facts of the present case, not being the company in which the public are substantially interested. Whereas the fact is that the appellant is a company in which the public are not substantially interested. Thus, it is apparent that the Assessing Officer accepted the claim, on the wrong premises. Therefore, the assessment order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue. To this extent, we confirm the power of revision exercised by the ld. PCIT u/s 263 of the Act.
As regards to the direction of the PCIT to the AO to initiate the penalty proceedings u/s 271F of the Act, it is settled position of law that the penalty proceedings should be initiated based on the satisfaction reached by the Assessing Officer and the penalty proceedings cannot be initiated at the instance of the higher authorities. Moreover, we find that the penalty proceedings u/s 271F is independent of the assessment proceedings. Therefore, the ld. PCIT in exercise the power of revision vested with him u/s 263 cannot direct the Assessing Officer to initiate the penalty proceedings u/s 271F of the Act. On this score, the order of revision passed by the ld. PCIT is quashed. Appeal filed by the assessee is partly allowed.