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2022 (8) TMI 623 - AT - Income TaxRevision u/s 263 - penalty proceedings u/s 271AAB(1A) - As per CIT AO did not take a conscious decision relating to noninitiation/ incorrect initiation of penalty which cause prejudice to the revenue - HELD THAT:- AO has initiated penalty proceedings u/s 271 AAB(1A) with the observations that the amount of investment made by the assessee for purchase of motorcycle in cash is added to his total income treated as unexplained investment u/s 69 and tax is charged as per provisions of section 115BBE. Assessee has offered Rs.1,25,000/- for taxation during search proceedings in statement u/s 132(4), however, the assessee has not included Rs.1,25,000/- in the return filed u/s 153A, therefore, penalty proceedings u/s 271AAB(1A) is initiated accordingly. AR argued that the AO has taken conscious decision to initiate the penalty proceedings u/s 271AAB(1A) of the Act. It may be noted that both u/s 271(1)(c) and u/s 271AAB it is the AO who is to satisfy himself whether on the additions made, penalty proceedings is required to be initiated or not and also the section under which it is to be initiated. The mandate under section 263 of the Act do not give any power to CIT to impose his satisfaction over the satisfaction of AO as to whether the penalty proceedings are toinitiated or not and if initiated under which section/clause. In our view, on examination of assessment record, the PCIT cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. Thus, the PCIT’s revisionary decision relating to non-initiation/incorrect initiation of penalty which without holding that assessment order passed by the AO as erroneous and prejudicial to the interest of revenueis vague and bad in law. Respectfully, following the jurisdictional High Court in the case of “CIT Vs. Keshrimal Parasmal” [1985 (5) TMI 34 - RAJASTHAN HIGH COURT] we hold that the PCIT is not entitled to direct the AO to initiate penalty proceedings. Accordingly, the order passed under s. 263 is quashed. - Decided in favour of assessee.
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