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TMI Blog2016 (7) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... itrary, erroneous, void, invalid and bad in law. 2. On the facts and in the circumstances of the case, the learned CIT erred in holding that while disclosing the sum of Rs. 18.10 crores being written back liability, as undisclosed income, the appellant had submitted the application of the undisclosed income without specifying the manner in which such undisclosed income has been derived. 3. On the facts and in the circumstances of the case, the learned CIT erred in holding that it was mandatory on the part of the AO to initiate penalty proceeding u/s. 271AAA of the Act. 4. On the facts and in the circumstances of the case, the learned CIT erred in holding that the appellant company had not co-operated with the Department during the course of the assessment proceedings. 5. On the facts and in the circumstances of the case, the learned CIT erred in holding that it cannot be a fact that the AO had examined the issue of disclosure made by the appellant as nowhere in the order, the AO had discussed the same, and furthermore, in holding that the AO had not applied his mind on the issue. 6. On the facts and in the circumstances of the case, the learned CIT erred in holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the order is erroneous and prejudicial to the interest of Revenue, is not correct. However the ld. CIT disagreed with the submission of the assessee and observed that the assessee has submitted the application of undisclosed income but the manner in which it was derived was not submitted. So the conditions as enumerated in section 271AAA of the Act has not been fulfilled. The power of the AO under section 271AAA for the levy of the penalty is not discretionary. There was no noting made by the AO that penalty is not leviable. The ld. CIT has made reference and considered the following Judgments to arrive at the conclusion that the order is erroneous and prejudicial to the interest of Revenue, the case laws are reproduced below:- 1) CIT v. Surendra Praszad Agarwal 275 ITR 113 (All) 2) ACIT vs. Saraya Distillery (1978) CTR 382 (All) 3) ACIT vs. Indian Pharmaceuticals (1980) 19 CTR 302 (MP) 4) CIT vs. Cochin Malabar Estates Ltd (1974) 97 ITR 466 (Ker) 5) Singho Mica mining Co. Ltd. vs. CIT (1978) 111 ITR 231 (Cal) 6) C.A Abrham vs. ITO (1961) 41 ITR 425 (SC) Hence, it was mandatory for the AO initiate the penalty proceedings in terms of the provisions of section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1std day of June, 2007 [but before the 1std day of July, 2012], the assessee shall pay by way of penalty, in addition to tax, if any, payable by him, a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year. (2) Nothing contained in sub-section (1) shall apply if the assessee,- (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) pays the tax, together with interest, if any, in respect of the undisclosed income." From a plain reading of the Sec. 271AAA, we find that the penalty will not be attracted under the Section in a case where the assessee fulfills the conditions for claiming immunity from penalty as laid down under sub-clause (2) u/s 271AAA of the Act. The first condition has been fulfilled by assessee for making the disclosure of undisclosed income u/s 132(4) of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evenue-There must be material before the Commissioner to satisfy him, prima facie, that the two requisites are present- Power cannot be exercised at the whims and caprice of Commissioner Held : The power of suo motu revision under sub-s. (1) of s. 263 is in the nature of supervisory jurisdiction and the same can be exercised only if the circumstances specified therein exist. Two circumstances must exist to enable the Commissioner to exercise power of revision under this sub-section, viz., (i) the order is erroneous; (ii) by virtue of the order being erroneous prejudice has been caused to the interest of the Revenue. It has, therefore, to be considered firstly as to when an order can be said to be erroneous. An order cannot be termed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes certain assessment, the same cannot be branded as erroneous by the Commissioner simply because according to him the order should have been written more elaborately. This section does not visualise a case of substitution of judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vant objective factors were available from the records called for and examined by such authority. Any other view in the matter will amount to giving unbridled and arbitrary power to revising authority to initiate proceedings for revision in every case and start re-examination and fresh enquiries in matters which have already been concluded under the law. It is quasi-judicial power hedged with limitation and has to be exercised subject to the same and within its scope and ambit. So far as calling for the records and examining the same is concerned, undoubtedly it is an administrative act, but on examination, "to consider", or in other words, to form an opinion that the particular order is erroneous in so far as it is prejudicial to the interest of the Revenue, is a quasi-judicial act because on this consideration or opinion the whole machinery of reexamination and reconsideration of an order of assessment, which has already been concluded and controversy about which has been set at rest, is again set in motion. It is an important decision and the same cannot be based on the whims or caprice of the revising authority. There must be materials available from records called for by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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