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2016 (10) TMI 216 - ITAT PUNE

2016 (10) TMI 216 - ITAT PUNE - TM - Revision u/s 263 - as per Commissioner Assessing Officer has failed to initiate penalty proceedings under section 271(1)(c) of the Act on the addition of ₹ 2,20,72,000/- to the total income - Held that:- In the case Addl. CIT v. J.K. D'Costa [1981 (4) TMI 68 - DELHI High Court ] it has been held that if the Commissioner finds, while examining the records of an assessment order under section 263, that the Assessing Officer has not initiated penalty proce .....

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For The Appellant : Shri Kishor Phadke For The Respondent : Shri A. S. Singh (CIT) ORDER PER PRADIP KUMAR KEDIA, AM : The captioned appeal filed by the assessee is directed against the order of the Commissioner of Income Tax-V, Pune (in short the Commissioner ), dated 28.03.2014 whereby the assessment order passed by the Assessing Officer in relation to assessment year 2009-10 passed under section 143(3) of the Income Tax Act, 1961 (in short the Act ) dated 26.12.2011 was held to be erroneous in .....

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on 29.10.2009 showing income of ₹ 28,72,910/- and thereafter a revised return was filed on 14.10.2010 declaring total income of ₹ 95,55,430/-. The Assessing Officer, while framing the assessment under section 143(3) based on revised return, made certain additions on account of creditors appearing in the Balance Sheet of the assessee to the tune of ₹ 2,20,72,000/- in aggregate. In respect of such addition, the Assessing Officer noted that amount of ₹ 25,72,000/- and ͅ .....

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the assessee. No penalty proceedings under section 271(1)(c) of the Act were initiated in respect of various additions made to the admitted income. 3. The Commissioner considered the assessment order to be erroneous and prejudicial to the interests of the Revenue. Accordingly, he issued show-cause notice under section 263 of the Act dated 07.03.2014 to the assessee. The relevant extract of the show-cause notice issued by the Commissioner under section 263 is reproduced hereunder :- Sub : Notice .....

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7; 75,50,000/- and ₹ 1,19,50,000/- as per discussion made in Para 4.2, 4.3 & 4.7 respectively to the Returned income of ₹ 95,55,430/-. All the above additions have been made as per the Assessment Order on the basis of the details appearing in respect of Creditors in the Balance Sheet. From the perusal of the Balance Sheet appearing on the record having a total of ₹ 169981840.47 on both the Asset and the Liability side, it can be seen from the details of the Liability side t .....

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eet is included under which grouping. The AO has thereafter proceeded to discuss these new grouping to arrive at different additions described above. In view of the aforesaid appearing in the records, it is clear that the AO has not completed the assessment after proper verification and reconciliation. He has not carried out the necessary verifications and scrutiny as was demanded by the materials available in record before him in this case. 3. In addition to the above, the Asset side of the Bal .....

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m the reasons given below are not tallying with the Closing Balance shown in the break up. These are as under : 1. P K Patel - confirmation is given of ₹ 12,50,000/-, where as liability in balance sheet is shown at ₹ 50,00,000/-. 2 . Dinesh Patel - Confirmation for purchase of land, but neither appearing in debtor or creditor list. 3. Naresh Patel - Confirmation given of 12.50 lacs but in the list it is only 10 lacs. 4. Sunil Patel - Confirmation given for purchase of land of ₹ .....

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land. 7. Babusha Kalbhor - confirmation given for 35.25 lacs for purchase of land, but it appearing as current liability and not as advance against land. 8. Laccharam Choudhary - Confirmation given for ₹ 7,00,000/- against purchase of land, but the amount appearing in the balance sheet in the list is ₹ 4,00,000/-. 9. Sukhram chowdhary - Confirmation given for ₹ 3,50,000/- but it is not appearing in debtor or creditor list. 10. Nilesh Patel - Confirmation given for purchase of .....

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ds correctly and properly. He has also erred in not initiating the penalty proceeding u/s. 271(1)(c) of the Income Tax Act. For all the aforesaid reasons it appears that the assessment completed by the AO for A.Y. 2009-2010 was erroneous in so far as it is prejudicial to the interest of revenue. 4. After considering the reply of the assessee, The Commissioner was of the view that the impugned assessment order under section 143(3) dated 26.12.2011 is erroneous in so far as it is prejudicial to th .....

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rred in law and on facts in assuming jurisdiction u/s 263 of the ITA, 1961 on the analogy that the 143(3) order dated 26/12/2011 was erroneous and prejudicial to the interest of revenue. 2. The learned CIT-V, Pune erred in law in setting aside the assessment order u/s 143(3) assuming the same as incomplete and erroneous as it was completed in haste and without examining and dealing with the relevant details apparent from record. The learned CIT - V, Pune erred in law and on facts in directing le .....

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of mind and avoid litigations. 5. The appellant craves leave to add / modify / alter / delete all / any of the grounds of appeal. 6. The Ld. Authorized Representative (AR) for the assessee Shri Kishor Phadke at the outset submitted that the assessment order has already been reframed in terms of the directions under section 263 vide order dated 19.03.2015. However, the assessment has been framed broadly on the similar lines as that of earlier order except for another small addition of ₹ 3, .....

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d upon the latest decision of the Hon ble Punjab & Haryana High Court in the case of CIT vs. Rakesh Nain Trivedi, 282 CTR 205 (P&H) for the proposition that non-initiation of penalty proceedings by the Assessing Officer in the course of assessment proceedings would not render the order erroneous and prejudicial to the interests of the Revenue and therefore such order cannot be subject-matter of revision under section 263 of the Act on this ground. He, thereafter, referred to the decision .....

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r of cases of different High Courts for and against, has been taken into account. The Ld. AR, drawing analogy from the decision of the Hon ble Bombay High Court in the case of CIT vs. Gabriel India Ltd., 203 ITR 108 (Bom.), sought to contend that the conclusion of the Assessing Officer in not initiating the penalty proceedings in the facts of the case cannot be termed as erroneous simply because the Commissioner does not agree with his conclusion. The additions were made with reference to offer .....

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Corporation (supra) as referred to by the Commissioner and submitted that the impugned direction of the Commissioner to consider the initiation of penalty proceedings while setting-aside the assessment order is within the bounds of law and therefore cannot be assailed. 8. We have carefully heard the rival submissions and perused the record. In exercise of power conferred under section 263 of the Act, the Commissioner has set-aside the assessment for framing it afresh inter-alia on the ground tha .....

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iled to initiate penalty proceedings under section 271(1)(c) of the Act in the assessment proceedings ? We find that this question has been deliberated upon in large number of judicial precedents and is no longer res integra. In the case Addl. CIT v. J.K. D'Costa [1982] 133 ITR 7 (Delhi) followed in ACIT v. Achal Kumar Jain (142 ITR 606) and CIT v. Nihal Chand Rekyan [2000] 242 ITR 45 (Delhi) and in Addl.CIT v. Sudarshan Talkies (1993) 200 ITR 153 (Delhi); also by Hon'ble Madras High Cou .....

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