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TMI Blog2017 (8) TMI 475X X X X Extracts X X X X X X X X Extracts X X X X ..... nsidered the explanations offered by the assessee in the affidavit and heard both the parties and condone the delay. 3. All the grounds of appeal are related to the direction of the CIT to initiate penalty u/s 271(1)(c) of the Income Tax Act, 1961 (hereinafter called as 'the Act') by exercising the powers u/s 263 of the Act. The assessee filed return of income declaring total income of Rs. 11,25,932/- and agricultural income of Rs. 5,20,000/- on 27.12.2007. Subsequently, the A.O. conducted the survey u/s 133A of the Act on 25.10.2011 and the assessment was completed u/s 143(3) of the Act on total income of Rs. 11,25,932/- excluding the agricultural income. During the course of survey, the A.O. found that a sum of Rs. 22,75,000/- was deposi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y proceedings required to be initiated during the assessment proceedings but not after completion of the assessment proceedings. The A.R. argued that on completion of the assessment proceedings, there were no proceedings pending and no penalty can be initiated u/s 271(1)(c). The Ld. CIT is empowered to revise the orders passed under various sections of the Act and in this case, there is no order which required to be revised. The Ld A.R further argued that the assessment order passed u/s 143(3) of the Act cannot be set aside for initiation of the penalty proceedings. There is no penalty order available to the CIT, which can be taken up for revision u/s 263 of the Act. Therefore, the Ld. A.R. contended that there is no error in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supports the view that omission to initiate penalty proceedings during the course of assessment proceedings renders the assessment order erroneous and also prejudicial to the interest of the revenue. The Ld. D.R. further relied on the decision of Patna High Court in the case of R.A. Himmat Singhga & Co. Vs. CIT 340 ITR 0253 and invited our attention to the para no.28 of the order which reads as under: "28. Thus, in essence, the initial words of section 263 "any proceedings" under the Act are of immense signification. Secondly, section 263 which uses the words "any order passed therein" by the assessing officer also has its importance. It is also seen from section 263 that the said provision uses the words "pass such order thereon as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT can initiate the penalty but he cannot direct the A.O. to initiate penalty u/s 271 of the Act. Therefore, the Ld. A.R. affirmed that the order passed u/s 263 of the Act required to be quashed. 7. We have heard the rival submissions and perused the materials placed on record. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 271(1)(c) & 273 of the Act have not been invoked. As per the amendment made to the Income tax act, the CIT is empowered to initiate penalty u/s 271(1)(c) of the Act. As per section 263 of the Act, the CIT is empowered to pass an order after giving opportunity of being heard to the assessee, such an order as the circumstances of the case justify including an order enhancing or modifying the assessment or cancelling the assessment and directing the fresh assessment. From section u/s 263 of the Act it is clear that the CIT is empowered to enhance, modify or direct the A.O. to re-do the assessment and set aside the assessment order. In this case, the assessing officer has not initiated the penalty proceedings which required to be initia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee was the decision of Hon'ble ITAT Ahmedabad 'B' bench in the case of Easy Transportation Software Pvt. Ltd. (supra). The facts of this case were that the assessee has claimed the deduction u/s 10B of the Act, which was withdrawn by the assessee during the assessment proceedings and the AO completed the assessment without initiating penalty u/s 271(1)(c) of the Act. The CIT has interfered by exercising power u/s 263 of the Act and cancelled the assessment order passed u/s 143(3) of the Act and directed the assessing officer to reframe the assessment order after giving opportunity to the assessee. In the said case, the entire assessment was cancelled and set aside the assessment with a direction to the A.O. to reframe the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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