TMI Blog2018 (12) TMI 823X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings by the CIT and directions of the Ld.Pr.CIT to AO to initiate the penalty proceedings was considered by this Tribunal in the case of U.V.Ramanamurthy Raju [2017 (8) TMI 475 - ITAT VISAKHAPATNAM] and held that the Pr.CIT is empowered to initiate the penalty proceedings and also empowered to direct the AO to initiate the penalty proceedings u/s 271(1)(c) r.w.s 263 of the Act in revision proceedings u/s 263. - Decided against assessee. - I.T.A.Nos.80-82 /Viz/2018 - - - Dated:- 12-12-2018 - Shri V. Durga Rao, Judicial Member And Shri D.S. Sunder Singh, Accountant Member For the Appellant : Shri C.Subrahmanyam, AR For the Respondent : Shri D.K.Sonowal, CIT DR ORDER PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: These appeals are filed by the assessee against the order of the Principal Commissioner of Income Tax (Pr.CIT)-1, Visakhapatnam vide F.No.Pr.CIT-1/VSP/263/2017-18 dated 29.01.2018 for the Assessment Years (A.Ys) 2008-09 to 2010-11 u/s 263 of Income Tax Act, 1961 (hereinafter called as Act ). Since the grounds raised in these appeals are common, the appeals are clubbed, heard together and a common order is being passed for the sake of convenience ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh it is a fit case for initiating the penalty proceedings u/s 271(1)(c) of the Act. The Ld.Pr.CIT found that since there was no voluntary return of income and the return was filed in response to notice u/s 148, thus the AO ought to have initiated the penalty proceedings u/s 271(1)(c) of the Act. The Ld.Pr.CIT was of the view that the order passed by the AO u/s 143(3) was erroneous and prejudicial to the interest of the revenue, hence, issued the notice u/s 263 and called for the explanation of the assessee. In response to the notice issued, the assessee filed explanation before the Ld.Pr.CIT stating that the penalty proceedings are not part of assessment proceedings, therefore, giving directions to initiate penalty proceedings u/s 271(1)(c) in revision is beyond the scope of the proceedings u/s 263. The Ld.AR further contended before the Ld.Pr.CIT that non initiation of penalty proceedings u/s 271(1)(c) during the course of assessment proceedings was neither erroneous nor prejudicial to the interest of the revenue. Recording satisfaction for initiation of penalty proceedings is the opinion of the AO and non-initiation of penalty does not give jurisdiction for revision u/s 263. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Act either for concealment of income or for furnishing inaccurate particulars. The Ld.Pr.CIT is not permitted to set aside the assessment made u/s 143(3) for non-initiation of penalty proceedings u/s 271(1)(c) of the Act. Non initiation of penalty proceedings does not render the assessment made u/s 143(3) as erroneous and prejudicial to the interest of the revenue, thus there is no case for revision u/s 263. The Ld.AR further submitted that, if the Ld.Pr.CIT, is satisfied regarding the concealment or furnishing inaccurate particulars, then he alone has to initiate the penalty and pass the orders in respect of penalty to be imposed, but cannot direct the AO to initiate the penalty proceedings. The Ld.AR relied on the decision of Hon ble High Court of Karnataka in the case of Commissioner of Income Tax Anr. Vs. Manjunatha Cotton Ginning Factory [359 ITR 0565] and the decision of Hon ble High Court of Punjab Haryana in the case of Commissioner of Income Tax Vs. Rakesh Nain Trivedi [128 DTR 0309 (P H)]. The Ld.AR strongly assailed that the Pr.CIT is not vested with the powers to direct the AO to initiate the penalty proceedings u/s 271(1)(c) and requested to quash the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the penalty proceedings and also empowered to direct the AO to initiate the penalty proceedings u/s 271(1)(c) r.w.s 263 of the Act in revision proceedings u/s 263. For the sake of clarity and convenience, we extract relevant part of the order of this Tribunal in para No.7 which reads as under : 7. We have heard the rival submissions and perused the materials paced 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.0. The A.0. 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 that though it is a prima facie case for initiation of penalty proceedings, the A.0. has not initiated the penalty proceedings. Therefore, placing the reliance on Allahabad High Court judgment cited (supra) held that omission to initiate penalty proceedings during the course of assessment proceedings renders the assessment order erroneous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of section 271 of the Act Section 271 of the Act is amended to include the Principal Commissioner/Commissioner to initiate the penalty proceedings by Finance Act 2002, w.e.f. 01.06.2002. Therefore, subsequent to the amendment of section 271 we are of the considered opinion that the CIT can initiate himself or by exercising power u/s 263 of the Act, direct the assessing officer to initiate the penalty proceedings u/s 271 of the Act. The case law relied upon by the assessee was prior to the amendment of section 271 of the Act. Hon'ble High Court held that CIT was not empowered to record the satisfaction and once he is not empowered to do so on his own, he cannot direct the assessing authority in revision powers. The case on hand is related to the assessment year 2006-07 and subsequent to the amendment. After the amendment, CIT also empowered to initiate the penalty proceedings u/s 271(1)(c) of the Act. Therefore, the case law relied upon by the assessee is not helpful to him. The second case law relied upon by 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 wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te particulars is valid and. legal? 2. Whether the proceedings initiated by the Assessing Authority was legal and valid? ITA Nos.5022 and 5023 of 2009 i) Whether the Tribunal was justified in holding that the basis for initiation of the penalty proceedings is the satisfaction of the Appellate Authority in coming to a conclusion based totally on a different ground other than the ground on which the Assessing Authority had passed the assessment order? ii) Whether the proceedings initiated by the Assessing Authority was legal and valid? ITA Nos.5025 and 5026 of 2010 When the two fact finding authorities have concurrently he'd that the explanation offered by the assessee is not false, though the assessee has failed to conclusively prove the explanation offered, does a cases made out for interference ? 5.2. The question raised before the Hon ble High Court was not related to the revision u/s 263 for non-initiation of penalty proceedings and the facts are distinguishable and has no application in the assessee s case Similarly, the Ld.AR relied on the decision of Hon ble High Court of Punjab Haryana in the case of Commissioner of Income Tax Vs. Rakes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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