TMI Blog1988 (6) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 263 of the Income-tax Act, 1961, to the extent of charging of interest under section 139 and section 217 of the Income-tax Act, 1961, relating to the assessment years involved in the various appeals ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the Additional Commissioner of Income-tax was not justified in setting aside the assessments in order to restore to the Income-tax Officer the right to commence the proceedings of penalty under sections 27](1)(a), 271(1)(c) and 273 of the Income-tax Act, 1961, which had already become barred by limitation on account of failure of the Income-tax Officer to commence these proceedings within the prescribed time-limit relating to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of penalty proceedings under section 271(1)(a) and section 273 for all the seven assessment years 1964-65 to 1970-71, for non-initiation of penalty proceedings under section 271(1)(c) for the assessment years 1966-67 to 1970-71 and for non-charging of interest leviable under section 139 for the assessment years 1964-65, 1965-66, 1967-68 and 1968-69 as also of interest under section 217 of the Income-tax Act, 1961, for all the seven assessment years. All the assessments are, therefore, set aside with a direction that penalty proceedings should be initiated as directed in respect of the relevant years, proper interest chargeable under section 139 for the assessment years mentioned and tinder section 217 for all the above years should be cha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d (p. 968): " In cases where the jurisdictional fact attracting the levy cannot be disputed, for example, that the return has been furnished under section 139 with delay, it will be a question merely of satisfying the relevant authority that there are circumstances calling for a reduction or waiver of the interest. If an opportunity to do so has not been made available to the assessee before the order levying interest is made, it will be open to the assessee to apply to the Income-tax Officer after such order has been made to show that a reduction or waiver of interest is justified. We have been referred to the judgment by one of us (Sabyasachi Mukharji J.) in Premchand Sitanath Roy v. Addl. CIT [1977] 109 ITR 751 (Cal). In that case, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dd that to pass an order in such terms may, in a given case, be an abuse of power or in the parlance of administrative law, a colourable exercise of power. Such an unqualified direction to the Income-tax Officer to initiate proceedings to levy penalty cannot be justified. The Delhi High Court in CIT v. J. K. D'Costa [1982] 133 ITR 7 held and we quote the long passage which explains itself (p. 11): " Here, we find overselves in complete agreement with the view taken by the Tribunal. It is well established that proceedings for the levy of a penalty, whether under section 27](1)(a) or under section 273(b), are proceedings independent of and separate from the assessment proceedings. Though the expression assessment is used in the Act with dif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment is finalised. We, therefore, agree with the view taken by the Tribunal that the penalty proceedings do not form part of the assessment proceedings and that the failure of the Income-tax Officer to record in the assessment order his satisfaction or the lack of it in regard to the leviability of penalty cannot be said to be a factor vitiating the assessment order in any respect. An assessment cannot be said to be erroneous or prejudicial to the interests of the Revenue because of the failure of the Income-tax Officer to record his opinion about the leviability of penalty in the case. We, therefore, answer the first question referred to us in the affirmative and in favour of the assessee." We are in respectful agreement with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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