TMI Blog2022 (1) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... . PCIT on account of non-inquiry of the cash deposits in the bank account of the assessee and the interest income earned by the assessee is upheld, while on the aspect of initiation of penalty proceedings is set aside.- Decided in favour of assessee. - ITA No. 2022/Ahd/2015 - - - Dated:- 27-1-2022 - Smt. Annapurna Gupta, Accountant Member And Ms. Madhumita Roy, Judicial Member For the Revenue : Shri Vijaykumar Jaiswal, CIT D.R. For the Assessee : Shri A. C. Shah, A.R. ORDER PER : ANNAPURNA GUPTA, ACCOUNTANT MEMBER:- The present appeal has been filed by the assessee against the order passed by the Ld. Principal Commissioner of Income Tax-7, Ahmedabad, (in short referred to as PCIT), dated 10-03-2015, in exercise of his revisionary jurisdiction u/s. 263 of the Income Tax Act, 1961(hereinafter referred to as the Act ) and relates to assessment year 2008-09. 2. The appeal was earlier dismissed for non-prosecution vide order dated 01-03-2018 and subsequently recalled on a Miscellaneous Application filed by the assessee in MA No. 359/Ahd/2019 dated 21st Feb, 2020. In consequence thereof, the appeal was fixed for hearing afresh. 2.1 The appeal has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at too after lapse of 4 years, the Assessing Officer has not initiated any penalty proceedings on the assessee u/s. 271(1)(c) of the act for concealment/furnishing inaccurate particulars of income. 3.1 He therefore was of the view that the order passed by the Assessing Officer was erroneous on account of the afore-stated and show cause notice was issued to the assessee u/s. 263 of the Act. Due reply was filed by the assessee and rejecting all the contentions of the assessee the Ld.PCIT held the order passed by the Assessing Officer u/s. 147 r.w.s. 143(3) of the Act to be erroneous and prejudicial to the interest of the Revenue on the above counts and directed him to reframe assessment after verifying and considering the same. His findings in this regard at para 8 of the order is as under:- 8. In view of the discussion made in the preceding paragraphs, the assessment order dated 27.12.2013 passed u/s. 147 r.w.s. 143(3) of the Act by the Assessing Officer is considered as erroneous and prejudicial -to interest of revenue Therefore, I set aside the order dated 01.02.2013 passed u/s. 143 (3) of the Act with a direction to the Assessing Officer to reframe the assessment after - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sions of section 271(1)(c) which did not grant power to the CIT to initiate penalty proceedings, but the ITAT Ahmedabad Benches in the case of Easy Transcription and Software Pvt. Ltd. vs. CIT (2017) 88 taxmann.com 772 had held that the ratio laid down by the Hon ble Gujarat High Court in the case of Parmanad Patel still applied post amendment to the section. Copies of the said orders were placed before us in paper book at pages 12 to 30. 5.2 The ld. Departmental Representative on the other hand countered by relying on the order of the Ld. PCIT, who had placed reliance on the decision of the Hon ble Allahabad High Court in the case of CIT vs. Associated Contractors Corporation 275 ITR 133, for the proposition that non initiation of penalty proceedings by the Assessing Officer renders the assessment order erroneous for the purposes of exercising revisionary powers by CIT u/s 263 of the Act. He further contended that subsequent order passed making no additions on the directions made in order passed u/s 263 of the Act is of no relevance for the purposes of determining whether the revision was in accordance with law. That what is to be seen is whether prima facie there has been made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deposits in the bank account of the assessee and the interest income earned by the assessee ,is therefore upheld. 6.3 Now, coming to the aspect of the assessment order being held erroneous for non-initiation of penalty proceedings u/s. 271(1)(c) of the Act, the ld. counsel for the assessee has drawn our attention to the consistent orders of the Jurisdictional High Court, in Parmanand M Patel(supra) and Suresh G Shah(supra), categorically holding that the Commissioner, in exercise of the revisionary power, cannot direct initiation of penalty proceedings to the Assessing Officer u/s. 271(1)(c) of the Act. Further, we have also gone through the order of the ITAT Ahmedabad Bench in the case of the Easy Transcription and Software Pvt. Ltd. (supra) and we find that in the said decision, the ITAT Ahmedabad Bench had considered the effect of the amendment to section 271(1)(c) of the Act, w.e.f. 01-04-2002,empowering the commissioner also to initiate penalty proceedings which earlier was not there. The decisions of the jurisdictional High Court ,relate to the preamendment period,and the impugned case before us relates to assessment year 2008-09, post amendment, and therefore the said dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 015 for Assessment Year 2010-11 is as under (Paragraph nos.13 to 17):- 13. On perusal of the decision of Hon ble Gujarat High Court in Parmanand Patel case (pre amended law), we note that basis for holding that the CIT lacks jurisdiction under S. 263 to cancel the assessment for failure of the AO to initiate penalty proceedings were multifold. The propositions emerging therein are broadly summarized as under: (A) S. 271(1)(c) confers discretionary jurisdiction on the AO or the CIT(Appeals) to initiate penalty proceedings. The provision does not empower any other authority to exercise discretion. Even while being a superior authority, the administrative CIT is not a designated authority to form satisfaction prior to amendment of S. 271(1)(c) effective from 1-6.2002. The CIT is thus not permitted substitute satisfaction arrived at by AO, in exercise of revisional powers. In the absence of powers conferred to invoke the penalty provision, the CIT could not direct the AO to do so in colourable exercise of powers. (B) The satisfaction for default committed as stipulated under clause (c) to S. 271(1)(c) has to be arrived at in the course of any proceedings and not subseq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the position of law spelt in this regard. Howsoever, clear the legislative intent may be, the requirements of a substantive provision cannot be bypassed to give effect to such intent. It is trite that legislative casus omissus cannot be supplied by judicial interpretive process. 15. The action of CIT under S. 263 is required to be struck down for other reason also. As noted above, arriving at the satisfaction is the foundation of action under S. 271(1)(c) of the Act. Admittedly, the CIT is a designated authority to form satisfaction post amendment. Nevertheless, the impugned satisfaction towards default enumerated in 271(1)(c ) is required to be formed not later than the conclusion of proceeding before it i.e. assessment proceeding in the instant case. Thus the designated authorities would become functus officio once the proceedings are concluded. Admittedly, the assessment proceedings were concluded and post facto satisfaction is not permissible. The penalty proceedings being distinct and separate, the assessment per se can alone be reviewed in accordance with law. However, the completed assessment cannot be set aside to enable the subordinate authority to initiate a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty proceedings were duly initiated and later dropped which was subject matter of S. 263. Judicial utterances were made in the context of the case therein. 17. To sum up, in the light of various propositions culled out from decision of Hon ble Gujarat High Court in Parmanand Patel ( supra) we are disposed to hold that non initiation of penalty proceedings under S. 271(1)(c) while framing assessment is not a good ground for invoking revisional powers conferred under S. 263 of the Act. To reiterate, when proceeded in strict requirement of the provision, the CIT can not, after the conclusion of the assessment proceedings, make up mind or arrive at the required affirmative conclusion towards initiation of penalty proceedings in substitution of the lapse committed by the AO. Section 271(1)(c) read in conjunction with S. 263 of the Act, gives an unmistakable impression that while in the wake of amendment under S. 271(1)(c) w.e.f 1-6-2002, it may be lawful for the administrative CIT to impose penalty, that by itself would not be sufficient to hold that the CIT is entitled to exercise revisional powers by treating the assessment order as erroneous and prejudicial to the interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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