TMI Blog2023 (1) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... - - - Dated:- 29-12-2022 - SHRI PRASHANT MAHARISHI , AM AND SHRI PAVAN KUMAR GADALE , JM Fort the Assessee : Ms. Nishita Madalaywala For the Revenue : Ms. Madhu Malti Ghosh , CIT DR ORDER PER PRASHANT MAHARISHI , AM : 01. These are the 2 appeals filed by the assessee for A.Y. 2010-11 and 2011-12 against Revisionary order passed u/s. 263 of the Act dated 29.03.2022 separately for both the years by the PCIT, Central,Mumbai-2 (the ld. PCIT) wherein the respective orders passed for both the years were held to be erroneous and prejudicial to the interest of the revenue for the simple reason that the ld. AO should have initiated penalty proceedings u/s. 271(1)(c) of the Act in the assessment order passed u/s. 143(3) r.w.s. 254 of the Income Tax Act dated 31.12.2019 for both the years. 02. In both the orders the ld. PCIT has directed the AO to initiate penalty proceedings u/s. 271(1) (c) of the Act. Thus, the assessee is aggrieved and has raised identical grounds of appeal for both the assessment years as under : 1.On the facts and in the circumstances of the appellant s case and in law the Ld. Pr. CIT erred in invoking the provisions of section 263 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld. PCIT. The ld. PCIT after considering the explanation of the assessee held that assessment order passed by the Ld. AO is erroneous and prejudicial to the interest of revenue. The ld. PCIT was also informed by the AO as recorded in Para No. 11 that he has failed to initiate penalty proceedings u/s 271 (1) (c) of The Act. It is stated that ld. AO realizing the fact that he omitted to initiated penalty proceedings u/s. 271(1) (c) of the Act himself submitted a proposal for revision. The ld. PCIT followed the decision of the Hon ble Allahabad High Court in case of CIT Vs. Brij Bhushan Cold Storage 275 ITR 360 and ITAT Hyderabad in 4 ITR tribunal 297 wherein it has been held that even dropping of penalty proceedings u/s. 271(1) (C ) is held to be erroneous and prejudicial to the interest of revenue orders. The argument of the assessee was rejected that it is the sole authority of the LD AO to initiate the penalty proceedings. The ld. PCIT further stated that the amendment w.e.f. 01.06.2002 even the Principle Commissioner is also empowered to initiate the penalty proceedings. Accordingly, the LD PCIT held that order passed by the ld.AO where he failed to initiate the penalty procee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch penalty. The authority which passes the assessment order or any other orders only that and that authority is authorized to issue and initiate penalty proceedings arising out of assessment order. It was further stated that even otherwise the order u/s. 263 of the Act was passed by the ld. PCIT on the recommendation of the AO which is mentioned in the revisionary order itself, next the revisionary order unsustainable in law. The 263 order is required to pass on the independent finding of the ld. PCIT. 011. Accordingly, it was submitted that the order of the ld. PCIT is not sustainable in law. 012. The ld. CIT DR vehemently supported the orders of the ld. PCIT. It was submitted that non-initiation of the penalty proceedings u/s. 271(1) (c) of the Act makes assessment orders passed by ld. AO as erroneous and prejudicial to the interest of the revenue. It was further submitted that when the ITAT has set aside the assessment orders to the file of the ld. AO to pass it and make a De novoassessment, the fresh penalty proceedings are required to the initiated by the ld. AO. Therefore, whether in the original assessment proceedings the penalty proceedings were levied or not or even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the interest of revenue, it should be revised. 014. Honourable madras High Court in case of CIT vs Chennai Metro rail Ltd 92 taxmann.com 329 has held that In absence of any finding of Assessing Officer with regard to concealment of income or with regard to furnishing of inaccurate particulars of income, Commissioner, in exercise of power under section 263, could not direct Assessing Officer to initiate penalty proceedings under sec 271(1)(c) of the Act. 015. Similar view has once again been taken by the Honourable madras High Court in CIT vs C. R. K. Swami 254 ITR 258 (madras) has held as Under:- 2. Moreover, as held by a Bench of the Delhi High Court in the case of Addl. CIT v. Sudershan Talkies [1993] 200 ITR 153 , failure on the part of the assessing authority to initiate penalty proceedings would not give jurisdiction to the Commissioner of Income-tax to pass an order under section 263 of the Income-tax Act, 1961 ('the Act') and to direct initiation of such proceedings. We are in respectful agreement with that view. 016. Honourable Rajasthan High Court in case of CIT vs Kesrimal Parasmal by 27 taxman 447 (Rajasthan has held thatIn J.K. D'Costa' ..... X X X X Extracts X X X X X X X X Extracts X X X X
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