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TMI Blog2023 (12) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... -11 & 2013-14, assessee preferred these appeals. 2. Brief facts of the case are that on a perusal of the assessment records for the assessment years 2010-11 and 2013-14, learned PCIT found that the assessment orders passed under section 143(3) of the Income Tax Act, 1961 ('the Act') were erroneous insofar as those are prejudicial to the interest of Revenue because once the undisclosed income is assessed, the non-initiation of penalty or recording satisfaction for initiation of penalty by the learned Assessing Officer has resulted in an incorrect application of law as liability for penalty is a legal consequence mandated by the Act for not disclosing the correct income in the return of income filed under section 139 of the Act. According to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion or otherwise coming on record after the assessment would be bad in law. According to the learned AR, learned PCIT failed to appreciate the law that if two reasonable constructions of a taxing provision are possible, that construction which favors the assessee must be adopted and preference needs to be given to the reasoning of the majority of the Hon'ble High Courts. He placed reliance on the decision of Hon'ble Punjab & Haryana High Court in the case of CIT vs. Rakesh Nain Trivedi, [2017] 80 taxmann.com 238. He further submitted that the facts of these two appeals are identical to the facts of the case in Sri Adithya Homes Private Limited vs. ACIT decided by a Co-ordinate Bench of the Tribunal in ITA Nos. 230 & 231/Hyd/2023 for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsideration of this Court in this appeal is could the CIT in exercise of power under Section 263 of the Act hold the order of the Assessing Officer to be erroneous and prejudicial to the interest of the revenue where the Assessing Officer had failed to initiate penalty proceedings while completing assessment under Section 153A of the Act. 6. It may be noticed that the said issue is no longer res integra. This Court in Subhash Kumar Jain case (supra) agreeing with the view of High Courts of Delhi in Additional J.K.D.'s Costa case (supra), CIT v. Sudershan Talkies [1993] 201 ITR 289 (Delhi) and CIT v. Nihal Chand Rekyan [2000] 242 ITR 45/[2002] 123 Taxman 353 (Delhi), Rajasthan in CIT v. Keshrimal Parasmal [1986] 157 ITR 484/27 Taxman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith different meanings in different contexts, so far as s. 263 is concerned, it refers to a particular proceeding that is being considered by the Commissioner and it is not possible when the Commissioner is dealing with the assessment proceedings and the assessment order to expand the scope of these proceedings and to view the penalty proceedings also as part of the proceedings which are being sought to be revised by the Commissioner. There is no identity between the assessment proceedings and the penalty proceedings; the latter are separate proceedings, that may, in some cases, follow as a consequence of the assessment proceedings. As the Tribunal has pointed out, though it is usual for the ITO to record in the assessment order that penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Madhya Pradesh High Court in the cases of ACIT vs. Indian Pharmaceuticals (1980) 123 ITR 874 (MP) and ACIT vs. Kantilal Jain (1980) 125 ITR 373 (MP) etc., relied on the decision of the Hon'ble Apex Court in the case of CIT vs. Vegetable Products Ltd., (1973) 88 ITR 192 (SC) held the issue in favour of the assessee, stating that in case of more than one interpretation of taxing statute is possible, then the interpretation which favours the assessee, more particularly when it pertains to penalty, has to be adopted. 8. Since the facts are identical, respectfully following the view taken by the Co-ordinate Bench of the Tribunal in the case of Sri Adithya Homes Private Limited (supra), and the decision of Hon'ble Punjab and Haryana ..... X X X X Extracts X X X X X X X X Extracts X X X X
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