TMI Blog1981 (4) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... ons: (i) he did not say anything in the order about the charging of interest under s. 139(1) for the delay in the submission of the returns by the assessee; (ii) he did not deal with the question of the chargeability of interest under s. 217 for the failure of the assessee to file an estimate of advance tax and pay the tax thereon in so far as the assessment year 1965-66 was concerned; (iii) he did not mention anything in the assessment orders regarding the initiation of penalty proceedings under s. 271(1)(a) of the 1961 Act though the returns had been filed beyond time; and (iv) so far as the assessment year 1965-66 is concerned, he did not mention anything in the assessment order about the initiation of penalty proceedings und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions relating to penalty whether under s. 273(b) or s. 271 (1)(a) but that there was nothing wrong with the directions given by the Addl. Commissioner so far as the levy of interest was concerned. The Tribunal pointed out that the powers of the Commissioner under s. 263 were hedged in by certain conditions and limitations. Under that section his jurisdiction was to call for the records of certain proceedings and to revise an order passed by the ITO in those proceedings. The Commissioner could not travel beyond the subject-matter of the order passed by the ITO nor could he travel beyond the proceedings in the course of which the order had been passed. In this view of the matter, the Tribunal upheld only that portion of the order of the Addl. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following two questions : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in coming to the conclusion that the Additional Commissioner could not pass an order under section 263 relating to penalties ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in modifying the order of the Additional Commissioner passed under section 263 setting aside the assessments in question ? " We have heard Mr. Wazir Singh, learned counsel for the department, but we are of opinion that the conclusion reached by the Tribunal is the only possible conclusion that can be arrived at in the, circumstances of the case. Section 263 enables the Commissioner to call for and examine th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Tribunal has held, so far as the question of interest is concerned, that it is a part of the proceedings of assessment and that the direction to charge interest can also be said to be an integral part of the assessment order. So far as this part of the Commissioner's order is concerned, it has not been challenged by the assessee in the reference and we are not concerned with this part of the Commissioner's order. The only question before us is whether the Tribunal was right in revoking the order of the Addl. Commissioner in so far as it pertains to the question of penalties under ss. 271(1)(a) and 273(b). Here, we find ourselves in complete agreement with the view taken by the Tribunal. It is well established that proceedings for the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue a penalty notice or initiate penalty proceedings even long before the assessment is completed though the actual penalty order cannot be passed until 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 ITO 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 factor vitiating the assessment order in any respect. An assessment cannot be said to be erroneous or prejudicial to the interest of the revenue because of the failure of the ITO to record his opinion about the leviability of penalty in the case. We, therefore, answer the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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