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2015 (11) TMI 1649 - AT - Income TaxRevision u/s 263 - CIT noticed that the AO assessed the amount of capital account as income of the assessee as unexplained cash credit - penalty proceedings u/s 271(1)(c) - Held that - There is merit in the submissions made by the ld. AR. We notice that the CIT has not issued revision notice in connection with the non-initiation of the penalty proceedings u/s 271(1)(c) of the Act and hence the same cannot be subject matter of revision. SEE BS Sangwan Versus Income Tax Officer Ward 2, Sonipat 2015 (1) TMI 1011 - ITAT DELHI Casual perusal of the provisions of section 271(1)(c) of the Act would show that the AO may direct that the assessee shall pay by way of penalty. The use of word May gives discretion to the AO not to initiate penalty proceedings. Hence, the Commissioner, under the garb of revising the assessment order, cannot direct the AO to change his decision - Decided in favour of assessee
Issues:
Challenge to validity of revision order passed by CIT u/s 263 of the Income Tax Act for assessment year 2009-10. Analysis: Issue 1: Validity of Revision Order The appeal challenged the revision order passed by the Commissioner of Income Tax u/s 263 of the Income Tax Act. The CIT initiated proceedings to verify an amount found credited in the assessee's capital account. The CIT set aside the assessment order as erroneous and prejudicial to the interest of Revenue for not initiating penalty proceedings u/s 271(1)(c) for the credited amount. The appellant argued that the CIT revised the order on grounds not mentioned in the notice, citing a Tribunal decision. The appellant further contended that the AO's discretionary power regarding penalty proceedings cannot be compelled by the CIT, referencing another Tribunal decision. The Tribunal agreed with the appellant, stating that the CIT did not issue a revision notice regarding penalty proceedings, making it not subject to revision. The Tribunal also highlighted the AO's discretion in initiating penalty proceedings under section 271(1)(c) and concluded that the CIT cannot direct the AO to change his decision through a revision order. The Tribunal quashed the revision order based on these grounds. Conclusion: The Tribunal allowed the appeal, setting aside the revision order passed by the CIT under section 263 of the Income Tax Act for the assessment year 2009-10. The decision was based on the lack of mention of penalty proceedings in the revision notice and the AO's discretionary power in initiating penalty proceedings under section 271(1)(c). The Tribunal emphasized that the CIT cannot compel the AO to change his decision through a revision order, ultimately leading to the quashing of the revision order.
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