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Issues involved: Assessment orders lacking penal interest under u/s 217 and failure to initiate penalty proceedings u/s 273(b).
Assessment Orders and Penal Interest u/s 217: The Income-tax Officer passed assessment orders for the years in question without charging any interest u/s 217 for non-compliance with advance tax payment provisions. The Commissioner of Income-tax found these orders prejudicial to Revenue's interests and erroneous, setting them aside for fresh assessments. Penalty Proceedings u/s 273(b): The Commissioner directed the Income-tax Officer to initiate penalty proceedings u/s 273(b) due to the failure to comply with section 212(3) provisions. The Tribunal, however, held that this direction was unwarranted, as penalty proceedings are separate from assessment proceedings, citing precedents like Addl. CIT v. J. K. D'Costa. Court's Decision: The Court reframed the question to focus solely on penalty proceedings u/s 273(b), finding that failure to initiate penalty proceedings does not warrant action u/s 263. Precedents established that penalty proceedings are independent of assessment proceedings, and the Tribunal's decision to set aside the Commissioner's order was upheld. The question was answered in the affirmative against the Revenue, with no costs awarded.
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