9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 746 - AT - Income TaxPenalty u/s 271(1)(c) - initiating penalty proceeding u/s 271(1)(c) while assuming jurisdiction u/s 263 - HELD THAT - The facts are not in disputed. No doubt, the AO has initiated the penalty proceedings in the original assessment order passed under section 143(3) of the Act dated 26.03.2013. AO while reframing the assessment in lieu of appeal effect to the order of the Tribunal passed order under section 143(3) read with section 254 of the Act dated 28.12.2018 has not initiate the penalty proceedings. The question arises whether the revision proceedings for initiation of penalty proceedings can be done in the set aside assessment. We noted that the entire jurisprudence on the above subject is against Revenue and in favour of assessee and more particularly Hon ble Punjab and Haryana High Court has considered this issue and finally, after considering the authorities, held that the initiation of proceedings under section 263 of the Act is not permissible because initiation of penalty proceedings is highly debatable issue. We are of the view that the CIT cannot set aside the Assessment Order for the sole purpose of initiating penalty proceedings in exercise of revisional jurisdiction. Hence, we quash the revision order passed by the PCIT and allow the appeal of the assessee.
Issues Involved:
1. Legality or validity of the revision order passed by PCIT under section 263 of the Income Tax Act. 2. Direction by PCIT to the Assessing Officer (AO) to initiate penalty proceedings under section 271(1)(c) of the Income Tax Act. Detailed Analysis: 1. Legality or Validity of the Revision Order Passed by PCIT under Section 263 of the Income Tax Act: The assessee challenged the revision order under section 263 of the Income Tax Act, passed by the PCIT, arguing that it was void ab initio and violated the principles of natural justice. The original assessment was framed by the ITO under section 143(3)(ii) of the Act, where penalty proceedings under section 271(1)(c) were initiated for furnishing inaccurate particulars of income/concealment of income. This assessment was confirmed by CIT(A) and later set aside by the ITAT, directing the AO to re-examine the case. The AO, in the fresh assessment order dated 28.12.2018, did not initiate penalty proceedings. The PCIT, in the revision order, directed the AO to initiate penalty proceedings, deeming the assessment order erroneous and prejudicial to the interest of revenue. The assessee argued that the PCIT erred in assuming jurisdiction under section 263 and that the AO's omission to initiate penalty proceedings did not render the assessment order erroneous or prejudicial to the revenue. 2. Direction by PCIT to the Assessing Officer to Initiate Penalty Proceedings under Section 271(1)(c) of the Income Tax Act: The learned Counsel for the assessee contended that the PCIT could not direct the AO to initiate penalty proceedings under section 271(1)(c) through a revision order. He cited several judicial precedents, including the Hon’ble Punjab and Haryana High Court in CIT (central), Ludhiana Vs. Rakesh Nain Trivedi, and the Gujarat High Court in CIT Vs. Parmanand M. Patel, which held that initiation of penalty proceedings is a highly debatable issue and cannot be directed through revision under section 263. The learned CIT Departmental Representative argued that the AO's failure to initiate penalty proceedings in the fresh assessment order was an error, and the PCIT rightly directed the AO to initiate such proceedings. However, the Tribunal noted that the jurisprudence on the subject favored the assessee, and the initiation of penalty proceedings through revision under section 263 was not permissible. The Tribunal referred to the Punjab and Haryana High Court judgment, which stated that penalty proceedings are independent of assessment proceedings and cannot be directed through revision under section 263. Conclusion: The Tribunal quashed the revision order passed by the PCIT, holding that the CIT cannot set aside the assessment order solely for the purpose of initiating penalty proceedings in exercise of revisional jurisdiction. The appeal of the assessee was allowed, and the order pronounced in the open court on 23.11.2021.
|
