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TMI Blog1984 (10) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... cial to the Revenue. He called upon each of the assessee to show cause why action under s. 263 should not be taken. The pleas of the assessee were that they had paid the advance taxes as demanded. They had no reason to believe that the income for the year would have been higher and would have necessitated filing of an estimate showing an upward revision of the tax payable and further extension of time had been sought for filing the returns and hence, the penal provision of s. 271(1)(a) and s. 273(2)(c) were not attracted, nor were the provisions relating to levy of interest attracted. 3. The CIT did not agree. The conclusion of the CIT in this regard, which is in identical terms in each of the cases, was as under: "Penal interest under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the non-initiation of penal proceedings during the course of assessment proceedings would not render the assessment made erroneous or prejudicial to the Revenue. Since there was no infirmity in the order of assessment, for non-initiation of penalty proceedings, even if they should have been initiated, he submitted, the CIT could not exercise his revisionary powers under s. 263. Apart from it, he stated that even on facts, each of the assessee has sought for extension of time till 30th Nov., 1979 for filing the return and the return was filed on 5th Dec., 1979. Another contention was that the full advance-tax as demanded had been paid. In the case of Shri Ramjee Arjun, the tax demanded was Rs. 26,133 on an estimated income of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee imagining with reference to the additions made by the Department for earlier year in the firm s case that the assessee s income would require upward revision. It was also submitted that though the returns were filed in December, 1979, the assessment were made only in March, 1982 and the delay was not due to any fault of the assessee and in any view of the matter, interest under s. 217(1A) should not be charged and it is a fit case for the waiver of interest and it is apparently because of this reason that the ITO did not levy interest and it should be deemed that he had waived the levy of interest. The last contention urged was that if interest was to be levied under s. 217(1A), there ought to be a separate order and the non-levy of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h took the view that action under s. 263 could be taken by the CIT in case the ITO had omitted to initiate penal proceedings. The Court eventually reiterated the view taken in D. Costa s case. Dealing with the powers of the CIT, the Court finally observed in (1982) 30 CTR (Del) 146 at 151 : (1983) 142 ITR 606 at 613 (Del) in Achal Kumar Jain s case as under: "The meaning attributed to the expression "assessment" is different in various contexts of the Act. But in the context of s. 263, it is a particular "proceeding" that is to be considered. If he is dealing with the assessment proceedings and assessment order, he cannot extend his powers to deal with penalty proceedings when they are not before him. As observed by us in J.K.D. Costa s c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e may consider the order of the ITO as erroneous not only because it contains some apparent error of reasoning or of law or of the fact of it, but also because it is a stereotyped order which simply accepts what the assessee has stated in his return and fails to make inquiries which are called for in the circumstances of the case." This cannot be read to mean that the CIT is entitled to bring within his scope and deal with penalty proceedings and orders (which are admittedly connected but distinct) while calling for and examining the record of the assessment proceedings and orders." The ld. counsel had submitted that the Supreme Court had declined to grant special leave to appeal against the decision of the Delhi High Court in D. Costa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee an opportunity of being heard. Following the ratio of the aforesaid decision, we have to hold that for non-levy of interest under s. 217(1A), even if it was otherwise liveable, the assessment could not be set aside. The plea of the ld. counsel was that the levy of interest under s. 217(1A) had to be by an independent order though customarily it formed part of the assessment order and hence non-levy of interest under s. 217(1A) could not vitiate the assessment order. We need not pronounce on this aspect in the present appeals for we have held following the judgment of the Delhi High Court that the setting aside of the assessment in each of the case, all that subsists is a direction to the ITO that he should examine whether inte ..... X X X X Extracts X X X X X X X X Extracts X X X X
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