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TMI Blog2013 (11) TMI 683X X X X Extracts X X X X X X X X Extracts X X X X ..... e under Section 153A – Held that:- Order under Section 263 is not liable to be sustained because it is a settled position that penalty under Section 271(1)(c) is not to be levied on every income. The penalty is to be levied only when the conditions prescribed under Section 271(1)(c) are satisfied. Even when we see the language of Section 271(1)(c), even on concealed income, the levy of penalty is not automatic because discretion has been given to the Assessing Officer to levy or not to levy the penalty which would be clear from the use of the words "may" in Section 271(1)(c). Legality of order passed u/s 263 of the Income tax Act – Penalty u/s 271(1)(c) levied on lower side – Held that:- Reliance has been placed on the judgment of Hon’ble Bombay High Court in the case of Gabriel India Ltd.[ 1993 (4) TMI 55 - BOMBAY High Court] , wherein it was held that it would not vest the Commissioner with power to re-examine the accounts and determine the income himself at a higher figure. It is because the ITO has exercised the quasi-judicial power vested in him in accordance with law and arrived at a conclusion and such a conclusion cannot be termed to be erroneous simply because the Commi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtificates placed at paper book page Nos. D-5 to D-16. It was, therefore, requested that the delay in filing the appeals may be condoned. 3. Learned DR objected to the condonation of delay. 4. After considering the submissions of both the sides and keeping in view the judgment of Hon'ble Supreme Court in the case of Collector, Land Acquisition Vs. MST. Katiji and Others - [1987] 167 ITR 471, we are satisfied that the assessee was prevented by sufficient cause in filing the appeals in time. The assessee has filed ample documentary evidence in the form of medical certificates, prescription etc. in support of its claim that he is not keeping good health for the past few years. Accordingly, we condone the delay in filing the appeals. 5. In these two appeals, common grounds are raised by the assessee which read as under:- "1. On the facts and circumstances of the case and in law, the Hon'ble Commissioner of Income-tax, Central-II, New Delhi (hereinafter referred to as the Hon'ble CIT) erred in initiating proceedings under section 263 of the Act and hence, the order passed by the Hon'ble CIT under section 263 of Act is bad in law and void ab initio. 2. That on the facts and cir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that was the total concealed income worked out by the Assessing Officer as per penalty order. Against the penalty order, the assessee filed application under Section 264 on 06.08.2009 before the CIT, Central-II for quashing the penalty order. On the other hand, the CIT, Central-II initiated proceedings under Section 263 of the Act vide notice dated 03.03.2011. The assessee furnished the reply before the CIT on 09.03.2011. However, the CIT passed order under Section 263 on 10.03.2011 in which he set aside the penalty order and directed the Assessing Officer to dispose of the matter in accordance with the provisions of the IT Act. That the CIT treated the assessee's application under Section 264 as infructuous vide order dated 10.03.2011 on the ground that the penalty order has already been set aside in proceedings under Section 263. The assessee, aggrieved with the action of the Assessing Officer, is in appeal before the ITAT. 7. At the time of hearing before us, the learned counsel for the assessee argued at length. His arguments were two-fold :- (i) That the jurisdiction under Section 263 can be exercised by the CIT only if the order of the Assessing Officer is erroneous as w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the search conducted at the assessee's premises. He also mentions about the total undisclosed income declared during the course of search by the group. Thereafter, at page 2, he has discussed the legal position with regard to levy of penalty and then he finally works out the penalty on the total concealed income as worked out by him. That merely because the Assessing Officer has not given the working of concealed income by him, it cannot be said that his order is either erroneous or prejudicial to the interests of the Revenue. In support of this contention, he relied upon the following decisions:- (a) CIT Vs. Max India Ltd. - [2007] 295 ITR 282 (SC). (b) CIT Vs. Gabriel India Ltd. - [1993] 203 ITR 108 (Bombay). (ii) That against the penalty order in both the years, the assessee had filed the petition under Section 264 before the CIT. That the CIT, instead of disposing the application of the assessee under Section 264, kept it pending with him, thereafter initiated proceedings under Section 263, passed the order under Section 263 in which gave direction to the Assessing Officer to enhance the penalty and then dismissed the assessee's application under Section 264 holding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e file of the Assessing Officer for passing fresh penalty order in accordance with law. The same should be sustained. 9. We have carefully considered the arguments of both the sides and perused the material placed before us. There is no dispute that against the penalty orders passed under Section 271(1)(c), the assessee did not file any appeal but filed revision petition under Section 264. During the pendency of the revision petition with him, the CIT initiated proceedings under Section 263. In the order under Section 263, he set aside the matter to the file of the Assessing Officer and then he dismissed the assessee's petition filed under Section 264 holding the same to be infructuous. He held the penalty order under Section 271(1)(c) to be erroneous on the ground that the Assessing Officer had not levied the penalty in respect of the entire additional income offered in the return filed in response to notice under Section 153A. In the fresh penalty order passed in pursuance to order under Section 263, the Assessing Officer levied the penalty on the entire additional income disclosed in the return filed in response to notice under Section 153A. These facts have also been recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the other hand, the CIT, Central-II initiated proceedings under Section 263 of the Income-tax Act and passed order thereon which was prejudicial to the interests of the assessee. That Section 264 of the Income-tax Act debars the CIT from passing any order which is prejudicial to the assessee. Therefore, in our opinion, when the CIT cannot pass the order prejudicial to the assessee under Section 264, once the assessee approached him for getting relief under Section 264, if he is allowed to pass order under Section 263 prejudicial to the assessee, it would make prohibition under Section 264 that the CIT cannot pass the order prejudicial to the assessee as nullity. Therefore, in our opinion, on the facts of the assessee's case, the order under Section 263 cannot be sustained. 12. That even on facts, in our opinion, the order under Section 263 is not liable to be sustained because it is a settled position that penalty under Section 271(1)(c) is not to be levied on every income. The penalty is to be levied only when the conditions prescribed under Section 271(1)(c) are satisfied. Even when we see the language of Section 271(1)(c), even on concealed income, the levy of penalty is not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Officer has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the Revenue, unless the view taken by the Assessing Officer is unsustainable in law." 14. That Hon'ble Bombay High Court in the case of Gabriel India Ltd. (supra) at pages 114 115 of 203 ITR observed as under:- "From the aforesaid definitions it is clear that an order cannot be termed as erroneous unless it is not in accordance with law. If an ITO acting in accordance with law makes a certain assessment, the same cannot be branded as erroneous by the Commissioner simply because, according to him, the order should have been written more elaborately. This section does not visualise a case of substitution of the judgment of the Commissioner for that of the ITO, who passed the order, unless the decision is held to be erroneous. Cases may be visualised where the ITO while making an assessment examines the accounts, makes enquiries, applies his mind to the facts and circumstances of the case and determines the income either by accepting the accounts or by making some estimate himself. The Commissioner, on perusal of the records, may be of the opinion th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the case, such other relief and directions may be given pertaining to the CIT's orders under sections 264 of the Act as may be deemed appropriate by this Hon'ble Tribunal." 17. At the time of hearing before us, it is stated by the learned counsel that the additional grounds are in the nature of consequential relief and these grounds should arise only when the orders under Section 263 are quashed. He submitted that since the Assessing Officer passed the order under Section 263 setting aside the penalty order, he dismissed the assessee's application filed under Section 264 holding the same to be infructuous. It is submitted by the learned counsel that if the orders under Section 263 are quashed, then as a consequence, the assessee's application under Section 264 should be directed to be revived and disposed of on merits in accordance with law. 18. Learned DR, on the other hand, stated that this appeal before the ITAT is against the order under Section 263. There is no appeal pending before the ITAT against the order under Section 264 and, therefore, the ITAT is not competent to issue any direction with regard to order under Section 264. 19. We have heard both the parties a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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