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TMI Blog2014 (4) TMI 1170X X X X Extracts X X X X X X X X Extracts X X X X ..... endered the amount and has offered the surrendered amount by paying tax therefore this is not a fit case for levy of penalty and accordingly he may not have initiated penalty proceedings. Therefore such order cannot be called erroneous and prejudicial to the interest of the Revenue. - Decided in favour of assessee - IT Appeal Nos. 357 and 358 (CHD.) of 2013 - - - Dated:- 21-4-2014 - T.R. Sood, Accountant Member, And, MS. Sushma Chowla, Judicial Member For the Appellant : Sarabjit Garg For the Respondent : Amarveer Singh ORDER T.R. Sood, Accountant Member These appeals of the assessees are directed against the order dated 30.1.2013 of the Ld. CIT, Ludhiana. In both these appeals originally detailed grounds were filed and therefore the Ld. Counsel for the assessee had been directed to file concise grounds of appeal. In response the following revised grounds have been filed: 1. That on the facts and in the circumstances of the case and in law, learned CIT erred in assuming jurisdiction u/s 263 of the Act for non-initiation of penalty proceedings despite the clear cut ruling of the Hon'ble Punjab Haryana High Court in case of CIT v. Subhash Ku ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also noted that since the income of the assessee exceeded prescribed limit mentioned in S 44AA and therefore the assessee was required to maintain the accounts non-maintenance of such accounts would attract penalty u/s 271A which has also not been initiated. In view of these facts the assessment order was found to be erroneous and prejudicial to the interest of the Revenue. Show cause notice was issued. 3. In response to show cause notice it was contended that as per the Exp (a) to S 263(1) only those cases were covered under the provisions of section 263 where assessment is made by the Assessing officer himself or on the basis of directions issued by the JCIT u/s 144A or the orders passed by the JCIT in exercise of the powers performing the functions of the Assessing officer. Since the present assessment was made u/s 153A with the prior approval of JCIT/Addl CIT u/s 153D. The same could not have been reviewed and revised u/s 263. It was further submitted that penalty provisions of S 271A and S 271AAA used the expression may which means the Assessing officer has been given the discretions to levy or not to levy the penalty and therefore if the Assessing officer does not ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest of the Revenue and observed at para 19 as under: In view of the above discussion, there is no dispute regarding applicability of provisions of section 263 of Income-tax Act, 1961 and it is clear that in this case non initiation of penalties stated above by the Assessing officer in the assessment order resulted in an assessment order which is erroneous and prejudicial to the interest of the Revenue. Accordingly the assessment order is cancelled and the Assessing officer is directed to reframe the order in accordance with the provisions of the Act. 5. Before us, the Ld. Counsel for the assessee reiterated the submissions made before the Ld. Commissioner. Reference was made to various decisions which were relied before him. He specifically pointed out that in case of Surendra Prasad Agrawal (supra) Hon'ble Allahabad High Court noted the divergent views expressed by various courts including in the case of JK D'Costa (supra). It was also noted that SLP was dismissed by the Hon'ble Supreme Court in case of JK D'Costa (supra). It was also noted that this decision has been followed by various High Courts but still Hon'ble Allahabad High Court preferred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... officer was duty bound to initiate penalty proceedings because initiation is mandatory for levy of penalty. He also submitted that other decisions relied on by the Counsel for the assessee are distinguishable and in this regard he particularly referred to the decision of Hon'ble Supreme Court in case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297. wherein it is clearly observed that only the judgment which is identical to the facts of the case, can be relied for particular proposition. 7. We have gone through the rival submissions carefully and find force in the submissions of the Ld. Counsel for the assessee. In case of JK D'Costa (supra) Assessing officer completed the assessment but he did not took following action. (i) he did not say anything in the order about the charging of interest u/s 139(1) for the delay in the submission of the returns by the assessee; (ii) he did not deal with the question of the chargeability of interest u/s 217 for the failure of the assessee to file an estimate of advance tax and pay the tax thereon in so far as the Assessment year 1965-66 was concerned; (iii) he did not mention anything in the assessment order r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver therein which is plaint of the Addl Commissioner is that while completing the assessment and passing the assessment orders, the ITO had failed to take steps to charge interest and that he had also failed to initiate penalty proceedings against the assessee. The question, therefore is whether these two aspects of the matter formed part of the proceedings which were being examined by the Commissioner and also whether these are two aspects which form an integral part of the assessment orders which the Commissioner is seeking to revise. The Tribunal has held so far as the question of interest is concerned that it is a part of the proceedings of assessment and that the direction to charge interest can also be said to be an integral part of the assessment order. So far as this part of the Commissioner's order is concerned, it has not been challenged by the assessee in the reference and we are not concerned with this part of the Commissioner's order. The only question before us is whether the Tribunal was right in revoking the order of the Addl Commissioner in so far as it pertains to the question of penalties u/s 271(1)(a) and 273(b). Here we find ourselves in complete agreem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee. Later on similar issue came up before the Hon'ble Delhi High Court in case of Addl CIT v. Sudershan Talkies [1993] 200 ITR 153. In that case the assessee had not complied with the provisions of the payment of advance tax and therefore assessment order was revised by the Commissioner for non-initiation of penalty u/s 273(b). Before the Hon'ble High Court decision of Hon'ble Madhya Pradesh High Court in case of Indian Pharmaceuticals (supra) was relied. The Court noted that this issue was no longer res-integra because of the decision of JK D'Costa's case (supra). It was noted that because the Revenue had filed SLP (SLP No. 11391, 11392 of 1981) which was dismissed by the Hon'ble Supreme Court vide decision reported at 147 ITR (St) 1 and therefore Hon'ble High Court followed the decision of JK D'Costa's case (supra). 8. No doubt Hon'ble Allahabad High Court in case of Surendra Prasad Agrawal (supra) did not follow the decision of JK D'Costa's case (supra) the Court noted that this decision was followed by Hon'ble Delhi High Court in other cases as well as by Hon'ble Rajasthan High Court in case of CIT v. Keshrimal P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar offer that no penal action u/s 271(1)(c) would be initiated. The office note clearly show that this offer has been accepted by the Revenue. Therefore penalty could not be levied. In this regard the Court referred to the decision in case of Banta Singh Kartar Singh v. CIT [1980] 125 ITR 239 (Punj. Har.). The Court also dealt with the second limb of the issue vide para 9 to 12 which are as under: '9. Now adverting to the second limb, it may be noticed that the Delhi High Court in judgment in Addl CIT v. JK D'Costa [1982] 133 ITR 7 has held that the CIT cannot pass an order u/s 263 of the Act pertaining to imposition of penalty where the assessment order u/s 143(3) is silent in that respect. The relevant observations recorded are: It is well established that proceedings for the levy of a penalty whether u/s 271(1)(c) or u/s 273(b) are proceedings independently of and separate from the assessment proceedings. Though the expression assessment is used in the Act with different meanings in different contexts, so far as section 263 is concerned it refers to a particularly proceeding that is being considered by the Ld. Commissioner and it is not possible when the Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se (supra). 11. However, Madhya Pradesh High Court in Addl CIT v. Indian Pharmaceuticals [1980] 123 ITR 874 which has been followed by the same High Court in Addl CIT v. Kantilal Jain [1980] 125 ITR 373 and Addl CWT v. Nathoolal Belaram [1980] 125 ITR 596 has adopted diametrically opposite approach. 12. We are in agreement with the view taken by the High Courts of Delhi, Rajasthan, Calcutta and Gauhati and express our inability to subscribe the view of Madhya Pradesh High Court.' The above clearly show that second aspect was also dealt and the Hon'ble Punjab and Haryana High Court clearly showed its inability to follow the decision of Hon'ble Madhya Pradesh High Court in case of Indian Pharmaceuticals (supra) and rather followed the decision of Hon'ble Delhi High Court in case of JK D'Costa (supra) therefore the contention of the D.R. for the Revenue is not correct that the decision of Hon'ble Punjab and Haryana High Court is distinguishable because they have clearly followed the decision of Hon'ble Delhi High Court in case of JK D'Costa (supra) while dealing with the second aspect. Therefore in view of the decision of Hon'ble Punjab and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 132, which has- (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or (B) otherwise not been disclosed to the Chief Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted; 11. From above it is clear that it is not always necessary for the Assessing officer to initiate penalty proceedings if he is satisfied that the particular case is not fit for levy of penalty then the Assessing officer has powers not to initiate penalty proceedings because legislature has used the expression may in penal provision which shows that Assessing officer has discretionary power to initiate the penalty proceedings. In other words, in any such situation of not initiating penalty proceedings the Assessing officer has ad ..... X X X X Extracts X X X X X X X X Extracts X X X X
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