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TMI Blog2021 (7) TMI 299X X X X Extracts X X X X X X X X Extracts X X X X ..... the taxpayers post de monetization of currency. Those she relied on the paragraph number two of that pretzel in stating that if there is no omission or wrong statement made in the original return of income the assessee cannot revise the return filed originally. However, in the present case, we find that there is an omission and a wrong statement, which is bona fide, and therefore the assessee was entitled to revise a return of income. It is also a fact that it is not a case of demonetization of currency. Therefore, the assessee is validly entitled to revise a return of income. If the argument of the learned principal CIT is accepted then the sanctity of revising the return of income then in assessee finds an error or omission in the originally filed return, automatically in all such cases initiation of the penalty proceedings would be mandatory. Such is not the mandate of law and therefore on this count also the order passed by the learned principal Commissioner of income tax is not sustainable. We hold that the order passed by the principal Commissioner of income tax u/s 263 is not sustainable in law - Appeal filed by the assessee is allowed. - I.T.A. No. 496/Del/2021 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26AS. According to Pr. CIT, section 139(5) of the Act has been enacted when a bonafide mistake is discovered; assessee can revise her return of income. Thus, according to her, assessee misused this provision for her undue benefit. Ld Pr. CIT relied on Press release dated 14.12.2016 of the CBDT. Based on these facts and circumstances she noted that assessee has intentionally not offered for tax the professional receipts amounting to ₹ 44,74,100/- in the original return of income and its deliberate suppression of facts, which attracts penalty under Section 271(1)(c) of the Act. Therefore, according to her, penalty on the income of ₹ 44,74,100/- which was under-stated and offered for taxation by the assessee after its detection by the Department is leviable. She, therefore, was of the view that Assessing Officer did not apply his mind and did not make due verification as she passed an order without initiating penalty proceedings under Section 271(1)(c) of the Act and, therefore, the order is erroneous in so far as it is prejudicial to the interest of Revenue. Therefore, she issued a show cause notice on 23rd of March 2021. 06. The assessee submitted that during the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to know about the bonafide error in the original return of income. He referred to the provisions of the Act wherein according to Section 139(5) of the Act assessee could validly revise her return of income as found bona fide error in it. Therefore, his contention was that assessee revised her return of income when she found a bonafide error in the original return and it was before detection of such error by the Assessing Officer. He also submitted that the CA, who committed the error, has also submitted an affidavit dated 6 January 2017 wherein he owned the mistake. Such affidavit is placed at page No. 20 of the Paper book. He also submitted that identical facts existed in assessment year 2014-15 wherein penalty was levied on the assessee of ₹ 14,08,420/- by the ld AO , which travelled up to the appellate stage of the co-ordinate bench, who passed an order in ITA. No. 3611 (Del) of 2019 for assessment year 2014-15 dated 22.11.2019 wherein the penalty was deleted. He, therefore, submitted that no such penalty can sustain for this year also as there is no change in the facts and circumstances of the case. He further submitted that the issue is squarely covered in favour of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng Officer failed to initiate the penalty proceedings the ld Pr. CIT was within her power to examine that order and to hold that the Assessing Officer should have initiated penalty proceedings, which AO failed to initiate, and, therefore, the order is passed by the ld. Pr. CIT finding that such assessment order is erroneous and prejudicial to the interest of revenue. . She, therefore, is correct in passing the order under Section 263 of the Act. He submitted that at present, we are not concerned that assessee may be penalized or not, which could be decided by the Assessing Officer later on levying the penalty proceedings, but the matter here is that whether the order passed by the Assessing Officer is erroneous or not. He submitted that it is so, therefore, he supported the order of the ld. Pr. CIT. 12. We have carefully considered the rival contentions and perused the orders of the lower authorities. We have also considered the various judicial precedents relied upon by the learned authorised representative. Facts are already culled out above. We find that the issue is squarely covered in favour of the assessee by the decision of the honourable jurisdictional High Court holding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Tribunal that the penalty proceedings do not form part of the assessment proceedings and that the failure of the ITO to record in the assessment order his satisfaction or the lack of it in regard to the leviability of penalty cannot be said to be a factor vitiating the assessment order in any respect. An assessment cannot be said to be erroneous or prejudicial to the interest of the Revenue because of the failure of the ITO to record his opinion about the leviability of penalty in the case. 13. Special leave petition against the said decision was dismissed by the apex Court (1984) 147 ITR (St) 1. The same view was reiterated by the Delhi High Court in CIT vs. Sudershan Talkies (1993) 112 CTR (Del) 165 : (1993) 201 ITR 289 (Del) and followed in CIT vs. Nihal Chand Rekyan (1999) 156 CTR (Del) 59 : (2000) 242 ITR 45 (Del). The Rajasthan High Court in CIT vs. Keshrimal Parasmal (1985) 48 CTR (Raj) 61 : (1986) 157 ITR 484 (Raj), Gauhati High Court in Surendra Prasad Singh Ors. vs. CIT (1988) 71 CTR (Gau) 125 : (1988) 173 ITR 510 (Gau) and Calcutta High Court in CIT vs. Linotype Machinery Ltd. (1991) 192 ITR 337 (Cal) have followed the judgment of Delhi High Court in J.K. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of the law with safeguards the interest of the revenue in such circumstances. We have also carefully perused the arguments of the learned departmental representative However, in view of the decision of the honourable Delhi High Court, we are duty-bound to follow it. 16. Therefore, respectfully following the decision of the honourable Delhi High Court we do not find any reason to sustain the order passed by the learned principal Commissioner of income tax u/s 263 of the income tax act. 17. Even otherwise we find that the assessee filed the original return on 29/9/2015, notice u/s 143 (2) was issued by the learned AO on 20/9/2016, assessee revised her return of income on 31 December 2016 and first notice u/s 142 (1) was issued to the assessee on 23rd of June 2017 wherein the copy of the income tax return, balance sheet et cetera were asked. This was the first instance where the assessing officer got hold of the record of the assessee where AO could have find out the error. No doubt the case of the assessee was selected for scrutiny with respect to the mismatch between the financial statements and 26 AS, however when the assessing officer received the details of income t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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