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TMI Blog2022 (6) TMI 1150X X X X Extracts X X X X X X X X Extracts X X X X ..... the case of CIT v. Surendra Prasad Aggarwal(supra), and held that in the absence of any findings in the assessment order regarding underreporting or misreporting of income, the PCIT cannot revise the assessment order to initiate penalty proceedings. Therefore, we are of the considered view that the PCIT has erred in invoking revisional powers u/s.263 of the Act, and set aside the assessment order to initiate penalty proceedings u/s.270A of the Act, because, the AO has chosen not to initiate penalty proceedings. The PCIT cannot substitute his views and observed that, the AO has passed erroneous order which resulted in loss of Revenue to the Department. We are of the considered view that the assessment order passed by the AO is neither ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not satisfied cumulatively thereby vitiating the revision order completely. 4. The PCIT failed to appreciate that the presumption of non-application of mind in so far as in not initiating the penalty proceedings under section 270A of the Act while completing the assessment was wholly unjustified. 5. The PCIT failed to appreciate that the cleavage of opinion pointed out in the revision order on the issue on hand would oust the jurisdiction to pass the revision order and hence ought to have appreciated that the order of revision was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 6. The PCIT failed to appreciate that the order of revision in directing the Assessing Of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and prejudicial to the interest of the Revenue, as the order has been passed with omission to initiate penalty proceedings u/s.270A of the Act, in respect of disallowance of capital gains claim. In response to the show cause notice, the assessee submitted that the assessment order passed by the AO, is neither erroneous nor prejudicial to the interest of the Revenue, because, the AO has not initiated penalty proceedings u/s.270A of the Act, because, there is no satisfaction/finding recorded by the AO with regard to underreporting or misreporting of income as required under the law. The PCIT, however, was not satisfied with the explanation of the assessee and according to him, the assessment order passed by the AO with omission to initiate pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icial to the interest of the Revenue, because, the AO has completed assessment proceedings without initiating penalty proceedings u/s.270A of the Act, even though, he has made a specific observation with regard to nonfurnishing of necessary evidences to justify claim of cost of improvement, claim against long term capital gains derived from transfer of property and this amounts to underreporting or misreporting of income as contemplated u/s.270A of the Act. Therefore, the PCIT has rightly invoked his jurisdictional power u/s.263 of the Act, and set aside the assessment order. 6. We have heard both the parties, perused the materials available on record and gone through orders of the authorities below. The sole basis for the PCIT to assume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act, although, there is an observation of underreporting or misreporting of income. The PCIT had also relied upon the decision of the Hon ble Allahabad High Court in the case of CIT v. Surendra Prasad Aggarwal reported in [2005] 275 ITR 113 (Allahabad) and held that the revisionary powers can be exercised for initiation of penalty proceedings. We find that although the Hon ble Allahabad High Court in the case of CIT v. Surendra Prasad Aggarwal (supra), has uphold 263 order passed by the PCIT for initiation of penalty proceedings, but the jurisdictional the Hon ble Madras High Court in the case of CIT v. Chennai Metro Rail Ltd. (supra), has taken a contrary view after considering the decision of the Hon ble Allahabad High Court in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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