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TMI Blog2023 (12) TMI 581X X X X Extracts X X X X X X X X Extracts X X X X ..... nue for AO not initiating penalty proceedings while completing assessment u/s 143(3) of the Act. This issue is no longer res integra. In the case of Sri Adithya Homes Private Limited [ 2023 (7) TMI 1330 - ITAT HYDERABAD] a Co-ordinate Bench of the Tribunal having noticed the decision in the case of Rakesh Nain Trivedi [ 2015 (12) TMI 979 - PUNJAB AND HARYANA HIGH COURT] and also the line of decisions following the view of Indian Pharmaceuticals [ 1978 (10) TMI 12 - MADHYA PRADESH HIGH COURT] and ACIT vs. Kantilal Jain [ 1979 (10) TMI 37 - MADHYA PRADESH HIGH COURT] etc., relied on the decision of Vegetable Products Ltd [ 1973 (1) TMI 1 - SUPREME COURT] held the issue in favour of the assessee, stating that in case of more than one i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of penalty by the learned Assessing Officer has resulted in an incorrect application of law as liability for penalty is a legal consequence mandated by the Act for not disclosing the correct income in the return of income filed under section 139 of the Act. According to the learned PCIT, non-initiation of penalty under section 271(1)(c) of the Act does not have deterrent effect and such action can also lead to perpetuating such wanton acts of concealment of income to evade due tax obligations. Learned PCIT, therefore, held that the assessment order is erroneous order insofar as it is prejudicial to the interest of Revenue, and set aside the order to the learned Assessing Officer, for the purpose of initiating the penalty proceedings. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Rakesh Nain Trivedi, [2017] 80 taxmann.com 238. He further submitted that the facts of these two appeals are identical to the facts of the case in Sri Adithya Homes Private Limited vs. ACIT decided by a Co-ordinate Bench of the Tribunal in ITA Nos. 230 231/Hyd/2023 for the assessment years 2016-17 and 2017-18, dated 21/07/2023. 4. Per contra, learned DR submitted that the assessment order as it is, is erroneous insofar as it is prejudicial to the interest of Revenue because in this case, the twin requirements specified in the case of M/s. Malabar Industries Co Ltd vs. CIT (2000) 109 taxman 66(SC) are satisfied. He placed reliance on the decisions of the Hon'ble Madhya Pradesh High Court reported in the cases of ACIT vs. Indian P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing with the view of High Courts of Delhi in Additional J.K.D.'s Costa case (supra), CIT v. Sudershan Talkies [1993] 201 ITR 289 (Delhi) and CIT v. Nihal Chand Rekyan [2000] 242 ITR 45/[2002] 123 Taxman 353 (Delhi), Rajasthan in CIT v. Keshrimal Parasmal [1986] 157 ITR 484/27 Taxman 447 (Raj.), Calcutta in CIT v. Linotype Machinery Ltd. [1991] 192 ITR 337 (Cal.) and Gauhati in Surendra Prasad Singh v. CIT [1988] 173 ITR 510/40 Taxman 346 (Gau.) whereas dissenting with the diametrically opposite approach of Madhya Pradesh High Court in Addl. CIT v. Indian Pharmaceuticals [1980] 123 ITR 874 (MP.), Addl. CIT v. Kantilal Jain [1980] 125 ITR 373/[1981] 5 Taxman 92 (MP.) and Addl. CWT v. Nathoolal Balaram [1980] 125 ITR 596/3 Taxman 170 (MP ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity between the assessment proceedings and the penalty proceedings; the latter are separate proceedings, that may, in some cases, follow as a consequence of the assessment proceedings. As the Tribunal has pointed out, though it is usual for the ITO to record in the assessment order that penalty proceedings are being initiated, this is more a matter of convenience than of legal requirement. All that the law requires, so far as the penalty proceedings are concerned, is that they should be initiated in the court of the proceedings for assessment. It is sufficient if there is some record somewhere, even apart from the assessment order itself, that the ITO has recorded his satisfaction that the assessed is guilty of concealment or other default ..... X X X X Extracts X X X X X X X X Extracts X X X X
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