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TMI Blog2024 (10) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... n the submission of AR and find that the Ld.PCIT erred in recording a finding of fact in his impugned order u/s. 263 of the Act that in the assessment orders in question, the AO has given a clear finding that the additions made in the assessment order attracted penalty as per the provisions of Sec.270A. As noted that it is not the case of the Ld.PCIT that the AO erred in initiating penalty u/s. 271AAB(1A) of the Act for all the three assessment years i.e. AY 2018-19 to 2020-21. It is also noted that the AO in the assessment orders (under consideration) hasn t given any finding that the assessee has underreported or misreported its income. PCIT erred in holding that omission to record satisfaction to initiate penalty proceedings u/s. 270A of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , assessee filed return of income (RoI) for AY 2018-19 on 31.01.2022 declaring total taxable income of ₹ 16,07,55,090/-. Likewise, for AY 2019- 20, pursuant to the notice u/s. 153A of the Act, the assessee filed RoI declaring total taxable income of ₹ 25,97,75,910/-. Similarly, for AY 2020-21, the assessee filed return pursuant to notice u/s. 153A of the Act declaring a total taxable income of ₹ 31,58,43,390/-. Thereafter, the AO made the following additions for the three assessment years (reflected in the captioned appeals) by assessment order dated 02.08.2022 u/s. 153A r.w.s. 143(3) of the Act: 4. The Ld.PCIT on 15.11.2023 issued show cause notice u/s. 263 of the Act conveying his desire to invoke his revisional jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Hon ble Madras High Court was pleased to uphold the action of the Tribunal holding that revision of assessment by the Commissioner on the ground that the penalty proceedings hadn t been initiated was unsustainable by relying on the decision of the Hon ble Delhi High Court in the case of CIT v. Sudershan Talkies reported in [1993] 200 ITR 153, wherein, it was held that failure on the part of the AO to initiate penalty proceedings would not give rise to the Ld.PCIT to pass order u/s. 263 of the Act and direct initiation of such proceedings. However, the Ld.PCIT wasn t convinced by the contention of the assessee and he relied on the decision of the Hon ble Madras High Court in the case of CIT v. CMRL dated 30.01.2018 reported in [2018] 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue. The learned Tribunal rightly set aside the direction of the Principal Commissioner directing the Assessing Officer to initiate penalty proceedings although we may not agree with the reasoning in its entirety. 6. And thereafter, the Ld.PCIT was of the view that since the order of the Hon ble Madras High Court in the case of CMRL (supra) was the latest judgment vis- -vis that of the decision cited by the assessee i.e. CIT v. CRK Swamy (supra), he was of the view that he had jurisdiction to invoke the revisional jurisdiction and therefore, he held that the assessment order passed by the AO u/s. 143(3) of the Act dated 02.08.2022 for AYs 2018-19 to 2020-21 as erroneous in so far as prejudicial to the interest of the Revenue to the exte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e order of assessment. Therefore, the Hon ble Madras High Court held that the Ld.PCIT seems to have distorted the order of the assessment and to that extent, the findings of the Ld.PCIT was held to be perverse and therefore, the Hon ble High Court held that in the absence of any findings of the AO with regard to concealment of income or about furnishing of inaccurate particulars of income, the Ld.PCIT erred in holding that omission to record satisfaction to initiate penalty proceedings was erroneous or prejudicial to revenue. In such factual matrix, the Hon ble Madras High Court is noted to have upheld the action of the Tribunal setting aside the direction of the Ld.PCIT to initiate penalty proceedings. 9. According to the Ld.AR, in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he three assessment years i.e. AY 2018-19 to 2020-21. It is also noted that the AO in the assessment orders (under consideration) hasn t given any finding that the assessee has underreported or misreported its income. Therefore, the Ld.PCIT erred in holding that omission to record satisfaction to initiate penalty proceedings u/s. 270A of the Act was clearly erroneous being perverse. Therefore, relying on the decision of the Hon ble Madras High Court in the case of CIT v. CRK Swamy the case of CIT v. CMRL (supra), we set aside the impugned order of the Ld.PCIT on the peculiar facts and circumstances of the case. 10. In the result, appeals filed by the assessee for all the assessment years are allowed. Order pronounced on the 25th day of Sept ..... X X X X Extracts X X X X X X X X Extracts X X X X
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