Income Tax Appellate Tribunal - Raipur
Savitri Verma, Raigarh, Raigarh vs Principal Commissioner Of Income Tax, ... on 27 September, 2024
आयकर अपीलीय अिधकरण, रायपु र ायपीठ, रायपुर
IN THE INCOME TAX APPELLATE TRIBUNAL RAIPUR BENCH, RAIPUR
ी रिवश सूद, ाियक सद एवं ी अ ण खोड़िपया, लेखा सद के सम ।
BEFORE SHRI RAVISH SOOD, JM & SHRI ARUN KHODPIA, AM
(ITA No. 223/RPR/2024)
(Assessment Year: 2013-14)
Savitri Verma, Flas No.1/5, Aishwaryam V Pr. Commissioner of Income-tax, Raipur-1,
Flates, Governdhanpur, Raigarh S Central Revenue Building, Civil Lines, Raipur
Chhattisgarh 492001, Chhattisgarh
PAN: AJOPV2929E
(अपीलाथ /Appellant) . ( थ / Respondent)
.
िनधा रती की ओर से / Assessee by : None.
राज की ओर से / Revenue by : Dr. Priyanka Patel, Sr. DR
सु नवाई की तारीख / Date of Hearing : 26.09.2024
घोषणा की तारीख / Date of Pronouncement : 27.09.2024
आदे श / O R D E R
Per Arun Khodpia, AM:
The captioned appeal is filed by the assessee against the order of learned Principal Commissioner of Income Tax (in short, ld. PCIT), Raipur-1 passed u/s 263 of the Income Tax Act, 1961 (in short, 'the IT Act') for the AY 2013-14 dated 26.03.2024, which in turn arises from the order of the learned Assessing Officer, National Faceless Assessment Centre (NFAC) (in short, ld. AO) passed u/s 147 r.w.s. 144B of the IT Act, dated 30.03.2022.
2. The grounds of appeal raised by the assessee in the present appeal are culled out as under:
2ITA No.223/RPR/2024
Savitri Verma "1. In the facts and circumstances of the case and in law, learned Pr.
Commissioner of Income-tax has erred in passing order u/s 263 of the Income-tax Act, 1961 and in setting aside assessment order dated 30.03.2022 passed u/s 147 of the Act and issuing directions to reframe the assessment denovo.
2. In the facts and circumstances of the case and in law, learned Pr. Commissioner of Income-tax has erred in passing order u/s 263 of the Income-tax Act, 1961 for initiating penalty proceedings u/s 241(1)(c)of the Income-tax Act, 1961.
3. The impugned order is bad in law and on facts.
4. The appellant reserves the right to addition, after or omit all or any of the grounds of appeal in the interest of justice."
3. Briefly stated, the case of the assessee for AY 2013-14 was re-opened u/s 147 of the IT Act on the issue pertaining to genuineness of land acquisition charges and the deduction of interest paid on housing loan. During the re- opening assessment proceedings necessary information and submissions were furnished by the assessee before the Ld AO, based on which, the returned income shown by the assessee in her Income Tax Return filed in response to notice u/s 148 of the IT Act was accepted and the assessment was completed. Subsequently, the ld. PCIT picked up the case of the assessee for the relevant year by initiating the revisional proceeding u/s 263 of the IT Act, stating the reason that the assessee had furnished inaccurate particulars and have concealed her income to the tune of Rs.6,05,621/-, which in pursuance to reopening assessment proceedings u/s 148 of the IT Act, was shown by the assessee as her taxable income. Therefore, the penalty u/s 271 (1)(c) of the IT Act was required to be initiated on such income, whereas, the AO while passing the assessment order was failed to do so. With such 3 ITA No.223/RPR/2024 Savitri Verma observations, the proceedings u/s 263 of the IT Act are initiated and the order passed u/s 147 r.w.s. 144B of the Act, dated 30.03.2022 has been labelled as erroneous so far as prejudicial to the interests of revenue.
4. During the revisionary proceedings on being show-caused, reply to the aforesaid observations by the ld. PCIT was furnished by the assessee on 18.03.2024, however, the same was not found convincing by the ld. PCIT, therefore, the order of Ld AO was held erroneous as well as prejudicial to the interest of revenue, thus, have set aside the proceedings to the files of the Ld AO with the direction to pass fresh assessment order in speaking manner after making all necessary enquiries required, after providing due and adequate opportunity of being heard to the assessee, after considering all the submissions etc. made in counter-reply submitted by the assessee in a fair and judicious manner.
5. Aggrieved with the aforesaid order of the ld. PCIT, the assessee preferred the present appeal, which is under consideration before us.
6. At the outset, it is informed that the assessee's counsel in the present case has requested for adjournment due to his engagement in time barring audit assignments, the adjournment request of the ld. AR has been rejected, as the matter is squarely covered by the judgment of Hon'ble Panjab and Haryana High Court in the case of Commissioner of Income-tax (Central), Ludhiana v. 4 ITA No.223/RPR/2024
Savitri Verma Rakesh Nain Trivedi, [2017] 80 taxmann.com 238 (Punjab & Haryana), wherein, the Hon'ble High Court has held as under:
"5. After hearing learned counsel for the parties, we find the issue that arises for consideration of this Court inthis appeal is could the CIT in exercise of power under Section 263 of the Act hold the order of the AssessingOfficer to be erroneous and prejudicial to the interest of the revenue where the Assessing Officer had failed to initiate penalty proceedings while completing assessment under Section 153A of the Act.
6. It may be noticed that the said issue is no longer res integra. This Court in Subhash Kumar Jain case(supra) agreeing 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] 123Taxman 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 PrasadSingh 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. NathoolalBalaram [1980] 125 ITR 596/3 Taxman 170 (MP.) had concluded that where the CIT finds that the Assessing Officer had not initiated penalty proceedings under Section 271(1)(c) of the Act in the assessment order, he cannot direct the Assessing Officer to initiate penalty proceedings under Section 271(1)(c) of the Act in exercise of revisional power under Section 263 of the Act. The relevant observations recorded therein read thus:-
"9. Now adverting to the second limb, it may be noticed that the Delhi High Court in judgment reported in Addl. CIT vs. J.K.D.'Costa (1981) 25 CTR (Del) 224 : (1982) 133 ITR 7 (Del) has held that the CIT cannot pass an order under s. 263 of the Act pertaining to imposition of penalty where the assessment order under 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 under s. 271(1)(a) or unders. 273(b) are proceedings independent of and separate from the assessment proceedings. Though the expression "assessment" is used in the Act with different meanings in different contexts, so faras s. 263 is concerned, it refers to a particular proceeding that is being considered by the Commissioner and it is not possible when the Commissioner is dealing with the assessment proceedings and the assessment order to expand the scope of these proceedings and to view the penalty proceedings also as part of the proceedings which are being sought to be revised by the Commissioner. There is no identity between the assessment proceedings 5 ITA No.223/RPR/2024 Savitri Verma 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 ofconvenience than of legal requirement. All that the law requires, so far as the penalty proceedingsare concerned, is that they should be initiated in the court of the proceedings for assessment.
It issufficient 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 for which penalty action is called for. Indeed, in certain cases it is possible for the ITO to issue a penalty notice or initiate penalty proceedings even long before the assessment is completed though the actual penalty order cannot be passed until the assessment finalised. We, therefore, agree with the view taken by 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.
10. 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 inSurendra Prasad Singh & Ors. vs. CIT (1988) 71 CTR (Gau) 125 : (1988) 173 ITR 510 (Gau) andCalcutta High Court in CIT vs. Linotype & Machinery Ltd. (1991) 192 ITR 337 (Cal) havefollowed the judgment of Delhi High Court in J.K.D's Costa's case (supra).
11. However, Madhya Pradesh High Court in Addl. CIT vs. Indian Pharmaceuticals (1980) 123 ITR874 (MP) which has been followed by the same High Court in Addl. CIT vs. Kantilal Jain (1980)125 ITR 373 (MP) and Addl. CWT vs. Nathoolal Balaram (1980) 125 ITR 596 (MP) has adopteddiametrically opposite approach.
12. We are in agreement with the view taken by the High Courts of Delhi, Rajasthan, Calcutta andGauhati, and express our inability to subscribe to the view of Madhya Pradesh High Court.
6ITA No.223/RPR/2024
Savitri Verma
13. Accordingly, it is held that the initiation of proceedings under s. 263 was not justified. The Tribunalwas right in holding that after examining the record of the assessment in exercise of powers under s.263, where the CIT finds that the AO had not initiated penalty proceedings, he cannot direct the AO to initiate penalty proceedings under s. 271(1)(c) of the Act."
7. In view of the above, equally we are unable to subscribe to the view adopted by Allahabad High Court in Surendra Prasad Aggarwal's case (supra) where judgment of Madhya Pradesh High Court in Indian Pharmaceuticals' case (supra) noticed hereinbefore has been concurred with.
8. Accordingly, it is held that the initiation of proceedings under Section 263 of the Act was not justified, and we uphold the order of the Tribunal cancelling the revisional order passed by the CIT.""
7. On the contrary, Dr. Priyanka Patel learned Senior Departmental Representative (in short, ld. Sr. DR) had placed her reliance on the order of the Ld. PCIT.
8. On a thoughtful consideration of the aforesaid facts and circumstances, after hearing the contentions of the ld. Sr. DR and on perusal of the observations of the aforesaid case pronounced by Hon'ble Panjab and Haryana High Court in case of Rakesh Nain Trivedi (supra), we are of the considered view that the initiation of proceedings u/s 263 for initiation of penalty proceedings is not permissible. Thus, the action of Ld. PCIT to exercise the power u/s 263 of the IT Act to direct the assessing officer to initiate the penalty proceedings u/s 271(1)(c) of the IT Act is not permissible in the eyes of law.7 ITA No.223/RPR/2024
Savitri Verma
9. Respectfully following the aforesaid decision in the case of Rakesh Nain Trivedi (supra), we find merits in the contentions raised under the ground of present appeal by the assessee that the Ld PCIT has erred in passing the order u/s 263 of the IT Act, as the reopening proceedings are initiated only for directing the Ld AO to initiate penalty proceedings u/s 271(1)(c) of the IT Act against settled principle of law.
10. In result, the appeal filed by the assessee stands allowed, in terms of our aforesaid observations.
Order pronounced in the open court on 27/09/2024.
Sd/- Sd/-
(RAVISH SOOD) (ARUN KHODPIA)
ाियक सद / JUDICIAL MEMBER ले खा सद / ACCOUNTANT MEMBER
रायपु र/Raipur; िदनांक Dated 27/09/2024
Hem
आदे श की ितिलिप अ े िषत/Copy of the Order forwarded to :
1. अपीलाथ / The Appellant-
2. थ / The Respondent-
3. आयकर आयु (अपील) / The CIT(A),
4. The Pr. CIT -1, Raipur, (C.G.)
5. िवभागीय ितिनिध, आयकर अपीलीय अिधकरण, रायपुर/ DR, ITAT, Raipur
6. गाड फाईल / Guard file.
आदे शानु सार/ BY ORDER, //True copy// (Private Secretary) आयकर अपीलीय अिधकरण, रायपु र/ITAT, Raipur