DWARKA PRASAD JHAWAR,ADILABAD vs. INCOME TAX OFFICERS,WARD -1, MANCHERIAL

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ITA 360/HYD/2021Status: DisposedITAT Hyderabad13 December 2021AY 2016-175 pages
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What did the Tribunal hold?

The Tribunal found no merit in the PCIT's revision direction. It held that for revision jurisdiction to be exercised, the assessment must be both erroneous and prejudicial to revenue, and the AO had already initiated penalty proceedings under Section 271(1)(c). The Tribunal also noted that the PCIT had not specifically established that the assessee's income met the definition of 'undisclosed income' to attract Section 271AAB.

What were the facts?

The Principal Commissioner of Income Tax (PCIT) initiated revision proceedings under Section 263 of the Income Tax Act, 1961, against an assessment order. The PCIT alleged that the Assessing Officer (AO) failed to initiate penalty proceedings under Section 271AAB, making the assessment erroneous and prejudicial to the interest of revenue.

What were the issues?

Whether the PCIT's revision under Section 263 was justified due to the AO's alleged failure to initiate penalty under Section 271AAB, and whether the assessment was erroneous and prejudicial to revenue.

Which sections of the Income-tax Act were involved?

Section 263,Section 153A,Section 143(3),Section 271AAB,Section 271(1)(c),Section 132A(3)

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Income Tax Appellate Tribunal, HYDERABAD ‘B’ BENCH, HYDERABAD.

O R D E R Per Shri S.S. Godara, J.M. : This assessee’s appeal for Asst. Year 2016-17 arises from the Pr. Commissioner of Income Tax (Appeals)-2, Hyderabad’s order dt.30.03.2021 passed in case No.ITBA/REV/F/REV5/2020-21 / 1031963437(1) in Section 263 of Income Tax Act, 1961 (‘the Act’).

Case called twice. None appears at assessee's behest. We accordingly proceed exparte.

2.

We have heard learned CIT-DR and perused the case file with his able assistance.

3.

Relevant facts are found to be in a very narrow compass. Learned PCIT’s revision direction under challenge before us term the corresponding section 153A r.w.s. 143(3) assessment dt.30.11.2018 framed in furtherance to the search / seizure operation dt.26.05.2016; as an erroneous one so far as prejudice to the interest of revenue on account of the latter is alleged failure in initiating 271AAB penalty. Mr. Sai vehemently contended in support of the PCIT’s revision directions that such an inaction on the Assessing Officer’s part is very much exigible to 263 revision jurisdiction in view of (2005) 275 ITR 113 (Allahabad) CIT Vs.Sunder Prasad Agrawal.

4.

We find no merit either in the PCIT’s revision direction nor in Revenue’s vehement contention in support thereof. There could hardly be any dispute about the settled legal proposition that an assessment has to be both erroneous and prejudicial to the interest of revenue before the CIT or the PCIT; as the case may be, exercises his revision jurisdiction. And that it is not each and every instance of such an assessment to be made subject to revision proceedings but only those wherein the assessing authority does not adopt one of the two possible views that Malabar Industrial Co. Ltd. Vs. CIT 243 ITR 83 (SC).

5.

We next notice from a perusal of the case file that the Assessing Officer had duly issued his notice dt.30.11.2018 initiating penalty u/s. 271(1(c) of the Act. Mr. Sai at this stage sought to buttress the point that the assessee's objections against non-initiation of section 271AAB are not acceptable in light of section 132A(3)’s stipulation regarding the specified material which is applicable in toto under the impugned penal provision. We see no substance in the Revenue’s instant argument as it is not the PCIT’s case that the relevant facts involved attract herein specific definition of “undisclosed income” in 271AAB Explanation (c) of the Act. He has nowhere held in specific terms that the assessee's alleged disclosed income; if any satisfies the foregoing definition clause so as to attract the impugned section 271AAB penalty proceedings and failure to this extent of the Assessing Officer’s part attracts revision mechanism in issue. We accordingly reverse the PCIT revision directions and accept the assessee's substantive ground(s) to this effect. Ordered accordingly.

6.

This assessee's appeal is allowed in above terms.

Order pronounced in the open court on 13th Dec., 2021.

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