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Before: Shri Laliet Kumar & Dr. Mitha Lal Meena
In the Income-Tax Appellate Tribunal, Agra Bench, Agra
Before : Shri Laliet Kumar, Judicial Member And Dr. Mitha Lal Meena, Accountant Member
ITA Nos.153 to 156/Agr/2017 Assessment Years: 2009-10 to 2012-13
Nalanda Builders & Developers (I) vs. DCIT, Central Circle, Ltd, first Floor, Shanti Mall, Church Agra Road, Agra. PAN –AACCN2200J (Appellant) (Respondent)
Appellant by S/Sh. Rajendra Sharma, Manuj Sharma, Advocates Respondent by Sh. Sunil Bajpai, CIT/DR
Date of Hearing 15.07.2019 Date of Pronouncement 15.07.2019
ORDER Per Bench: These are the appeals arising out of the order passed by Pr. CIT u/s. 263 of
the IT Act on 21.03.2017 for the assessment years 2009-10 to 2012-13. The
assessee has raised the following grounds :
That the Principal Commissioner of Income Tax (Central) has been arbitrary and unjust while setting aside the penalty order dated 24.09.2015, passed by the AO under Section 271AAB(l)(b) of the Income Tax Act. The order passed by PCIT under Section 263 of Income Tax Act is against the law, liable to be set aside.
That while passing the order under Section 263 of Income Tax Act, the Principal Commissioner of Income Tax has completely ignored that the order of the AO dated 24.09.2015 imposing the penalty under Section 271AAB(l)(b) is merged with the order of Commissioner of Income Tax (Appeals) dated 15.02.2017, thus, the order passed after that under Section 263 of Income Tax
ITA Nos. 153 to 156/Agr/2017 2
act by the Principal Commissioner of Income Tax on 21.03.2017 is out of jurisdiction, liable to be set aside.
That the order dated 21.03.2017 passed under Section 263 by the Principal Commissioner of Income Tax is bad in law, liable to be set aside.
With respect to ground No. 2, it was submitted that in the present case, the
Assessing Officer vide order dated 24.09.2015 had passed an order imposing
penalty u/s. 271AAB(1)(b) of the Income-tax Act. Feeling aggrieved by the order
passed by the Assessing Officer, the assessee had preferred appeal before the
Commissioner (Appeals). The Commissioner (Appeals) had decided the appeal
against the assessee vide order dated 15.02.2017. While doing so, the ld. CIT(A)
enhanced the penalty from 20% to 30% by invoking the provisions of section
271AAB(1)(c) of the Act. The Pr. CIT while exercising powers u/s. 263 had held that
the Assessing Officer had wrongly applied the provisions of section 271AAB(1)(b) of
the Act and instead the provisions of section 271AAB(1)(c) are liable to be applied.
Thus, the order of the Pr. CIT is in line with the order passed by the CIT(A).
It was submitted by the ld. AR that as the order of the CIT(A) dated
15.02.2017 was passed after considering the material available on record and also
in accordance with law, therefore, subsequent order passed by the Pr. CIT dated
21.03.2017 was without jurisdiction, as once the CIT(A) is ceased the matter then it
is not within the relevant jurisdiction of the Pr. CIT to pass the order with respect to
the same subject matter and hence, order u/s. 263 was not in accordance with law.
ITA Nos. 153 to 156/Agr/2017 3
Per contra, the ld. DR submitted that the order passed by the Pr. CIT was in
accordance with law and it was the duty of the assessee to bring to the notice of Pr.
CIT about the pendency of appeal proceedings.
We have heard the rival contentions of the parties and perused the record. In
the present case, the Assessing Officer has passed the order on 24.09.2015 imposing
penalty u/s. 271AAB(1)(b) of the Act. Against that order, the assessee had preferred
appeal before the CIT(A) and the CIT(A) had passed order on 15.02.2017. From the
perusal of the order passed by the ld. Pr. CIT dated 21.03.2017, more particularly,
paragraph No. 5, it is clear that the Pr. CIT had issued show cause notice only on
22.02.2017, i.e., after passing the order by ld. CIT(A) on 15.02.2017. The Pr. CIT can
exercise jurisdiction on twin principles laid down by Hon’ble Supreme Court in the
case of Malabar Industries, wherein it was held that the order should be erroneous
and prejudicial to the interest of Revenue and it was further held that before
exercising the powers u/s. 263, the Pr. CIT should make enquiries and apply his
mind. Once, the appeal order had already been passed by the ld. CIT(A) on
15.02.2017 holding that the provisions of section 271AAB(1)(c) of the Act are
applicable instead of section 271AAB(1)(b) of the Act, it is expected from the Pr. CIT
to apply his mind and also go through the order passed by the ld. CIT(A). However,
in the present case, no such exercise was done. On this count alone, the order of the
Pr. CIT is required to be set aside.
ITA Nos. 153 to 156/Agr/2017 4
Further, there is one more aspect that the order of ld. CIT(A) was available in
the office of Pr. CIT, which is supposed to be looked into before exercising the
powers u/s. 263 of the Act. However, the ld. Pr. CIT has not looked into the order
passed by the ld. CIT(A) and ignored the said order. The impugned order was
passed by the Pr. CIT u/s. 263. In our view the powers u/s. 263 of the Act are
required to be exercised diligently after applying the mind and looking into the
records. In view of this, the ld. Pr. CIT has not exercised his jurisdiction in
accordance with law. Further we are of the also opinion that the powers u/s. 263
and the powers of the ld. CIT(A) u/s. 251 are overlapping. Once the subject matter of
263 proceedings had already attained finality before the ld. CIT(A), then in that
eventuality unless there is element of fraud etc., the Pr. CIT should not exercise its
powers u/s. 263 and should abstain to exercise its powers u/s. 263 when the order
of the Assessing Officer has already been scrutinized by the ld. CIT(A). In the present
case, the ld. Pr. CIT has neither complied with the provisions of section 263 (twin
conditions) nor he had observed the separation of power nor he had stuck to the
finality of order once order of the Assessing Officer was scrutinized by the ld.
CIT(A). We are of the firm opinion that the ld. CIT(A) and CIT(Admn.) are of the
officers of the same rank and are exercising their powers, i.e., appellate powers and
Revisionary powers. Once the order is already examined and scrutinized by the ld.
CIT(A) then the order should not be examined except with due exception of fraud
ITA Nos. 153 to 156/Agr/2017 5
etc. by the Pr. CIT. No case is set up by the ld. Pr. CIT of fraud etc. Therefore, the
exercise of jurisdiction u/s. 263 was without any basis. Accordingly, the orders
passed u/s. 263 were uncalled for and not in accordance with law. Hence, we quash
the same.
In the result, all the appeals of the assessee are allowed.
Order pronounced in the open court.
Sd/- Sd/-
(Dr. Mitha Lal Meena) (Laliet Kumar) Accountant Member Judicial member
Dated: 15.07.2019 *aks* Copy of order forwarded to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order Assistant Registrar Income Tax Appellate Tribunal Agra Bench, Agra