ASHVIN CHANABHAI RAMANI,RAJKOT vs. ITO WARD 2(1)(2), RAJKOT, RAJKOT

आयकर अपीलीय अिधकरण, राजकोट �यायपीठ, राजकोट। In The Income Tax Appellate Tribunal, Rajkot Bench, Rajkot Before Dr. Arjun Lal Saini, Accountant Member And Shri Sonjoy Sarma, Judicial Member आयकरअपीलसं./ITA No. 281/Rjt/2025 (�नधा�रणवष�/Assessment Year: (2015-16) Ashvin Chanabhai Ramani Principal Commissioner Of Income Tax – 1, Prenadham 2 Bhavnath Park STN Vs. Aayakar Bhawan 11, Rajkot Gujrat - 360002 Haridhava RD Rajkot – Gujrat 360002 �थायीलेखासं./जीआइआरसं./PAN/GIR No.: BJOPR9659E (अपीलाथ�/Appellant) (��यथ�/Respondent) Appellant by : Shri Manoj Korat, Ld. AR Respondent by : Shri Kiran Unavekar, Ld. CIT DR Date of Hearing : 23/06/2026 30/06/2026 Date of Pronouncement : ORDER Per, Shri Sonjoy Sarma, JM: By way of this appeal, the assessee has challenged the correctness of the order dated 27.01.2023, passed by the Learned Principal Commissioner of Income-tax (in short “Ld. PCIT”) under section 263 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’), for the assessment year 2015-16. 2. Brief fact of the case are that for AY 2015–16, the case of the assessee was reopened and notice under section 148 of the Income Tax Act was issued.

In response thereto, the assessee filed the return of income. Thereafter, the Assessing Officer passed an order under section 147 read with section 144B of the Act accepting the returned income. It was noticed by Ld. PCIT (Rajkot) that the assessment order had been passed without making due enquiries and, therefore, the same was considered erroneous and prejudicial to the interests of the Revenue. It was observed that the assessee had not filed the return of income within the time prescribed under section 139(1) of the Act. Accordingly, the Assessing Officer ought to have examined the issue of initiation of penalty proceedings under section 271F of the Act for non-filing of return of income and should have made necessary verification and taken action as mandated under law. It was further noticed that the assessee had declared an amount of ₹6,35,612 without filing the return under section 139 of the Act. However, the issue had not been subjected to proper scrutiny and the income may have escaped proper assessment. It was also observed that the Assessing Officer ought to have examined initiation of penalty proceedings under section 270F and 271(1)(c) of the Act for concealment or under-reporting of income, but no necessary verification or action as required under law was undertaken before passing the assessment order. Accordingly proceeding under section 263 of the Act was initiated and an opportunity was granted to the assessee to furnish submissions. However, no response was initially received from the assessee. Consequently, pursuant to notice issued by the Ld. PCIT, Rajkot dated 24.01.2025, the assessee filed submissions in reply. However, the learned PCIT, not being satisfied with the explanation, held that the assessment order had been passed without proper application of mind and without considering the relevant provisions of law regarding imitation of penalty under sections 271F and 271(1)(c) of the Act and, therefore, the same was erroneous and prejudicial to the interests of the Revenue. Accordingly, the assessment order passed by the Assessing Officer was set aside for fresh assessment to the extent of the issues discussed in the revision order, with directions to make proper examination after due application of mind and consideration of the relevant provisions of law. 3. Aggrieved by the order, the assessee preferred an appeal and submitted that the order passed by the Ld. PCIT (Rajkot) was bad in law and liable to be quashed since the assessee had properly disclosed his income during the assessment proceedings and, therefore, there was no issue warranting revision under section 263 of the Act. 4. On the other hand, the Ld. strongly opposed such contention and submitted that the proceedings under section 263 were validly initiated because the Assessing Officer had failed to initiate penalty proceedings under sections 271F and 271(1)(c) of the Act, thereby rendering the assessment order erroneous and prejudicial to the interests of the Revenue. It was further submitted that the learned PCIT had categorically observed that the Assessing Officer had failed to examine the relevant facts while passing the assessment order and, therefore, revisionary jurisdiction under section 263 of the Act was rightly exercised. 5. We, after hearing the submissions of both parties and perusing the material available on record, the we observed that no penalty proceedings had been initiated by the Assessing Officer while passing the order under section 147 read with section 144B of the Act, despite the fact that the assessee had not filed the return of income for the relevant assessment year. We, find that it was the duty of the Assessing Officer to examine the issue and initiate appropriate proceedings under sections 271F and 271(1)(c) of the Act wherever applicable. Since the Assessing Officer had failed to examine the issue of initiation of penalty proceedings, therefore the Ld. PCIT was justified in exercising jurisdiction under section 263 of the Act and directing the Assessing Officer to revisit the matter and make a fresh assessment on the issue. Accordingly, we do not find any infirmity in the order passed by the Ld. PCIT, Rajkot and, following the principles laid down by the Hon’ble Supreme Court, Malabar Industrial Co. Ltd. Vs. CIT (2020) [243 ITR 83] upheld the revision order and dismissed the appeal of the assessee.

Order is pronounced in the open Court on 30/06/2026.

Sd/- Sd/-

[ Dr. Arjun Lal Saini ] [ Shri Sonjoy Sarma ] लेखा सद�य/Accountant Member �याियक सद�य/Judicial Member S राजकोट/Rajkot िदनांक/ Date: 30/06/2026 Copy of the order forwarded to : 1. The assessee 2. The Respondent 3. CIT 4. The CIT(A) 5. DR, ITAT, Rajkot 6. Guard File By order

Sr. Private Secretary ITAT, Rajkot

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