DCIT CC 2(2), KOLKATA, KOLKATA vs. SRI SHYAM FASHION TEXTILES PVT LTD, KOLKATA

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ITSSA 74/KOL/2025Status: DisposedITAT Kolkata05 February 2026AY 2017-186 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the order of the CIT(Appeals) and dismissed the appeal filed by the Revenue. The Tribunal noted that penalty proceedings were initially initiated under Section 271AAB and subsequently dropped, with a corrigendum issued to change the penalty section to Section 270A. It was undisputed that the search took place on September 26, 2019, and the provisions of Section 271AAB were not attracted. The Tribunal acknowledged that the initial penalty proceedings under Section 271AAB were initiated with the prior approval of the Additional CIT and that there was an application of mind by both the AO and the Additional CIT. However, the Tribunal agreed with the CIT(Appeals) that a corrigendum issued to change the section under which penalty was initiated, especially when the subsequent section requires specific satisfaction and approval, would not suffice. The Tribunal found no infirmity in the CIT(Appeals)'s decision to delete the penalty, citing the principle that a corrigendum is for rectifying errors and not for altering the fundamental basis of penalty initiation, particularly when it involves changing the section requiring specific satisfaction of the AO and approval of higher authorities. The penalty imposed under Section 270A was cancelled.

What were the facts?

The Revenue has appealed against an order of the CIT(Appeals) for Assessment Year 2017-18. The assessee, Sri Shyam Fashion Textiles Pvt. Ltd., initially declared a total income of Rs. 4,74,65,560/-. Following a search and seizure operation under Section 132 of the Income-tax Act, 1961, on September 26, 2019, the assessee's assessment was completed under Section 153A at Rs. 10,01,45,940/-. Penalty proceedings were initiated under Section 270A, resulting in a penalty of Rs. 91,09,518/-. The CIT(Appeals) allowed the assessee's appeal, leading to the present appeal by the Revenue. The Revenue's appeal was filed with a delay of 36 days, which was condoned.

What were the issues?

1. Whether the Assessing Officer (AO) was competent to issue a corrigendum order rectifying a mistake in the original assessment order, specifically concerning the section under which penalty was initiated. The Revenue contends that the CIT(Appeals) erred in holding that the AO was not competent to issue such a corrigendum. The Assessee argues that the penalty was initially proposed under Section 271AAB(1A) and later changed to Section 270A via a corrigendum. The Assessee highlights that the search was initiated on September 26, 2019, and provisions of Section 271AAB are not attracted in such cases. The Assessee further submits that the power to impose penalty under Section 271 depends on the satisfaction of the Income-tax Officer during the proceedings, which cannot be exercised if satisfaction is not recorded. The Assessee relies on judicial pronouncements regarding the AO becoming functus officio after passing an assessment order and the limitations on changing penalty sections via corrigendum, especially when satisfaction and approval are required.

Which sections of the Income-tax Act were involved?

Section 132,Section 153A,Section 270A,Section 271AAB,Section 250,Section 154,Section 147,Section 263,Section 254,Section 153D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “D” BENCH KOLKATA

Before: Shri Rajesh Kumar & Shri Pradip Kumar Choubey

आयकर अपील�य अ�धकरण, कोलकाता पीठ, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH KOLKATA Before Shri Rajesh Kumar, Accountant Member and Shri Pradip Kumar Choubey, Judicial Member IT(SS)A No.74/Kol/2025 Assessment Year: 2017-18 DCIT, CC-2(2), Kolkata……...……..……….………….……….……….……Appellant vs. Sri Shyam Fashion Textiles Pvt. Ltd……………….…….....……...…..…..Respondent Diamond Heritage, Room No.508 & 509, Strand Road, Kol-1. [PAN: AAHCS3729A] Appearances by: Shri Sanat Kr. Raha, CIT-DR, appeared on behalf of the appellant. Shri Miraz D. Shah, AR, appeared on behalf of the Respondent. Date of concluding the hearing : December 01, 2025 Date of pronouncing the order : February 05, 2026 ORDER Per Pradip Kumar Choubey, Judicial Member: This appeal filed by the revenue is directed against the order dated 19.02.2025 of the CIT(Appeals)-26, Kolkata (hereinafter referred to as the “CIT(A)”) passed u/s 250 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) for the assessment year 2017–18. 2. The appeal has been filed by the revenue with a delay of 36 days and the revenue has filed a petition for condonation of the delay. After going over the said petition, we find sufficient reasons behind the delay and consequently, the delay in filing the appeal is hereby condoned and we proceed to dispose of the appeal on merits.

3.

Brief facts of the case are that the assessee filed his original return of income for Assessment Year: 2017-18 declaring a total income of Rs. 4,74,65,560/-. Subsequently a Search and Seizure operation under

IT(SS)A No.74/Kol/2025 Sri Shyam Fashion Textiles Pvt. Ltd section 132 of the Act was conducted at the business premises, office premises and residential premises of the Garments Group of entities on 26.09.2019 and on subsequent date. The assessment of the assessee was completed under section 153A of the Act at an assessed total income of Rs. 10,01,45,940/- and penalty proceedings were initiated and order u/s 270A of the Act was passed levying penalty of Rs. 91,09,518/-.

4.

Aggrieved by the above order, the assessee filed appeal before the ld. CIT(A) wherein the ld. CIT(A) allowed the appeal of the assessee by observing as under:

“In the case of BVM Global Education Trust Vs Assessment UnitW.P.No.10834 of 2024 dtd25/04/2024 it was held: 5. On perusal of the assessment order, it is clear that it was concluded therein that no addition is being made in relation to the issues mentioned in paragraph 1 thereof. In those circumstances, the demand made in the computation sheet and the demand notice cannot be sustained. DCIT, Circle 2(2)(1), International Taxation, New Delhi. Vs. Mondon Investments Ltd., ITA No. 4014/Del/2018dtd25.07.2023 it was held: 11. The issue, which arises for consideration is, once the Assessing Officer has passed an assessment order, whether rightly or wrongly, does he has the power to cancel / recall / withdraw the assessment order or declare it as null and void ? On carefully scanning through the provisions of the Act, we were unable to locate any such power vested with the Assessing Officer to declare an assessment order passed by him earlier as null and void. However, in the facts of the present case, the Assessing Officer has not only declared the assessment order passed by him earlier as null and void, but has passed a fresh assessment order when earlier assessment order was under challenge before the first appellate authority. Once, an assessment order is passed by Assessing Officer and communicated to the assessee, he becomes functus officio in respect of that assessment and cannot tinker with the assessment order passed. Of course, the Assessing Officer is empowered under the Act to reopen the assessment in case there is escapement of income or rectify the assessment order. However, such exercise of power by the Assessing Officer has to be in strict compliance with the conditions of section 147 and 154, respectively. An assessment order passed by the Assessing Officer can only be interfered with either by higher appellate authorities in terms of section 250 and 254 of the Act or by the revisionary authority under section 263 of the Act. The Assessing Officer himself cannot assume the role of either the appellate authority or

IT(SS)A No.74/Kol/2025 Sri Shyam Fashion Textiles Pvt. Ltd

the revisionary authority to revise / modify / cancel or withdraw the assessment order. The statute does not confer any power on the Assessing Officer to either withdraw or modify or substitute one assessment order passed by him earlier with another assessment order subsequently. If the Assessing Officer is permitted to do so, it will lead to undesirable consequences and will give a free hand to the Assessing Officer to pass an assessment order and subsequently withdraw/modify/cancel it according to his own whims and caprices. This will not only be against the scheme of the Act, but against all legal principles. In view of the aforesaid, we hold that the Assessing Officer had no jurisdiction to declare the assessment order passed earlier by him as null and void and substitute it with another assessment order. In view of the aforesaid, we uphold the decision of learned Commissioner (Appeals) in declaring the assessment order as invalid, though, based on our own reasoning. Grounds are dismissed. In ITO Vs Rajkumari ITA No. 353/CHNY/2024 dtd 25/10/2024 it was held: 7.2 We noted from the above judgment of Hon’ble High Court of Madras that the Hon’ble High Court has held the corrigendum issued in rectifying the error in preamble of the assessment order as legal and valid. Considering the facts of the present case before us, we noted that the AO while issuing original assessment order has wrongly noted the details of some other assessee as is apparent from the assessment order issued on 20.12.2019. The fact is that the corrigendum issued thereafter i.e., immediately on next day on 21.12.2019carries the correct assessment order which was issued as a correct assessment order. Admittedly, the assessment order issued vide corrigendum is matching with the computation sheet and demand notice issued along with the original assessment order dated 20.12.2019. The decision of Hon’ble Supreme Court rather support the case of Revenue for the reason that the ITNS 65 and ITNS 50i.e., Form for determination of tax payable and demand notice (in old scheme),now in computerization the computation sheet and demand notice is generated on the system which was created itself on 20.12.2019. In our view, the AO has made mistake in issuing original assessment order and subsequently rectified the mistake by issuing corrigendum which is a valid assessment order and hence, we reverse the finding of CIT(A) on this issue. Section 270A provides that the AO may direct during the course of any proceedings…. In this case was proceeding was u/s 153A of the Act which got concluded by the order u/s 153A of the Act. Once, an assessment order is passed by Assessing Officer and communicated to the assessee, he becomes functus officio in respect of that assessment and cannot tinker with the assessment order passed. What can be done by the AO as a corrigendum is with regard to the facts stated in the Assessment order as held in the case of Rajkumari(supra). A corrigendum issued in

IT(SS)A No.74/Kol/2025 Sri Shyam Fashion Textiles Pvt. Ltd rectifying the error in preamble of the assessment order is legal and valid. But where initiation of penalty requires the satisfaction of the AO, the same cannot be done byway of a corrigendum. “Corrigendum” means things to be corrected. It means there must be an error and there is a necessity to amend and rectify it. In grab of corrigendum, the section under which penalty is to be initiated cannot be altered and or changed, even more when it requires the satisfaction of the AO and the approval of the Addl CIT, when the assessment was concluded u/s 153A of the Act but that is what appears to have been done. Further, the penal proceedings u/s 271AAB of the Act was dropped. Respectfully, following the decisions cited above to the facts of the case, it is held that the penalty initiated originally under one section after recording of satisfaction during the course of assessment cannot be changed by way of a corrigendum when the subsequent section requires the AO to state as to which limb the penal provisions are attracted after the conclusion of assessment proceeding. In the result, the penalty imposed us/ 270A is cancelled. Since, penalty is cancelled on technical ground, the adjudication of levy of penalty on merits becomes academic in nature. Hence, no opinion is rendered thereon.” 5. Aggrieved and dissatisfied, the revenue is in appeal before us raising the following grounds of appeal:

“1. That on the facts and circumstances of this case, whether the ld. CIT(A) erred in law in holding that the Assessing Officer was not competent to issue corrigendum order rectifying a mistake in the original assessment order. 2. That the revenue reserves its right to substantiate, modify, delete supplement and/or alter any or all grounds of appeal at any time of appeal proceedings.” 6. Contrary to that, the ld. AR supports the impugned order by submitting that the order of assessment was passed u/s 153A of the Act dated 26.09.2021 wherein Penalty proceedings u/s 271AAB(1A) were initiated after the completion of the proceedings under the aforesaid section. It has been submitted by the ld. AR that the penalty was proposed and cancelled in a case where search has been initiated on or after 1-7-2012 and 15-12-2016 and in the present case, search was initiated on 26.09.2019. The ld. AR stated that the Assessing Officer

IT(SS)A No.74/Kol/2025 Sri Shyam Fashion Textiles Pvt. Ltd passed a corrigendum Order u/s 153A dated 02.03.2022 stating that there was an inadvertent typographical/clerical error in quoting the penalty section as u/s 271AAB(1A) instead of Section 270A. The ld. AR submits that there are several judicial pronouncements which laid down the power to impose penalty under section 271 of the Act depends upon the satisfaction of the Income-tax Officer in the course of the proceedings under the Act and it cannot be exercised if he is not satisfied and has not recorded his satisfaction.

7.

Upon hearing the submissions of the counsels of the respective parties and on perusal of the materials on record, we find that there is no denying to the fact that penalty proceedings were initiated first of all u/s 271AAB and thereafter, was issued by dropping penalty u/s 271AAB of the Act by the Assessing Officer. It is undisputed fact that the search took place on 26.09.2019 and provisions of section 27AAAB is not attracted. It is important to mention here that the order was passed with prior approval of Addl. CIT and copy of the assessment order and penalty notice u/s 271AAB was issued and admittedly there is application of mind, first of all by the Assessing Officer while initiating penalty u/s 271AAB and thereafter while granting approval u/s 270A. It means that two authorities i.e. DCIT, Central Circle 2(2), Kolkata while framing assessment has initiated penalty proceedings u/s.271AAB of the Act and also approval was granted by the Add. CIT, Central Range-2, Kolkata as per the provisions of section 153D of the Act. The ld. CIT(A) dealt the question then arises is whether a corrigendum issued with regard to the section under which penalty has been issued would suffice for concluding the proceedings and discussed various judicial proceedings in this content and thereafter, deleted the penalty rightly. We do not find any infirmity in the order of the ld. CIT(A) and the same is upheld.

IT(SS)A No.74/Kol/2025 Sri Shyam Fashion Textiles Pvt. Ltd 8. In view of the above discussion, the appeal filed by the revenue is dismissed. Kolkata, the 5th February, 2026.

Sd/- Sd/- [Rajesh Kumar] [Pradip Kumar Choubey] Accountant Member Judicial Member Dated: 05.02.2026. RS Copy of the order forwarded to: 1. Appellant - 2. Respondent - 3. CIT(A)- 4. CIT- , 5. CIT(DR),

//True copy// By order Assistant Registrar, Kolkata Benches

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