ALPESH UMESHCHANDRA,SURAT vs. ITO WARD-1(2) (1), SURAT

ITA 816/SRT/2025Status: DisposedITAT Surat06 April 2026AY 2016-20174 pages

AI SummaryAllowed

Facts

The assessee filed an appeal against an ex-parte order passed by the Principal Commissioner of Income Tax (PCIT) under Section 263 of the Income Tax Act for AY 2016-17. The PCIT had directed the Assessing Officer (AO) to modify the assessment order and initiate penalty proceedings under Section 271(1)(c) instead of Section 270A, deeming the AO's initial action erroneous and prejudicial to the revenue.

Held

The Tribunal held that the PCIT erred in exercising revisionary powers under Section 263 to change the penalty provision invoked by the AO, especially when penalty proceedings under Section 270A had already been initiated. The Tribunal noted that the PCIT cannot determine which penalty section should have been invoked as part of the revisionary power and that the assessment order cannot be deemed erroneous solely on this basis. Furthermore, the Tribunal emphasized the mandatory hearing requirement before passing orders related to penalties.

Key Issues

Whether the PCIT has the jurisdiction under Section 263 to revise an assessment order by directing the AO to invoke a different penalty provision (Section 271(1)(c) instead of Section 270A) and if the assessment order was indeed erroneous and prejudicial to the revenue on this ground.

Sections Cited

147, 144, 144B, 68, 263, 270A, 271(1)(c), 275, 246, 246A, 253

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, SURAT “DB”BENCH, SURAT

Before: DR. BRR KUMAR & MS. SUCHITRA KAMBLE

For Respondent: Shri Mukesh Jain, CIT-DR

Hearing: 19.01.2026Pronounced: 06.04.2026

IN THE INCOME TAX APPELLATE TRIBUNAL SURAT “DB”BENCH, SURAT BEFORE DR. BRR KUMAR, VICE PRESIDENT & MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I.T.A. No.816/Srt/2025 (Assessment Year: 2016-17) Alpesh Umeshchandra Jariwala, Vs. Income Tax Officer, 3/3942, Kanbi Sheri, Navapura, Ward-1(2)(1), Surat-395003 Surat [PAN No.AFJPJ4518C] (Appellant) .. (Respondent) Shri V I Rudalal, AR with Shri Rushi Parekh, Appellant by : CA Respondent by: Shri Mukesh Jain, CIT-DR Date of Hearing 19.01.2026 Date of Pronouncement 06.04.2026 O R D E R PER SUCHITRA KAMBLE - JUDICIAL MEMBER: The appeal filed by the assessee is against the order passed by the Ld. Principal Commissioner of Income Tax-1, (in short “Ld. PCIT”), Surat on 22.01.2025 for A.Y. 2016-17.

The assessee has raised the following grounds of appeal:

“1. That the learned Principal Commissioner of lncome-tax-1, Surat erred by passing ex-parte order u/s-263 without considering our submission dtd.17/12/2024. 2. That the learned Principal Commissioner of Income-tax-1, Surat erred in law as well as on the facts of the case in assuming jurisdiction u/s 263 of the Act by wrongly and incorrectly holding that the AO instead of initiating penalty proceeding u/s 270(1)(c) initiated the penalty proceedings u/s 270A of the Act, hence, the assessment order passed by the AO on dated 03/03/2023 u/s 147 r.w.s.144 r.w.s.144B, erroneous and prejudicial to the interest of revenue. Hence, the proceedings so initiated u/s 263 of the Act and the impugned order passed u/s- 263 of the Act. deserves to be quashed. 3. That the order passed by learned Principal Commissioner of Income-tax- 1, Surat, u/s-263 of IT Act setting aside the assessment framed u/s-147 r.w.s144

ITA No. 816/Srt/2025 AlpeshUmeshchandra vs. ITO Asst. Year –2016-17 - 2– r.w.s.144B of the Act as erroneous and prejudicial to the interest of the revenue is without jurisdiction, bad in law and void ab-initio. 4. The appellant craves leave to add, amend, alter, vary and' or withdraw any or all the above grounds of Appeal.” 3. The assessee filed return of income for A.Y. 2016-17 on 17.08.2016 declaring total income of Rs. 4,12,940/-. As per the information the assesee’s case was reopened in respect of investing unaccounted money in commodity market and properties. The case of the assessee was reopened under Section 147 of the Act. During the assessment proceedings, it was found that commodity market entries amounting to Rs. 1,56,00,753/- was reflecting in assessee’s bank account maintained with Tamilnadu Mercantile Bank. The assessee did not reply any statutory notices, therefore, the assessment was passed under Section 147 r.w.s. 144 r.w.s. 144B of the Act after making addition of Rs. 1,56,00,753/- treating the said amount as unexplained credits under Section 68 of the Act. The PCIT observed that the Assessing Officer has not initiated penalty under Section 271(1)(c) and initiated penalty under Section 270A of the Act. The show cause notice under Section 263 dated 05.03.2024 was issued and served upon the assessee. The assessee has not filed any reply, therefore, the PCIT directed the Assessing Officer under Section 263 to modify the assessment order thereby initiating the correct penalty proceedings under Section 271(1)(c) of the Act. The assessee filed present appeal in respect of the same before us.