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

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.

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.

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.s 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.

The Ld. AR submitted that the PCIT has passed ex-parte order under Section 263 of the Act without cognizance of the assessee’s submission dated 17.12.2024. The Ld. AR submitted that the PCIT has AlpeshUmeshchandra vs. ITO Asst. Year –2016-17 - 3– issued the jurisdiction under Section 263 of the Act wrongly. The initiation of penalty proceedings under Section 270A in respect of 271(1)(c) of the Act is not a revisional power and cannot be initiated under Section 263 of the Act. The Ld. AR relied upon the decision of Paramanand M. Patel which was related to the pre-amendment. The Ld. AR further relied upon Section 275 which is related to barred of limitation. The Ld. AR further submitted that there is a delay of 128 days in filing the present appeal for which the delay of condonation application has been filed. Hence, the delay is condoned.

The Ld. DR relied upon the assessment order and the order passed under Section 263 of the Act. The Ld. DR further submitted that as per Section 275 no order imposing of penalty under Chapter 21 shall be passed in case where the relevant assessment order other order is subject matter of an appeal to the CIT(A) under Section 246 or Section 246A or an appeal to the Appellate Tribunal under Section253 after the expiry of the Financial Year in which the proceedings in the course of which action for the imposition of penalty has been initiated are completed or six months from the end of the month in which the order of the Joint Commissioner (Appeals) or the Commissioner of Appeals or as the case may be the Appellate Tribunal is received by the PCIT or Commissioner whichever period expires later.

We have heard both the parties and perused all the relevant material available on record. It is pertinent to note that Section 275 categorically mentions in First Proviso that no order of imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for imposition of penalty shall be passed unless the AlpeshUmeshchandra vs. ITO Asst. Year –2016-17 - 4– assessee has been heard, or has been given reasonable opportunity of being heard. In the present case the penalty under which section has to be initiated cannot be determined under Section 263 which is a revisionary power as the Assessing Officer has initiated penalty under Section 270A and in fact the penalty has already been initiated. Thus, the revisionary power cannot be exercised merely on the fact that the penalty proceedings were not rightly invoked / initiated. Assessment order on the very same basis cannot held as erroneous in so far as prejudicial to the interest of Revenue be held.

In result, the appeal of the assessee is allowed. Order pronounced under proviso to Rule 34 of ITAT Rules, 1963 on 06/04/2026