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Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI
Before: SHRI ABRAHAM P.GEORGE & SHRI GEORGE MATHAN
आदेश / O R D E R
PER GEORGE MATHAN, JUDICIAL MEMBER:
the Order of Commissioner of Income Tax, Madurai-2, passed u/s.263 in C No.114/22/PCIT-2/MDU/2016-17 dated 14.03.2017 for the AY 2012-13.
Mrs.Ruby George, CIT., represented on behalf of the Revenue and Mr.G.Baskar, Adv., represented on behalf of the assessee.
ITA No.1101/Mds/2017 :- 2 -:
It was submitted by the Ld.AR that the assessee is a company which is doing the business of tractor sales. It was a submission that for the relevant AY, the assessee had filed his return of income for the relevant AY on 02.10.2012. The assessment u/s.143(3) came to be completed on 09.03.2015 wherein various additions had been made to the returned income. It was a submission that penalty proceedings u/s.271(1)(c) of the Act had been initiated by issuance of notice u/s.274 r.w.s.271 on 09.03.2015. It was a submission that the assessee had responded to the show cause notice vide a letter dated 13.04.2015. It was a submission that subsequently no action was taken by the AO. It was a submission that on 14.03.2017, the assessee was issued a show cause notice u/s.263 by the Ld.CIT, Madurai-2, asking the assessee to show cause as to why penalty u/s.271(1)(c) of the Act was not leviable and that the order passed by the AO dropping the penalty proceedings initiated u/s.271(1)(c) of the Act was erroneous and prejudice to the interest of the Revenue.
Subsequently, the order u/s.263 came to be passed on 31.03.2017 directing the AO to re-initiate the penalty proceedings in accordance with the law. It was a submission that at the outset, there was no error much less error which caused prejudice to the interest of the Revenue as required u/s.263. It was a submission that the AO had after considering the response of the assessee in respect of the penalty proceedings initiated had dropped the penalty proceedings. The directions given by the Ld.CIT for initiating fresh proceedings u/s.271(1)(c) of the Act was purely based on a change of opinion which was not permitted under the revision
ITA No.1101/Mds/2017 :- 3 -: u/s.263. It was a submission that the order of the Ld.CIT was liable to be quashed.
In reply, Ld.CIT & the Ld.DR vehemently supported the order passed u/s.263.
We have considered the rival submissions. Admittedly, a perusal of the Assessment Order in the assessee’s case passed u/s.143(3) on 09.03.2015 shows that most of the disallowances which had been made in the Assessment Order, were disallowances which have been accepted by the assessee. No evidence has been found to show that the assessee has concealed any particulars of the income or furnished inaccurate particulars of his income in the course of the assessment. A perusal of the Assessment Order also shows that penalty proceedings had been initiated and show cause notice issued and the assessee also filed his reply. The AO seems to have been dropped penalty proceedings after considering the reply filed by the assessee, thus it is a conscious act done by the AO. A perusal of the provisions of Sec.271(1)(c) of the Act shows that the words used are satisfaction of the AO. Admittedly, the AO has dropped the penalty proceedings after considering the reply of the assessee and it showed that the AO was not satisfied to proceed with the penalty proceedings more so, the AO was not satisfied that there was a concealment of income or furnishing of inaccurate particulars by the assessee. Now, Ld.CIT has invoked powers u/s.263 to direct the AO to ITA No.1101/Mds/2017 :- 4 -:
initiate the penalty proceedings in accordance with the law. The AO having once recorded his satisfaction in respect of the additions and having dropped the penalty proceedings, it would be an absolute change of opinion for the Ld.CIT to direct the AO to draw satisfaction again. In these circumstances, we find no error in the order of the AO much less error which has caused prejudice to the Revenue for the purpose of invoking the provisions of Sec.263 of the Act. In these circumstances, we are of the view that the order passed u/s.263 is unsustainable and consequently quashed the same.
In the result, the appeal filed by the assessee stands allowed.
Order pronounced in the Open Court on September 20, 2017, at Chennai.