GURJANT SINGH,JAIPUR vs. PCIT-2, JAIPUR

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ITA 356/JPR/2023Status: DisposedITAT Jaipur03 May 2024AY 2018-19Bench: DR. S. SEETHALAKSHMI (Judicial Member), SHRI RATHOD KAMLESH JAYANTBHAI (Accountant Member)14 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the PCIT cannot revise an assessment order solely to direct the initiation of penalty proceedings or to change the section under which penalty is to be levied. Following Supreme Court precedent, the PCIT's power under Section 263 does not extend to directing the AO to initiate penalty proceedings when the assessment order itself is not considered erroneous or prejudicial to revenue on that specific ground.

What were the facts?

The assessee's assessment order was revised by the Principal Commissioner (PCIT) under Section 263 of the Income Tax Act. The PCIT found that the Assessing Officer (AO) had initiated penalty proceedings under Section 270A instead of Section 271AAC, which was applicable due to additions made under Section 68. The assessee had made substantial purchases from suppliers whose genuineness and creditworthiness were not adequately established.

What were the issues?

Whether the PCIT can invoke Section 263 to revise an assessment order solely for the purpose of directing the initiation of penalty proceedings under a different section than that chosen by the AO.

Which sections of the Income-tax Act were involved?

Section 263,Section 271AAC,Section 270A,Section 68

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Cases cited in this judgment(4)Show list

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Income Tax Appellate Tribunal, JAIPUR BENCHES,”B” JAIPUR

Before: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ITA. No. 356/JPR/2023

For Appellant: Shri S. K.Gogra (C.A.) jktLo dh vksj ls@
Hearing: 06/02/2024Pronounced: 03/05/2024

Per contra, the ld. DR relied upon the order of the Ld. PCIT and 6.

contended with the similar argument as recorded in the order of ld. PCIT.

7.

We have heard the parties and perused the material placed on record. The bench noted from the order of ld. PCIT that the ld. PCIT has only noted that invocation of initiation of penalty proceedings was instead of section 271AAC of the Act initiated u/s 270A of the Act and therefore, he invoked the provisions of section 263 merely to initiate the penalty proceedings u/s 271AAC of the Act instead of 270A initiated by the ld. AO.

1.

7.1 The ld. AR of the assessee relied upon the various judgment challenging the action of ld. PCIT and the same are as under :-

• Harish Jain vs PCIT (2023) 102 ITR (Trib.) 84 • Commissioner of Income-tax vs. Keshrimal Parasmal (1986) 157 ITR 484 • Rekha Shekhawat vs. Pr. CIT (2022) 99 ITR (Trib.) 69 7.2 Out of the above judgment so cited, we find that we have binding precedent of the jurisdictional High Court on the similar set of facts wherein the Hon’ble High Court in the case of Commissioner of Income- tax vs. Keshrimal Parasmal (1986) 157 ITR 484 hold a view that “Revision: Commissioner in revision in assessment order whether cam direct initiation of penalty proceedings: 2-3-1984: Their Lordships P. N. BHAGWATI and A. N. SEN JJ dismissed, as not being a fit case in which the question arising in the special leave petition should be decided, a special leave petition by the Depart. ment against the judgment dated 27-4-1981 of the Delhi High Court in I.T.R. No. 82 of 1974, reported in [1982] 133 ITR 7, whereby the High Court, on a reference, held that the Commissioner in a suo motu revision under s. 263 of the I.T. Act,

1961, of an assessment proceeding, was not entitled to set aside the assessment order on the ground that there was no mention of initiation of penalty proceedings in the assessment order, and to direct the ITO to make fresh assessment and to initiate penalty proceed- ings: CIT v. J. K. Da Costa: S.L.P. (Civil) Nos. 11391-11392 of 1981." Thus, the position boils down to this that the view taken in J. K. D'Costa's case [1982] 133 ITR 7 has been confirmed by the Supreme Court and according to this case, the Commissioner of Income-tax is not enti tled to set aside the assessment order passed by the Income-tax Officer on the ground that there was no mention of initiation of penalty proceedings in the assessment order and the Commissioner of Income-tax in the proceed- ings under section 263 of the Act cannot direct the Income-tax Officer to make fresh assessment to initiate penalty proceedings. As the position stands concluded and settled by the Supreme Court, the question which is now sought to be referred by the Commissioner of Income-tax cannot be said to be a substantial question of law arising out of the Tribunal's order. It is only a question of academic nature.” Respectfully following the ratio of the decision as cited hereinabove and in the absence of any contrary decision having similar stature not cited before us. We hold that the order of the PCIT is beyond the jurisdictional as per provisions of section 263 of the Act and therefore, the same is quashed.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open Court on 03/05/2024.

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