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Income Tax Appellate Tribunal, “ F” BENCH, MUMBAI
सुनवधई की तधयीख / Date of Hearing :4.11.2015 घोषणध की तधयीख /Date of Pronouncement:4.11.2015 आदेश / O R D E R
Per B R Baskaran, AM:
The appeal filed by the assessee is directed against the order dated 26.3.2014 passed by Commissioner of Income Tax-I, Thane under section 263 of the Income Tax Act, 1961 for the assessment year 2009-10.
The assessee is challenging the validity of a revision order passed by the Commissioner of Income Tax u/s 263 of the Act.
We heard the parties and perused the record. The ld. AR submitted a copy of revision notice issued by the CIT and submitted that the CIT has initiated the proceedings u/s 263 of the Act in order to verify the amount of Rs.4,55,221/- found credited in the capital account of the assessee.
Before the CIT, the assessee did not appear and hence the ld.CIT proceeded to pass the order ex-parte. However, the CIT noticed that the AO has, in fact, assessed the above said amount of Rs.4,55,221/- as income of the assessee as unexplained cash credit. Having noticed this fact, the Ld CIT took the view that the AO should have initiated penalty proceedings u/s 271(1)(c) of the Act in respect of the above said addition and accordingly took the view that non-initiation of the penalty proceedings has rendered the assessment order erroneous and prejudicial to the interest of Revenue. Accordingly, the CIT set aside the assessment order and directed the AO to re-do the assessment de-novo after affording opportunity of being heard to the assessee.
The ld. A.R further submitted that the issue relating the initiation of revision proceedings was not mentioned in the notice issued by the CIT. He submitted that the Hon’ble Delhi Bench of Tribunal has held in the case of B S Sangwan V/s ITO (2015) 67 SOT 447 has held that revision order can only be passed on the ground on which the assessee has been given reasonable opportunity of being heard and it is not open to the Commissioner to set out one reason for revising order but actually revise the order on some other ground. The ld. Counsel submitted that the Ld CIT has revised the assessment order, in the instant case also, on the ground which was not stated in the notice.
The Ld A.R further submitted that the assessing officer has discretionary power with regard to the initiation of penalty proceedings and in the instant case, the AO has chosen not to initiate penalty proceedings. Hence the Ld CIT cannot compel the assessing officer to initiate penalty proceedings by passing revision order. In support of this submissions, the Ld A.R placed reliance on the decision rendered by Chandigarh Bench of Tribunal in the case of Amarjeet Dhall Vs. CIT (2014)(65 SOT 33)(Cha)(URO).
The ld. DR, on the contrary, supported the order passed by the Commissioner.
Having heard the rival contentions, we are of the view that there is merit in the submissions made by the ld. AR. We notice that the CIT has not issued revision notice in connection with the non-initiation of the penalty proceedings u/s 271(1)(c) of the Act and hence the same cannot be subject matter of revision. This view gets support from the decision rendered by the Delhi bench of Tribunal in the case of B.S.Sangwan (supra), which had followed the decision rendered by other benches of Tribunal in the case of Synergy Entrepreneur Solutions (P) Ltd (2011)(46 SOT 111)(Delhi) and also in the case of Maxpak Investments Ltd Vs. Asst. CIT (2003)(13 SOT 67)(Delhi). Hence the revision order is liable to be quashed on this ground alone.
7. A casual perusal of the provisions of section 271(1)(c) of the Act would show that the AO “may” direct that the assessee shall pay by way of penalty….. The use of word “May” gives discretion to the AO not to initiate penalty proceedings. Hence, the Commissioner, under the garb of revising the assessment order, cannot direct the AO to change his decision. This view also finds support from the decision rendered by the Chandigarh bench of Tribunal in the case of Amarjeet Dhall (supra).
In view of the foregoing discussions, we are of the view that the impugned revision order cannot be sustained. Accordingly, we set aside the same.
In the result, the appeal filed by the assessee is allowed.