In a recent ruling, the Ahmedabad bench of the ITAT held that the Commissioner cannot exercise his revisional jurisdiction under section 263 of the Income Tax Act, 1961 merely on the ground that the Assessing Officer has not initiated penalty proceedings against the assessee on conclusion of assessment proceedings.
In the instant case, the assessing officer completed re-assessment against the assessee. The Commissioner of Income Tax, passed a revisional order on ground that the Assessing Officer had not initiated Section 271(1)(c) explanation 3 and Section 271F penalty proceedings against the assessee. The order of revision was impugned by the assessee on second appeal.
The Tribunal quashed the order while pointing out that “The dispute admittedly between the parties is as to whether the Assessing Officer in his order dated 28.01.2014 had in fact instituted penal action or not against the assessee. It has come on record that the assessment order forming part of the case file contains penalty initiation stipulation. There is no such order filed at the Revenue’s behest in the course of arguments before us. The assessee’s assessment order filed along with the appeal contains signatures of the Assessing Officer. The samegoes against assessing authority’s clarification dated 09.03.2016 submitted before the CIT(A). We afforded sufficient to the Revenue to place on record the said clarification along with the assessment order not initiating penalty proceedings. The same has not been filed. All this makes us to conclude that the assessment order in the instant appeal filed is the correct assessment order. The CIT is therefore held to have erred in exercising Section 263 jurisdiction for the reason that the Assessing Officer had not initiated the impugned penalty proceedings. This exercise of revisional jurisdiction is accordingly declared to be not sustainable since based on a wrong assumption of the relevant facts forming the very backbone of Section 263.”
Read the full text of the order below.
