CIT (Central) Vs Rakesh Nain Trivedi (Punjab and Haryana High Court)
Punjab and Haryana High Court has dismissed an appeal by the Commissioner of Income Tax (Central) against Rakesh Nain Trivedi, affirming that the Commissioner cannot use revisional powers under Section 263 of the Income Tax Act, 1961, to direct an Assessing Officer (AO) to initiate penalty proceedings. The court’s decision, delivered on March 26, 2014, upholds the Income Tax Appellate Tribunal’s (ITAT) ruling, which had cancelled the CIT’s revisional order.
The case originated from an assessment year 2008-09, concerning Rakesh Nain Trivedi, who derives income from real estate. A search and seizure operation under Section 132 of the Act was conducted at his premises on December 11, 2008. Subsequently, a notice under Section 153A was issued, leading the assessee to file a return of income on March 31, 2009, declaring ₹78,16,530. The Assessing Officer completed the assessment on December 8, 2010, accepting the declared income.
However, the Commissioner of Income Tax (CIT) later invoked Section 263 of the Act, setting aside the assessment order on March 12, 2013. The CIT deemed the AO’s order “erroneous and prejudicial to the interest of the revenue” on three grounds:
1. Commission of ₹47,925 was paid without Tax Deducted at Source (TDS), making it unallowable.
2. Penalty proceedings under Section 271(1)(c) of the Act (for concealment of income) were not initiated.
3. Penalty proceedings under Sections 271A and 271B of the Act (for failure to maintain books of accounts and failure to get accounts audited, respectively) were not initiated.
The CIT directed the AO to re-frame the order.
