Air Wind Green Energy Limited Vs PCIT (ITAT Ahmedabad)
Initiating Penalty via Sec. 263? Not Permissible, Rules ITAT- Revision Power Misused: ITAT Bars PCIT from Forcing 270A Penalty
Background
AO completed reassessment u/s 147 r.w.s. 144B, disallowing bogus purchases of ₹51.87 lakh (from Sharukhan Jamiyatkhan Pathan) u/s 37(1). PCIT revised the order u/s 263 (12.03.2025) observing that AO should have invoked s.69C (unexplained expenditure) instead of s.37(1) & Directed AO to initiate penalty proceedings u/s 270A(9) (misreporting of income).
Assessee’s Arguments
- Revision u/s 263 cannot be used merely to direct initiation of penalty.
- Cited ITAT & HC precedents:
- G.M. Builders Vs PCIT (ITA 2192/Mum/2024).
- Vikas Vijay Gupta Vs PCIT (ITA 404/Ahd/2024).
- Mikuni India Pvt. Ltd. Vs PCIT (ITA 745/JPR/2024).
- Relied on Delhi HC in Addl. CIT Vs J.K. D’s Costa (133 ITR 7) – assessment & penalty are distinct; non-initiation of penalty cannot render assessment erroneous.
ITAT’s Findings
- Jurisdiction u/s 263 limited to revising erroneous assessment orders prejudicial to revenue.
- Assessment & penalty proceedings are separate and distinct.
- Commissioner cannot revise an order solely to direct initiation of penalty.
- Cited binding precedents (Delhi HC in J.K. D’s Costa, multiple ITAT benches).
- Hence, PCIT exceeded jurisdiction.
- PCIT’s order u/s 263 unsustainable in law.
Revisionary powers u/s 263 cannot be exercised merely to direct initiation of penalty proceedings (u/s 270A or otherwise). Assessment and penalty are separate streams; non-initiation of penalty does not make an assessment order “erroneous”.
