Dheeraj Singh Sisodiya Vs PCIT (ITAT Jaipur)
Held that revisional jurisdiction u/s. 263 of PCIT cannot be invoked for initiation of penalty proceedings without holding that the assessment order passed by the AO as erroneous and prejudicial to the interest of revenue.
Facts-
PCIT has erred on facts and in law in holding that in the order passed by AO he did not take a conscious decision relating to noninitiation/incorrect initiation of penalty which cause prejudice to the revenue without holding that assessment order passed by him is erroneous and prejudicial to the interest of revenue rather at the same time accepting that he is not disturbing the assessment that has already been made.
Accordingly, in exercise of powers as per provisions of section 263 of the Income Tax Act 1961, the AO is directed to initiate and levy penalty under the requisite sections as detailed in the show cause notice after arriving at due satisfaction independently. The Ld. PCIT further held that he is not disturbing the assessment that has already been made and is only passing an order for initiation! levy of penalty that too based upon independent satisfaction of the AO who will duly consider the replies of the taxpayer.
Ld. CIT D/R supported the impugned order.
Conclusion-
Held that the PCIT cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. Thus, the PCIT’s revisionary decision relating to non-initiation/incorrect initiation of penalty which without holding that assessment order passed by the AO as erroneous and prejudicial to the interest of revenue is vague and bad in law.
Respectfully, following the jurisdictional High Court in the case of “CIT Vs. Keshrimal Parasmal”, we hold that the PCIT is not entitled to direct the AO to initiate penalty proceedings. Accordingly, the order passed under s. 263 is quashed.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This is an appeal filed by the assessee against the order of ld. PCIT (Central), Jaipur dated 16.03.2022 for the assessment year 2016- 17. The assessee has raised the following grounds of appeal:-
“1. Under the facts and circumstances of the case, order passed by the ld. PCIT u/s 263 is illegal & bad in law and the same be quashed.
2. The ld. PCIT has erred on facts and in law in holding that in the order passed by AO he did not take a conscious decision relating to noninitiation/incorrect initiation of penalty which cause prejudice to the revenue without holding that assessment order passed by him is erroneous and prejudicial to the interest of revenue rather at the same time accepting that he is not disturbing the assessment that has already been made.
3. The appellant craves to alter, amend and modify any ground of appeal.
4. Necessary cost be awarded to the assessee.”
2. The brief facts of the case are that the assessee appellant filed his return of income on 30.06.2018 declaring total income of Rs.3,54,880/-. A search was conducted on the assessee on 15.11.2017. AO framed the assessment for AY 2012-13 to 2018-19 u/s 143(3) read with section 1 53A of the Act and initiated the penalty proceedings as under:-
