Case Law Details
Mr. Coimbatore Vaiyapuri Maathesh Vs ITO (ITAT Chennai)
If you examine the reasons given by the PCIT to revise the assessment order u/s.263 of the Act, we find that the PCIT has set aside the assessment order only for the reasons that the AO has failed to initiate penalty proceedings u/s.270A of the Act, although, there is an observation of underreporting or misreporting of income. The PCIT had also relied upon the decision of the Hon’ble Allahabad High Court in the case of CIT v. Surendra Prasad Aggarwal reported in [2005] 275 ITR 113 (Allahabad) and held that the revisionary powers can be exercised for initiation of penalty proceedings. We find that although the Hon’ble Allahabad High Court in the case of CIT v. Surendra Prasad Aggarwal (supra), has uphold 263 order passed by the PCIT for initiation of penalty proceedings, but the jurisdictional the Hon’ble Madras High Court in the case of CIT v. Chennai Metro Rail Ltd. (supra), has taken a contrary view after considering the decision of the Hon’ble Allahabad High Court in the case of CIT v. Surendra Prasad Aggarwal(supra), and held that in the absence of any findings in the assessment order regarding underreporting or misreporting of income, the PCIT cannot revise the assessment order to initiate penalty proceedings. Therefore, we are of the considered view that the PCIT has erred in invoking revisional powers u/s.263 of the Act, and set aside the assessment order to initiate penalty proceedings u/s.270A of the Act, because, the AO has chosen not to initiate penalty proceedings. The PCIT cannot substitute his views and observed that, the AO has passed erroneous order which resulted in loss of Revenue to the Department.
In this view of the matter and considering the facts and circumstances of the case, we are of the considered view that the assessment order passed by the AO is neither erroneous nor prejudicial to the interest of the Revenue and thus, we are of the considered view that the PCIT is erred in revising the assessment order u/s.263 of the Act. Hence, we quashed the revision order passed by the PCIT u/s.263 of the Act.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
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