Azure Power Uranus Private Limited Vs DCIT (ITAT Delhi)
No Penalty Notice, No Revision? PCIT’s Section 263 Order Quashed
The assessment and the PCIT’s objection
The Assessing Officer (AO) completed the assessment of Azure Power Uranus Private Limited for assessment year 2020–21 after making an addition of ₹72,48,011. The Transfer Pricing Officer had directed the AO to examine whether penalty proceedings under Section 270A should be initiated. The AO, however, did not initiate penalty proceedings in the assessment order.
The Principal Commissioner of Income Tax (PCIT) viewed that omission as making the assessment order erroneous and prejudicial to the interests of the Revenue. He therefore invoked his revisionary power under Section 263. The company challenged the revision before the Delhi ITAT.
The question was a narrow one: Can an otherwise completed assessment be revised under Section 263 solely because the AO did not initiate penalty proceedings?
The quantum assessment was not the complaint
The Tribunal first identified what the PCIT was—and was not—seeking to correct. His revision order did not dispute the determination of the company’s assessed income. The grievance concerned only the AO’s failure to initiate penalty under Section 270A.
That distinction mattered because assessment and penalty are separate proceedings. An assessment determines taxable income. Penalty involves a further decision under the applicable penalty provision. The absence of penalty initiation in an assessment order does not, by itself, show that the assessment of income is erroneous.
