SHREE LAXMANDAS JETHANI , NAGPUR V. PRINCIPAL COMMISSIONER OF INCOME TAX -2 , NAGUR

ITA 2/NAG/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 5581 (ITAT-NAGPUR)
• Duration Of Justice: 1 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2016-2017
• Appeal Filed On: 14-01-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VITTHAL M BHOSALE
• Assessee Lawyers: MANOJ MARYANI
• Keywords: Revision of order; Assessment record
• Section: 68; 263; 132; 271(1)(c); 139; 143(3); 153A; 201; 274; 192; 48; 153; 20

Judgement Text

आयकर अपीलȣय अͬधकरण Ûयायपीठ,नागप ु र मɅ । IN THE INCOME TAX APPELLATE TRIBUNAL BENCH, NAGPUR (Through Virtual Hearing at Raipur) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D BATTULL, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 02/NAG/2021 Ǔनधा[रण वष[ / Assessment Year : 2016-17 Shri Laxman Das Jethani, Plot No.45B, Sindhi Colony, Mecosabaug, Nagpur-440013 PAN : ADNPJ1373M .......अपीलाथȸ / Appellant बनाम / V/s. The Pr. Commissioner of Income Tax-2, Nagpur. ......Ĥ×यथȸ / Respondent Assessee by : Shri Manoj Maryani, Advocate Revenue by : Shri Vitthal M Bhosale, CIT D.R स ु नवाई कȧ तारȣख / Date of Hearing :16.02.2022 घोषणा कȧ तारȣख / Date of Pronouncement : 30.03.2022 ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 2 आदेश / ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Principal Commissioner of Income Tax, Nagpur-2 (for short ‘Pr. CIT’) u/s 263 of the Income-tax Act, 1961 (for short ‘the Act’), dated 10.12.2020, which in turn arises from the order passed by the A.O under Sec. 153A r.w.s 143(3) of the Act, dated 27.12.2018 for assessment year 2016-17. Before us the assessee has assailed the impugned order on the following grounds of appeal : “1. That order passed by the Pr. Commissioner of Income Tax, Nagpur-1, U/s. 263 is illegal, invalid and bad in law. 2. The Pr. Commissioner of Income Tax, Nagpur-2 ought to have considered that return was filed before expiry of due date of return of income and said cannot undisclosed income of the assessee as return of income was filed on 06.08.2016, therefore, proceedings- initiated u/s.263 is illegal, invalid and bad in law. 3. The Pr. Commissioner of Income Tax, Nagpur-2 ought to have considered that the opinion of assessing officer accepting the income shown by verifying the documents submitted by the assessee, therefore, order passed u/s.263 is unjustified, unwarranted and excessive. 4. The Pr. Commissioner of Income Tax, Nagpur-2 ought to have considered that the quantum of penalty u/s.271(1)(c) in the order passed u/s.153A r.w.s.143(3) by the assessing officer which is not erroneous in so far as not prejudicial to the interest of the revenue as income shown by the assessee were not undisclosed income of ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 3 the assessee and set a site assessment order. Therefore, order passed u/s.263 is unjustified, unwarranted and excessive. 5. The Pr. Commissioner of Income Tax, Nagpur-2 ought to have considered order passed u/s.153A r.w.s 143(3) since all the issues were discussed and considered at the time of original assessment and the assessing officer has made addition of Rs.20,00,000/- and which was deleted by the CIT(A) vide order CIT(A)-2/10306/2018- 19, again on same issue order passed u/s.263 is illegal, invalid and bad in law. 6. The Pr. Commissioner of Income Tax, Nagpur-2 ought to have considered CIT(A)-II, Nagpur allowed the appeal of the assessee and order of assessing officer merged with the order of CIT(A) therefore order passed u/s.263 is unjustified, unwarranted and excessive. 7. The Pr. Commissioner of Income Tax, Nagpur-2 erred in not accepted that the penalty cannot be imposed after expiry of period of 6 months from the date of assessment order u/s.275. In case of assessee assessment order was passed on 27.12.2018 penalty has to be initiated at end of the financial year in which assessment proceedings are completed i.e. on or before 31.03.2019, therefore, order passed is illegal, invalid and bad in law. 8. The Pr. Commissioner of Income Tax, Nagpur-2 erred in not accepted that the penalty cannot be initiated u/s.172AAB when penalty u/s.271(1)(c) has been already initiated against the assessee in the order passed u/s.153 r.w.s. 143(3) then against imposing of penalty u/s.172AAB has penalized twice. It amounts to double jeopardy, therefore, order passed is illegal, invalid and bad in law. 9. The Pr. Commissioner of Income Tax, Nagpur-2 has not considered the entire written submission of the assessee and passed the order u/s.263 without going into merits of the case therefore, the order passed is unjustified, unwarranted and excessive. 10. The Pr. Commissioner of Income Tax, Nagpur-2 erred in passing order u/s.263 and setting aside the assessment framed 153 r.w.s. 143(3) of the Income Tax Act, 1961 when the said order were already merged with the order of CIT(A) dated 03.09.2020. Therefore, order passed u/s.263 are unjustified, unwarranted and excessive. 11. The appellant seeks permission to add any other ground of appeal or amend or alter the aforesaid ground of appeal.” ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 4 2. Succinctly stated, the police authorities of Ganesh Peth Police Station, Nagpur on 05.04.2006 seized cash amounting to Rs.1.70 crore from two persons, viz. Shri Yaseen M. Khan & Shri Ashish K Tikkas. Thereafter, the aforesaid cash was requisitioned u/s. 132A of the Act and was seized vide panchnama dated 06.04.2016. Statements of the abovementioned persons were recorded on oath, in which, both of them had stated that they were carrying the cash as per instructions of their employer, viz. Shri Laxman Das Jethani i.e, the assessee before us. On being confronted with the aforesaid statement it was claimed by the assessee that he was deriving income from two streams of business, viz. (i). business of trading in cosmetics under the name and style of M/s Yash Traders; and (ii). business of a real estate agent. Qua the source of the aforesaid amount of cash of Rs. 1.70 crore (supra), it was submitted by the assessee that an amount of Rs.20 lacs was sourced out of the cash-in-hand that was available with him on 31.03.2016, while for the balance amount of Rs.1.50 crore was offered by him for tax as his undisclosed income for A.Y 2016-17. ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 5 3. In compliance to the Notice u/s 153A of the Act the assessee filed his return of income for assessment year 2016-17 on 06.08.2016, declaring a total income of Rs.1,49,24,000/- (after claiming deduction under Chapter-VIA of the Act). Assessment was thereafter framed vide order passed u/s. 153A r.w.s 143(3), dated 27.12.2018, wherein the Assessing Officer holding a conviction that the assesseee had failed to substantiate his claim that the amount of Rs. 20 lac (supra) was sourced out of the cash-in-hand available with him on 31.03.2016, thus, added the same as his undisclosed income u/s 68 r.w.s 115BBE of the Act. Observing, that the assessee had failed to prove the source of cash of Rs.20 lac (supra) the Assessing Officer while culminating the assessment initiated penalty proceedings u/s 271(1)(c) of the Act i.e, as regards the entire amount of cash of Rs.1.70 crore that was requisitioned u/s 132A of the Act. 4. After culmination of the assessment proceedings the Pr. CIT called for the assessment records of the assessee. Observing, that in a case where search proceedings were initiated under Sec. 132 of the Act i.e, on or after 01.07.2012 but before 15.12.2016, the penalty ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 6 proceedings would stand governed by Sec. 271AAB of the Act, while for the Assessing Officer had while framing the assessment initiated penalty proceedings u/s 271(1)(c) of the Act, the Pr. CIT was of the view that the Assessing Officer should have initiated penalty proceedings u/s. 271AAB of the Act. Also, it was observed by the Pr. CIT that though the assessee had not substantiated the manner in which the undisclosed income was derived by him, however, the Assessing Officer had not initiated penalty proceedings u/s. 271AAB(1)(b) of the Act as regards the undisclosed income of the assessee amounting to Rs.1.50 crore. Backed by his aforesaid observations the Pr.CIT was of the view that penalty u/s 271AAB(1)(b) of the Act was liable to be imposed on the assessee at the rate of 20% of the amount of undisclosed income. Having noted the above facts, the Pr. CIT was of the view that as the Assessing Officer had failed to initiate penalty proceedings u/s 271AAB of the Act, thus, the order passed by him u/s 153A r.w.s 143(3) of the Act, dated 27.12.2018 was rendered as erroneous in so far it was prejudicial to the interest of the revenue. On the basis of his aforesaid conviction the Pr. CIT called ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 7 upon the assessee to explain as to why the assessment order passed by the AO u/s 153A r.w.s 143(3) may not be revised u/s 263 of the Act. In reply, the assessee tried to impress upon the Pr. CIT that the order passed by the Assessing Officer u/s.153A r.w.s.143(3) of the Act dated 27.12.2018 was well in order and not amenable for revision u/s 263 of the Act. However, the Pr. CIT not finding favor with the aforesaid claim of the assessee rejected the same. Observing that the assessment order passed by the Assessing Officer was not found to be in consonance with the letter and spirit of the Act, the Pr. CIT held the order passed by him u/s 153A r.w.s 143(3), dated 27.12.2018 as erroneous in so far it was prejudicial to the interest of the revenue under section 263 of the Act and, set-aside the same to his file with a direction to re-assess the income of the assessee on the basis of a speaking order and initiate penalty proceedings as per the mandate of law. 5. The assessee being aggrieved with the order passed by the Pr. CIT u/s. 263 of the Act, dated 27.12.2018 has carried the matter in appeal before us. ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 8 6. We have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and the material available on record, as well as considered the judicial pronouncements that have been pressed into service by them to drive home their respective contentions. Admittedly, a perusal of the assessment order passed by the Assessing Officer u/s 153A r.w.s 143(3) of the Act, dated 27.12.2018 for the year under consideration i.e, A.Y 2016-17, reveals, that he had while culminating the assessment initiated penalty proceedings u/s 271(1)(c) of the Act, alleging concealment of income as regards the aforesaid amount of Rs.1.70 crore (supra) that was requisitioned by the Department u/s. 132A of the Act and thereafter seized vide Panchanama dated 06.04.2016. 7. Controversy involved in the present appeal lies in a narrow compass i.e, as to whether or not the Pr. CIT remaining well within the realm of his jurisdiction u/s 263 of the Act has directed the Assessing Officer to initiate penalty proceedings under the correct section and, re-assess the income of the assessee on the basis of a speaking ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 9 order.? Although the Pr. CIT had culminated his order with a direction to the Assessing Officer to initiate penalty proceedings in the hands of the assessee i.e, under the correct section, but a perusal of his order clearly reveals that he had directed the Assessing Officer to initiate penalty proceedings u/s 271AAB of the Act. In sum and substance, the Pr. CIT was of the view that the Assessing Officer had wrongly initiated penalty proceedings u/s 271(1)(c) of the Act, as the same in the case of a search initiated u/s.132 of the Act i.e, on or after 1 st day of July, 2012 but before 15.12.2016 was governed by Section 271AAB of the Act. Our indulgence in the present appeal has been sought by the assessee for adjudicating the sustainability of the order passed by the Pr. CIT u/s. 263 of the Act, wherein, he has in letter and spirit directed the Assessing Officer to initiate penalty proceedings in the case of the assessee u/s 271AAB of the Act. 8. Before adverting any further, we are of the considered view that it would be relevant to cull out the provisions of Section 271AAB of the Act, which at the relevant point of time read as under : ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 10 “271AAB. (1) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the 1st day of July, 2012 but before the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,— (a) a sum computed at the rate of ten per cent of the undisclosed income of the specified previous year, if such assessee— (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date— (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of twenty per cent of the undisclosed income of the specified previous year, if such assessee— (i) in the course of the search, in a statement under sub-section (4) of section 132, does not admit the undisclosed income; and (ii) on or before the specified date— (A) declares such income in the return of income furnished for the specified previous year; and (B) pays the tax, together with interest, if any, in respect of the undisclosed income; (c) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if it is not covered by the provisions of clauses (a) and (b). (1A) The Assessing Officer may, notwithstanding anything contained in any other provisions of this Act, direct that, in a case where search has been initiated under section 132 on or after the date on which the Taxation Laws (Second Amendment) Bill, 2016 receives the assent of the President, the assessee shall pay by way of penalty, in addition to tax, if any, payable by him,— (a) a sum computed at the rate of thirty per cent of the undisclosed income of the specified previous year, if the assessee— ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 11 (i) in the course of the search, in a statement under sub-section (4) of section 132, admits the undisclosed income and specifies the manner in which such income has been derived; (ii) substantiates the manner in which the undisclosed income was derived; and (iii) on or before the specified date— (A) pays the tax, together with interest, if any, in respect of the undisclosed income; and (B) furnishes the return of income for the specified previous year declaring such undisclosed income therein; (b) a sum computed at the rate of sixty per cent of the undisclosed income of the specified previous year, if it is not covered under the provisions of clause (a). (2) No penalty under the provisions of section 270A or clause (c) of sub- section (1) of section 271 shall be imposed upon the assessee in respect of the undisclosed income referred to in sub-section (1) or sub-section (1A). (3) The provisions of sections 274 and 275 shall, as far as may be, apply in relation to the penalty referred to in this section. Explanation.—For the purposes of this section,— (a) "specified date" means the due date of furnishing of return of income under sub-section (1) of section 139 or the date on which the period specified in the notice issued under section 153A for furnishing of return of income expires, as the case may be; (b) "specified previous year" means the previous year— (i) which has ended before the date of search, but the date of furnishing the return of income under sub-section (1) of section 139 for such year has not expired before the date of search and the assessee has not furnished the return of income for the previous year before the date of search; or (ii) in which search was conducted; (c) "undisclosed income" means— (i) any income of the specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books of account or other documents or transactions found in the course of a search under section 132, which has— (A) not been recorded on or before the date of search in the books of account or other documents maintained in the normal course relating to such previous year; or ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 12 (B) otherwise not been disclosed to the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner before the date of search; or (ii) any income of the specified previous year represented, either wholly or partly, by any entry in respect of an expense recorded in the books of account or other documents maintained in the normal course relating to the specified previous year which is found to be false and would not have been found to be so had the search not been conducted.” 9. As is discernible from the aforesaid mandate of law, we find that the penalty proceedings contemplated u/s 271AAB of the Act gets triggered only in a case where search had been initiated u/s.132 of the Act. At this stage, we may herein observe, that in the case of the assessee before us the aforesaid cash of Rs.1.70 crore (supra) was requisitioned u/s. 132A and thereafter seized by the Department vide Panchanama dated 06.04.2016. However, the Pr. CIT loosing sight of the fact that no search proceedings were initiated u/s 132 of the Act in the case of the assessee, had directed the Assessing Officer to initiate penalty proceedings u/s 271AAB of the Act. As observed by us hereinabove, now when the provisions of Section 271AAB gets triggered in a case where search is initiated u/s 132 of the Act, therefore, it is difficult for us to comprehend that as to on what basis ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 13 the Pr. CIT had sought invocation of the same in the case of the assessee before us where cash was requisitioned u/s 132A of the Act. 10. Although the Pr. CIT in the present case before us had duly observed that penalty proceedings u/s 271AAB of the Act are triggered in a case where search proceedings were initiated u/s 132 of the Act, however, he had thereafter wrongly stretched the applicability of the said penal provision to the case before him i.e, a case where cash was requisitioned by the department from the police authorities u/s.132A of the Act and thereafter seized vide Panchanama dated 06.04.2016. As the Pr. CIT has clearly misconceived the scope and gamut of section 271AAB of the Act, therefore, his directions to the Assessing Officer for initiating penalty proceedings under the said statutory provision in the case of the assessee before us cannot be subscribed on our part. 11. On the basis of our aforesaid deliberations, though we are unable to concur with the direction of the Pr. CIT as regards initiation of penalty proceedings u/s. 271AAB of the Act in the case of the assessee before us i.e, in a case where cash had been requisitioned u/s.132A of ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 14 the Act, however, even otherwise, we are of the considered view that such a direction given by him in exercise of his revisionary jurisdiction u/s 263 of the Act is not sustainable in the eyes of law. In our considered view as section 271AAB of the Act makes a specific reference to the term “may”, thus, it vests a discretion with the Assessing Officer as to whether or not the assessee is to be visited with penalty under the said statutory provision. Backed by the aforesaid position of law, we are of the considered view that the Pr. CIT could not have in exercise of his revisionary jurisdiction u/s 263 of the Act stepped in to control or, in fact steer such discretion of the Assessing Officer. Our aforesaid view that where the CIT finds that the Assessing Officer had not initiated penalty proceedings in the assessment order, then, he cannot in exercise of his revisionary jurisdiction u/s 263 of the Act direct him to initiate such penalty proceedings is supported by the following judicial pronouncements: (i). CIT (Central) Ludhiana Vs. Shri Rakesh Nain Trivedi, ITA No.290 of 2014 dated 29.10.2015 (ii). CIT v. J.K. Da'Costa [1984] 147 ITR (St.) 1 SC) . (iii). Commissioner of Income Tax Vs. Subhash Kumar Jain[2011] 335 ITR ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 15 364 (P&H) (iv). CIT Vs. Jagriti Agarwal (2011) 339 ITR 610 (P& H) (v). CIT Vs. Jagtar Singh Chawla, (2013) 215 Taxmann 154 (P& H) In the case of Shri Rakesh Nain Trivedi (supra) the Hon’ble Punjab & Haryana High Court had after exhaustively deliberating on the aforesaid issue under consideration, observed as under: “5. After hearing learned counsel for the parties, we find the issue that arises for consideration of this Court in this appeal is could the CIT in exercise of power under Section 263 of the Act hold the order of the Assessing Officer to be erroneous and prejudicial to the interest of the revenue where the Assessing Officer had failed to initiate penalty proceedings while completing assessment under Section 153A of the Act. 6. It may be noticed that the said issue is no longer res integra. This Court in Commissioner of Income Tax v. Subhash Kumar Jain (2011) 335 ITR 364 agreeing with the view of High Courts of Delhi in Additional CIT v. J.K.D.Costa (1982) 133 ITR 7 (Del) , Commissioner of Income Tax v. Sudershan Talkies (1993) 201 ITR 289 (Del) and Commissioner of Income Tax v. Nihal Chand Rekyan (2000) 242 ITR 45 (Del), Rajasthan in Commissioner of Income Tax v. Keshrimal Parasmal (1986) 157 ITR 484 (Raj), Calcutta in Commissioner of Income Tax v. Linotype & Machinery Ltd. (1991) 192 ITR 337 (Cal) and Gauhati in Surendra Prasad Singh and others v. Commissioner of Income Tax (1988) 173 ITR 510 (Gau.) whereas dissenting with the diametrically opposite approach of Madhya Pradesh High Court in Additional Commissioner of Income Tax v. Indian Pharmaceuticals (1980) 123 ITR 874 (MP) , Additional Commissioner of Income Tax v. Kantilal Jain (1980) 125 ITR 373 (MP) and Addl. CWT v. Nathoolal Balaram (1980) 125 ITR 596 (MP) had concluded that where the CIT finds that the Assessing Officer had not initiated penalty proceedings under Section 271(1)(c) of the Act in the assessment order, he cannot direct the Assessing Officer to initiate penalty proceedings under Section 271(1)(c) of the Act in exercise of revisional power under Section 263 of the Act. The relevant observations recorded therein read thus:- ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 16 “9. Now adverting to the second limb, it may be noticed that the Delhi High Court in judgment reported in Addl. CIT v. J.K.D.Costa (1981) 25 CTR (Del) 224 : (1982) 133 ITR 7 (Del) has held that the CIT cannot pass an order under section 263 of the Act pertaining to imposition of penalty where the assessment order under section 143(3) is silent in that respect. The relevant observations recorded are: “It is well established that proceedings for the levy of a penalty whether under section 271(1)(a) or under section 273(b) are proceedings independent of and separate from the assessment proceedings. Though the expression "assessment" is used in the Act with different meanings in different contexts, so far as section 263 is concerned, it refers to a particular proceeding that is being considered by the Commissioner and it is not possible when the Commissioner is dealing with the assessment proceedings and the assessment order to expand the scope of these proceedings and to view the penalty proceedings also as part of the proceedings which are being sought to be revised by the Commissioner. There is no identity between the assessment proceedings and the penalty proceedings; the latter are separate proceedings, that may, in some cases, follow as a consequence of the assessment proceedings. As the Tribunal has pointed out, though it is usual for the ITO to record in the assessment order that penalty proceedings are being initiated, this is more a matter of convenience than of legal requirement. All that the law requires, so far as the penalty proceedings are concerned, is that they should be initiated in the court of the proceedings for assessment. It is sufficient if there is some record somewhere, even apart from the assessment order itself, that the ITO has recorded his satisfaction that the assessed is guilty of concealment or other default for which penalty action is called for. Indeed, in certain cases it is possible for the ITO to issue a penalty notice or initiate penalty proceedings even long before the assessment is completed though the actual penalty order cannot be passed until the assessment finalised. We, therefore, agree with the view taken by the Tribunal that the penalty proceedings do not form part of the assessment proceedings and that the failure of the ITO to record in the assessment order his satisfaction or the lack of it in regard to the leviability of penalty cannot be said to be a factor vitiating the assessment order in any respect. An assessment cannot be said to be erroneous or prejudicial to the interest of the revenue ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 17 because of the failure of the ITO to record his opinion about the leviability of penalty in the case.” 10. Special leave petition against the said decision was dismissed by the Apex Court ((1984) 147 ITR (St) 1. The same view was reiterated by the Delhi High Court in CIT v. Sudershan Talkies (1993) 112 CTR (Del) 165 : (1993) 201 ITR 289 (Del) and followed in CIT v. Nihal Chand Rekyan (1999) 156 CTR (Del) 59 : (2000) 242 ITR 45 (Del). The Rajasthan High Court in CIT v. Keshrimal Parasmal (1985) 48 CTR (Raj) 61 : (1986) 157 ITR 1984 (Raj), Gauhati High Court in Surendra Prasad Singh & Ors. v. CIT (1988) 71 CTR (Gau) 125 : (1988) 173 ITR 510 (Gau) and Calcutta High Court in CIT v. Linotype & Machinery Ltd. (1991) 192 ITR 337 (Cal) have followed the judgment of Delhi High Court in J.K.Ds Costas case (supra). 11. However, Madhya Pradesh High Court in Addl. CIT v. Indian Pharmaceuticals (1980) 123 ITR 874 (MP) which has been followed by the same High Court in Addl. CIT v. Kantilal Jain (1980) 125 ITR 373 (MP) and Addl. CWT v. Nathoolal Balaram (1980) 125 ITR 596 (MP) has adopted diametrically opposite approach. 12. We are in agreement with the view taken by the High Courts of Delhi, Rajasthan, Calcutta and Gauhati, and express our inability to subscribe to the view of Madhya Pradesh High Court. 13. Accordingly, it is held that the initiation of proceedings under section 263 was not justified. The Tribunal was right in holding that after examining the record of the assessment in exercise of powers under section 263, where the CIT finds that the AO had not initiated penalty proceedings, he cannot direct the AO to initiate penalty proceedings under section 271(1)(c) of the Act.” 7. In view of the above, equally we are unable to subscribe to the view adopted by Allahabad High Court in Surendra Prasad Aggarwals case (supra) where judgment of Madhya Pradesh High Court in Indian Pharmaceuticals case (supra) noticed hereinbefore has been concurred with. 8. Accordingly, it is held that the initiation of proceedings under Section 263 of the Act was not justified and we uphold the order of the Tribunal cancelling the revisional order passed by the CIT.” 12. In the backdrop of our aforesaid deliberations, we are of the considered view that not only the Pr. CIT had on the basis of a ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 18 misconceived reading of the position of law directed the Assessing Officer to initiate penalty proceedings in the case of the assessee u/s 271AAB of the Act, but he had also exceeded his jurisdiction while issuing such directions. We, thus, not being able to persuade ourselves to subscribe to the aforesaid view taken by the Pr. CIT set-aside the order passed by him u/s 263 of the Act, dated 10.12.2020 and restore the order passed by the Assessing Officer u/s 153A r.w.s.143(3) of the Act, dated 27.12.2018. 13. Resultantly, the appeal of the assessee is allowed in terms of our aforesaid observations. Order pronounced in on 30 th day of March, 2022. Sd/- Sd/- JAMLAPPA D. BATTULL RAVISH SOOD (ACCOUNTANT MEMBER (JUDICIAL MEMBER) रायप ु र/ RAIPUR ; Ǒदनांक / Dated : 30 th March, 2022 SB ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 19 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of the Order forwarded to : 1. अपीलाथȸ / The Appellant. 2. Ĥ×यथȸ / The Respondent. 3. The Pr. Commissioner of Income Tax, Nagpur-2 4. ͪवभागीय ĤǓतǓनͬध, आयकर अपीलȣय अͬधकरण, नागप ु र/ DR, ITAT, Nagpur. 5. गाड[ फ़ाइल / Guard File. आदेशान ु सार / BY ORDER, // True Copy // Ǔनजी सͬचव / Private Secretary आयकर अपीलȣय अͬधकरण, रायप ु र / ITAT, Raipur. ITA No. 02/NAG/2021- A.Y 2016-17 Shree Laxmandas Jethani, Nagpur Vs. Pr. CIT-2, Nagpur 20 Date 1 Draft dictated on 16.02.2022 Sr.PS/PS 2 Draft placed before author 17.02.2022 Sr.PS/PS 3 Draft proposed and placed before the second Member JM/AM 4 Draft discussed/approved by second Member AM/JM 5 Approved draft comes to the Sr. PS/PS Sr.PS/PS 6 Kept for pronouncement on Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the A.R 11 Date of dispatch of order