VIKAS VIJAY GUPTA,AHMEDABAD V. THE PR. CIT, AHMEDABAD-1, AHMEDABAD

ITA 404/AHD/2024

AI Insights

The case revolves around the reassessment and subsequent penalty proceedings against Vikas Vijay Gupta for the Assessment Year 2017-18. The AO initially issued a reassessment order and incorrectly applied penalty provisions under section 271(1)(c) instead of the correct section 271AAC(1) for the unexplained addition of Rs. 66,63,250 under section 69A of the Income Tax Act. The PCIT, upon reviewing the reassessment order, found it to be erroneous and prejudicial to the interest of the revenue, leading to the issuance of a revision order under section 263, directing the AO to rectify the penalty notice. The assessee contested this revision, leading to the appeal before the Tribunal.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 396689 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-05-2025
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2017-2018
• Other Referred Cases: Addl. CIT v. J.K. D'Costa, Achal Kumar Jain, Surendra Prasad Agrawal, CIT vs. Chennai Metro Rail Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: ITS LETTER DATED
• Keywords: Set aside; Opportunity of being heard; Assessment record; Initiation of penalty proceedings; Revision of order
• Section: 147; 263; 271(1)(c)

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH Before: DR. BRR Kumar, Vice President And Shri T. R. Senthil Kumar, Judicial Member Vikas Vijay Gupta 604 Sarap, Opp. Navjivan Press P.O. Navjivan, Ahmedabad-380014, Gujarat PAN: AEOPG6723L (Appellant) Vs Principal Commissioner of Income Tax, Ahmedabad-1, Ahmedabad (Respondent) Assessee Represented: Shri Jaimin Shah, A.R. Revenue Represented: Shri R. N. Dsouza, CIT-DR Date of hearing : 27-02-2025 Date of pronouncement : 27-05-2025 आदेश/ORDER PER : T.R. SENTHIL KUMAR, JUDICIAL MEMBER:- This appeal is filed by the Assessee as against the Revision order dated 09.02.2024 passed by the Principal Commissioner of Income Tax, Ahmedabad-1, arising out of the reassessment order passed under section 147 r.w.s. 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) relating to the Assessment Year 2017-18. 2. Brief facts of the case is that the assessee is an individual filed his original Return of Income for the Asst. Year 2017-18 on 31-03- ITA No. 404/Ahd/2024 Assessment Year 2017-18 I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 2 2017 declaring total income of Rs.72,29,030/-. The assessment was reopened for understatement of sale consideration of Rs. 66,63,250/- on purchase of residential villa at ‘Kalhaar Blues and Greens’ project which has escaped assessment and brought to tax. Thus A.O. initiated penalty proceedings u/s. 271AAC(1) of the Act in respect of addition made u/s.69A of the Act. However in the concluding part of the reassessment order the AO recorded ‘Notice issued for 271(1)(c) of the Act for concealment of income’ and also issued notice dated 29-03-2022 for penalty u/s.274 r.w.s. 271(1)(c) of the Act. 2.1. In response the assessee by its letter dated 28-04-2022 replied that as against the reassessment order assessee has filed statutory appeal which is pending disposal before the Ld.CIT(A). The AO initiated penalty proceedings u/s. 271AAC(1) of the Act as mentioned in the reassessment order, whereas issued statutory notice u/s.271(1)(c) of the Act. Thus the A.O. is not clear in charging penalty under which section of the Act. Therefore the assessee requested that the entire penalty proceedings is liable to be dropped. 2.2. Without considering the above reply and non-application of mind, the AO issued second notice u/s. 271(1)(c) of the Act dated 07-09-2023. Again, the assessee vide its reply dated 22-09-2023 requested to drop the penalty proceedings wrongly initiated or alternatively keep the penalty proceedings in abeyance till the disposal of the appeal. I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 3 3. It is thereafter Ld. PCIT issued a Show Cause Notice dated 20- 01-2024 which rates as follows: “…2. It is observed during the scrutiny of the records that in the order u/s 147 r.w.s. 144B dtd. 29.03.2022 while making addition of Rs. 66,63,250/- u/s 69A of the I.T. Act, penalty proceedings u/s 271AAC were initiated. However, in the concluding para of the assessment order it is incorrectly mentioned that \"Notice issued for 271(1)(c) of the Act. 3. In view of the above, since in assessee's the assessment u/s 147 r.w.s. 1448 of the Income-tax Act, 1961 (\"Act\") for AY 2017-18 had been completed on 29.03.2022 without properly examining records that revel that an addition made u/s 69A of the Act at Rs.66,63,250/-. The undersigned is of the belief that the assessment order passed by the Assessing officer u/s 147 r.w.s. 1448 of the Income-tax Act, 1961 (\"Act\") for AY 2017-18 has become erroneous insofar as prejudicial to the interest of revenue within the meaning of section 263 of the I.T. Act and hence, it is a fit case for revision u/s. 263 of the Act.” 3.1. The assessee made detailed reply about the wrong notice issued by the AO and pendency of appeal before CIT[A] and requested to drop the Revision proceedings. 4. Ld PCIT considered the submissions of the assessee and held that though the AO in the body of the reassessment order concluded the unexplained amount of Rs.66,63,250/= is required to be taxed u/s.69A in line with section 115BBE of the Act and also initiated penalty proceeding u/s.271AAC[1] of the Act but erroneously issued penalty notice u/s.271[1][c] of the Act, which is erroneous and prejudicial to the interest of the Revenue and thereby setaside the notice issued u/s.274 rws 271[1][c] of the Act dated 29-03-2022 for the Asst. Year 2017-18 and directed the A.O. to issue fresh notice u/s.271AAC[1] of the Act by observing as follows: I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 4 “8. Hence, in exercise of power conferred in me u/s.263 of the Act, the A.O. is directed to drop the penal proceedings u/s 271(1)(c) of the Act and issue a fresh penalty notice u/s 271AAC(1) of the Act. Needless to mention, the A.O. may levy penalty or keep the proceedings in abeyance till the outcome of Ld. CIT(A)'s order on the issue of addition u/s 69A of the Act. with this, I set aside the notice issued u/s 274 read with section 271(1)(c) of the Income tax Act dated 29.03.2022 for the A.Y. 2017-18 with the direction to the AO to issue a fresh penalty notice in accordance with law and after duly examining the facts of the case to the extent discussed supra after giving the assessee a reasonable opportunity of being heard.” 5. Aggrieved against the Revision order the assessee in appeal before us raising the following Grounds of Appeal: 1. The Principal Commissioner of Income Tax -1, Ahmedabad, has erred in law and on facts while passing the order u/s 263 of the Income Tax Act, 1961dated 09/02/2024, Which requires to be quashed. 2. That the Ld. Principal Commissioner -1, Ahmedabad has erred in law and on facts while initiating the proceedings u/s 263 of the I.T. Act, 1961 and therefore the proceedings itself is bad in law illegal and void. 3. That the re-assessment order passed dated 29/03/2022 by National Faceless Assessment Unit is neither erroneous nor prejudicial to the Interest of revenue, however the proceedings initiated u/s 263 of the I.T. Act, 1961 by PCIT-1, Ahmedabad is bad in law which requires to be quashed. 4. While passing the Order U/s 263 by PCIT-1, Ahmedabad has not disputed the re-assessment order, however he has disputed the notice issued u/s 271(1)(c) dated 29/03/2022, which is out of the preview of section 263 of the Income Tax Act, and therefore the order passed u/s 263 requires to be quashed. 5. The Commissioner has failed to appreciate that the order of assessment dated 29-03-2022, and penalty initiated u/s 271AAC(1) of the IT Act, 1961 are subject-matter of appeal before the Commissioner (Appeals) and therefore considering the Explanation-1 to section 263 of the IT Act, the proceedings initiated are bad in law and requires to be quashed. I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 5 6. Heard rival submissions at length and perused the materials available on record including the Paper Book filed by the assessee and the Penalty notices issued by the Ld AO u/s. 271(1)(c) of the Act. 6.1. The sole basis for invoking section 263 by the Ld. PCIT in the instant case is that the penalty notice was issued under section 271(1)(c) instead of the penalty provision rightly applicable section 271AAC(1) of the Act, as discussed in the body of the reassessment order. The Ld. PCIT considered this as a serious error and also prejudicial to the interest of Revenue. No doubt that it is an erroneous order with reference to issuance of penalty notice u/s.271[1][c] instead of the correct penalty notice ought to have been issued u/s.271AAC[1] of the Act. 6.2. In the present case, it is not in dispute that the LdAO consciously and correctly invoked section 271AAC(1) in the reassessment order, but wrongly issued penalty notice u/s.271(1)(c) of the Act, which is at best, a procedural defect that could have been rectified by the AO himself invoking section 292B of the Act and thereafter Ld. PCIT invoked revision proceeding and issued Show Cause Notice dated 20-01-2024. 6.3. As per section 263 of the Act, the PCIT when found the assessment order is erroneous and prejudicial to the interest of Revenue, after offerding opportunity of hearing to the assessee, pass revision order to enhance or modify the assessment, or cancel and direct to pass fresh assessment. In the present case Ld PCIT in exercise of power conferred u/s.263 of the Act, directed the A.O. to drop the penal proceedings u/s 271(1)(c) of the Act and I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 6 issue a fresh penalty notice u/s 271AAC(1) of the Act, thus modified the reassessment order. 7. Ld. Counsel Shri Jaimin Shah appearing for the assessee submitted that the penalty proceedings are independent and distinct from the assessment proceedings and relied upon Delhi High Court in the case of Addl. CIT v. J.K. D’Costa reported in [1982] 133 ITR 7 wherein it was held that failure to initiate or wrongful initiation of penalty proceedings does not affect the validity of the assessment order, which was later confirmed by Hon’ble Supreme Court by dismissing Revenue’s SLP which is reported in [1984] 147 ITR (St.) 1. 7.1. Further Ld. Counsel relied upon Chennai Tribunal decision in ITA No.1451/Chny/2024 dated 14-08-2024 in the case of M/s. Anotra Realtors Pvt Ltd -Vs- PCIT, on identical wrong issuance of penalty notice, held that PCIT cannot direct AO to initiate penalty through revision proceedings, when the AO already applied his mind and initiated penalty, even if under the wrong section and thereby quashed the Revision proceeding by observing as follows: “…13. In the present case before us, admittedly assessment was framed u/s.153C of the Act and the AO initiated penalty proceedings u/s.271AAC of the Act, which is non-existent provision and the same was also approved by the Addl.CIT u/s.153D of the Act. But there is no recording of any satisfaction that the assessee has concealed the particulars of income or furnished inaccurate particulars of income. Once there is no satisfaction recorded in the order, the order cannot be subject matter of revision u/s.263 of the Act by the PCIT in view of another decision of Hon’ble High Court of Madras in the case of CIT vs. Chennai Metro Rail Ltd., in Tax Case (Appeal) No.745 of 2017, wherein the Hon’ble Madras High Court considering the decision of Hon’ble Allahabad High Court in the case of Surendra Prasad Agarwal, supra, concurred with the decision of Hon’ble Allahabad High Court but given a finding that the AO has to record his satisfaction or establish that the assessee has concealed his income by filing I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 7 inaccurate particulars of income. In the absence of the same, the Hon’ble High Court held that the Tribunal has rightly set aside the directions of CIT directing the AO to initiate penalty proceedings although they have not agreed with the reasoning’s in its entirety. The Hon’ble High Court observed as under:- “14. In view of Section 271(1) read with Section 263 of the Act, the Principal Commissioner might pass such order as the circumstances of the case might justify, which could include an order enhancing or modifying the assessment or cancelling the assessment or directing a fresh assessment. Directing fresh assessment would, in our view, include assessment of penalty. It cannot, therefore, be said that the Principal Commissioner had no jurisdiction to pass such order. The issue has been decided by a Division Bench of the High Court of Allahabad in Commissioner of Income-tax v. Surendra Prasad Agrawal, reported in (2005) 142 Taxman 653 (Allahabad). However, the Principal Commissioner, we find, has recorded a finding that “on examination of the records, it is found that the Assessing Officer had in the assessment order established that the Assessee had concealed his income by filing inaccurate particulars”. There is no such finding in the order of assessment. The Principal Commissioner seems to have distorted the order of assessment. The finding of the Principal Commissioner is to that extent perverse. 15. In our view, in the absence of any finding of the Assessing Officer with regard to concealment of income or with regard to furnishing of inaccurate particulars of income, the Commissioner clearly erred in holding that omission to record satisfaction to initiate penalty proceedings was erroneous or prejudicial to the interest of Revenue. The learned Tribunal rightly set aside the direction of the Principal Commissioner directing the Assessing Officer to initiate penalty proceedings although we may not agree with the reasoning in its entirety.” 8. On the contrary, the Ld. Departmental Representative (DR) submitted that omission by the Assessing Officer to initiate penalty proceedings has squarely rendered the assessment order erroneous and prejudicial to the interest of Revenue. In support, he relied on the Hon’ble Allahabad High Court in the case of CIT v. Surendra Prasad Agrawal [2005] 142 Taxman 653 (Allahabad). I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 8 9. We have heard rival submissions at length and perused the relevant material on record including the Paper Book and Case Laws filed by the parties. The case law relied by the assessee namely J.K. D’Costa was considered by Delhi High Court in the case of Achal Kumar Jain [1982] 11 Taxman 228 and Allahabad High Court in the case of CIT v. Surendra Prasad Agrawal [2005] 142 Taxman 653. The above case laws were considered by the Mumbai Bench of this Tribunal in the case of Anjis Developers Pvt. Ltd. v. PCIT-5 in ITA No. 959/MUM/2022 dated 20/02/2023 and held as follows: “6. We have heard rival submission of the parties on the issue-in-dispute and perused the relevant material on record. According to the Ld. PCIT, the Assessing Officer failed to make inquiries on the issue of initiating penalty proceedings u/s 270A of the Act and said action of the Assessing Officer is without application of the mind. Before the Ld. PCIT, it was submitted on behalf of the assessee that all material facts were disclosed before the Assessing Officer.It was further submitted that case of the assessee falls within the exclusion mentioned u/s 270A(6) of the Act and therefore addition made cannot be considered as under reporting of the income for the purpose of section 270A of the Act and it was possible that Assessing Officer had after considering the fact of the case and exclusion mentioned 270A(6) of the Act, arrived at the decision that the assessee was not liable for initiating the penalty proceedings. But we find that there is no such whisper in the assessment order or in the assessment record that case falls under exclusion mentioned in section 270A(6) of the Act. Further, we find that in the case of Addl. CIT v. J.K. D's Costa (supra), the Hon'ble High Court has held penalty proceedings do not from part of assessment proceedings and failure of the Assessing Officer or ITO to record in the assessment order, his satisfaction or lack of it in regard to the leviability of the penalty, cannot be said to be a factor vitiating the assessment order in any respect. The Hon'ble Delhi High Court in the case of Achal Kumar Jain (supra) following the finding in the case of J.K. D's Costa (supra). However, we find that the Hon'ble Allahabad High Court in the case of Surendra Prasad Agrawal (supra) after considering the decision of the Hon'ble Delhi High court in the case of J.K. D's Costa (supra) and Achal Kumar Jain (supra) held that non-initiation of penalty proceedings u/s 271(1)(c) of the Act has rendered, the assessment order erroneous in so far as prejudicial to the interest of the Revenue. The relevant finding of the Hon'ble Allahabad High Court is reproduced as under: I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 9 \"5. We have heard Shri A.N. Mahajan, the learned Standing Counsel for the Revenue and Shri Rishi Raj Kapoor, leamed counsel for the respondent. 6. The learned counsel for the Revenue submitted that the Tribunal was not justified in holding that the Commissioner of Income Tax could not have assumed jurisdiction under section 263 of the Act in a case in which there was no order passed by the Income Tax Officer under the Act in as much as omission to initiate penalty proceedings while passing the assessment order was erroneous as also prejudicial the interest of the Revenue. He further submitted that the Commissioner of Income Tax has remanded the matter and if the order was erroneous and prejudicial on two points, the Commissioner had the power to remand the matter and direct for initiation of penalty proceedings also. He relied upon the following decisions 1. Saraiya Distillery's case (supra) 2. Malabar Industrial Co. Lid. v. CIT (2000).243 ITR 83-(SC). 7. Shri R.R. Kapoor learned counsel for the respondent submitted that omission to initiate penalty proceedings under section 273(1) of the Act by the Income Tax Officer while passing the assessment order did not amount to an order which could be revised by the Commissioner of Income Tax under section 263 of the Act. While supporting the decision of the Tribunal he relied upon the following decisions: 1. Adell. CIT v. J.K. D'Costa (19821 133 ITR 7& (Delhi) 2. Addl. CIT v. Achal Kumar Jain [1983] 142 ITR 606 (Delhi) 3. CIT v. Nihal Chand Rekyan (20001 242 ITTR 45 (Delhi). 8. Having heard the leamed counsel for the parties we find that the Delhi High Court in the case of J.K. D'Costa (supra) has held that the assessment cannot be said to be erroneous or prejudicial to the interest of the revenue because of the failure of the Income Tax Officer to record his opinion about the leviability of penalty in the case. It has held as follows: \"..The only question before us is whether the Tribunal was right in revoking the order of the Addl. Commissioner in so far as it pertains to the question of penalties under sections 271(1)(a) and 273(b). Here, we find ourselves in complete agreement with the view taken by the Tribunal. It is well established that proceedings for the levy of a penalty whether under section 271(1)(a) or under section 273(6) 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 I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 10 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 course 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 assessee 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 is finalized. 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 because of the failure of the ITO to record his opinion about the leviability of penalty in the case...\" (p. 11) 9. The aforesaid decision has been consistently followed by the Delhi High Court in the cases of Achal Kumar Jain (supra), P.C. Puri v. CIT (1985) 151 ITR 584 (Delhi), Addl. CIT v. Precision Metal Works (1985) 156 MIR 6934, CWT v. A.N. Sarvaria (1986) 161 ITR 694, Addl. CIT v. Sudershan Talkies (1993).200 ITR 153, CIT v. Sudershan Talkies [19931.201 ITTR 289 and Nihal Chand Rekvan (supra). 10. Similar view has been taken by the Rajasthan High Court in the case of CIT v. Keshrimal Parasmal (1986)157 ITR 484%, Gauhati High Court in the case of Surendra Prasad Singh v. CIT (19881_173 ITR 610°, Calcutta High Court in the case of CIT V. Linotype & Machinery Lid. (19911_192 ITR 337 and Madras High Court in the case of CIT v. C.R.K. Swami (2002) 254 ITR 1584. I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 11 11. On the other hand the Madhya Pradesh High Court has taken a contrary view in the case of Addl. CIT v.Indian Pharmaceuticals (19801_123 ITR 874. Addl. CIT v. Kantilal Jain [19801 125 ITR 3735, Addl. CWT v. Nathoolal Bala Ram (1980). 125 ITR 596& and CIT v. Narpat Singh Malkhan Singh (19811 128 ITR 777 12. This Court in the case of Saraiva Distillery (supra) has held that an order can be said to be erroneous either when it does not decide a point or record a finding on an issue which ought to have been done or decides it wrongly. In the aforesaid case the Assessing Officer had not charged interest while passing the assessment order. This Court following the decision of Kerala High Court in the case of CIT v. Cochin Malabar Estates Lid. (1974)27 ITR 466 and Calcutta High Court in the case of Singho Mica Mining Co. Lid. v. CIT (19781_LL ITR 231 has held that the order passed by the ITO being prejudicial to the interest of the revenue, the Additional Commissioner had jurisdiction under section 263 to pass the order. The Madhya Pradesh High Court in the case of Indian Pharmaceuticals after referring to the decision of the Apex Court in the case of C.A. Abraham v. ITO[1961] 41 ITR 425 and CIT v. Bheekha Bhai Dada Bhai [1961] 42 ITR 123 has held that the assessment does not mean only computation of income but consideration of all facts including the liability for penalty that may attract the provisions contained in section 271(1)(a) of the Act. It has further held that if in any proceeding for assessment the Income Tax Officer fails to take notice of the facts attracting the provisions contained under section 271(1)(a) of the Act, it could not be said that his failure to take notice of the facts which were before him attracting the provisions of section 271(1)(a) of the Act does not amount to an error prejudicial to the interest of the Revenue. It concluded that if therefore the ITO during the pendency of the proceedings has omitted to take notice of facts attracting section 271(1)(a) of the Act during the pendency of the proceedings which ultimately ended in an order of assessment, the order would be erroneous and in this view of the matter, the Commissioner was right in exercising jurisdiction conferred on him under section 263 of the Act. The other decision of the M.P.High Court has followed its earlier decision in the case of Indian Pharmaceutical (supra). The Delhi High Court in the case of Achal Kumar Jain (supra) had considered the decision of the Madhya Pradesh High Court in the case of Indian Pharmaceuticals (supra), Shri Kanti Lal Jain (supra), NathoolalBalaram (supra) and Narain Singh Malkhan Singh (supra) and while disagreeing has held as follows: \"On a cursory examination, it appeared to us that the view of the Madhya Pradesh High Court as indicated in the abovementioned I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 12 decisions is correct, but on closer scrutiny we respectfully disagree with the same. In any case, the matter is not res integra as far as this court is concerned. In Addl. CIT v. J.K.D. Costa, Income-tax Reference No. 82 of 1974, disposed of by us on 27th April, 1981-reported in (1982) 133 ITR7. We held on similar facts that the Commissioner could not pass an order pertaining to penalty under section263 of the Act. We held that the penalty proceedings do not form part of the assessment proceedings. Further, the failure of the ITO to record his satisfaction or the lack of it in the assessment order, with regard to the leviability of penalty cannot be a factor vitiating the assessment orders.\" 6.1 Thereafter, Hon'ble High Court in para 18 held as under: \"18. It is well established that the Assessing Officer has to initiate proceedings for imposition of penalty during the course of the assessment itself. If he fails to initiate or record his satisfaction for the initiation of the penalty proceedings during the course of the assessment proceedings it would be a case where the assessment order can be said to be erroneous as he has not decided a point nor recorded a finding on an issue which ought to have been done or decides it wrongly as held by this Court in the case of Saraiya Distillery (supra). Thus the omission ofthe Income Tax Officer to initiate penalty proceedings during the course of the assessment renders the assessment order erroneous and prejudicial to the interest of the Revenue. 19. In this view of the matter, we are in respectful agreement with the view taken by the Madhya Pradesh High Court in the case of Indian Pharmaceuticals (supra). 20. In view of the foregoing discussions we are of the considered opinion that the Tribunal was not justified in holding that the failure to initiate penalty proceedings in the course of the assessment did not render the assessment order erroneous and prejudicial to the interest of the revenue. The Commissioner of Income Tax had the jurisdiction to revise such an order.\" 6.2 The issue in dispute in the instant case is in relation to penalty u/s 270A of the Act which is more or less 'pari materia' with section u/s 271(1)(c) of the Act. For ready reference the section 271(1)(c) of the Act and section 270A are reproduced as under: Section 271(1)(c) I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 13 [Failure to furnish returns, comply with notices, concealment of income, etc. 271. (1) If the (Assessing Officer or the Commissioner (Appeals) any proceedings under this Act, is satisfied that nay person- (b)……………… or (c) has concealed the particulars of \"his income or so*** \"furnished inaccurate particulars of 81/such income, or/7\" (d)…………….. he may direct that such person shall pay by way of penalty.- (1)[****] 84 (ii) in the cases referred to in clause (b), & in addition to tax, if any, payable) by him, la sum of ten thousand rupees) for each such failure ;) ST (iii) in the cases referred to in clause (c) & or clause (d)], in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times), the amount of tax sought to be evaded by reason of the concealment of particulars of his income 9 or fringe benefits) or the furnishing of inaccurate particulars of such income or fringe benefits). Section 270A 270A. (1) The Assessing Officer or the Commissioner (Appeals) or the Principal Commissioner or Commissioner may, during the course of any proceedings under this Act, direct that any person who has under- reported his income shall be liable to pay a penalty in addition to tax, if any, on the under-reportedincome. 6.3 Since, both the penalty u/s 271(1) of the Act as well as penalty u/s 270A of the Act could be initiated if the Assessing Officer or other authority prescribed may consider so under the proceeding of the Act. Therefore, the issue decided by Hon'ble Allahabad High Court (supra) being pari materia, respectfully following the finding, the grounds raised by the assessee are dismissed.” 9.1. Further the case laws of Chennai Tribunal in the case of M/s. Anotra Realtors Pvt. Ltd. is not applicable to the present case, since in that case in the assessment order, the Ld. A.O. has not recorded the satisfaction for initiation of penalty proceedings. In that I.T.A No. 404/Ahd/2024 A.Y. 2017-18 Page No Vikas Vijay Gupta vs. PCIT 14 circumstances, the Chennai Tribunal held that Revision proceedings cannot be invoked, solely for the reasons that penalty proceedings initiated on a wrong penalty proceedings. Whereas in this case, the Ld. A.O. has consciously and correctly invoked Section 271AAC(1) in the reassessment order, however wrongly issued penalty notice u/s. 271(1)(c) of the Act. Therefore we are of the considered opinion, the revisionary jurisdiction invoked u/s. 263 by directing the Assessing Officer to issue correct penalty notice by modifying the reassessment order is well within the provisions of law, which does not require any interference. 10. In the result, the appeal filed by the Assessee is hereby dismissed. Order pronounced in the open court on 27-05-2025 Sd/- Sd/- (DR. BRR KUMAR) (T.R. SENTHIL KUMAR) VICE PRESIDENT JUDICIAL MEMBER Ahmedabad : Dated 27/05/2025 आदेश कȧ ĤǓतͧलͪप अĒेͪषत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपीलȣय अͬधकरण, अहमदाबाद "