CIT v. Surendra Prasad Agrawal

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The Tax Publishers2005 TaxPub(DT) 0574 (All-HC) : (2005) 003 (I) ITCL 0177 : (2005) 275 ITR 0113 : (2005) 194 CTR 0161 : (2005) 142 TAXMAN 0653 CIT v. Surendra Prasad Agrawal () INCOME TAX --Revision under s. 263----ERRONEOUS AND PREJUDICIAL ORDEROmission to initiate penalty proceeding in course of assessment-- Catch Note: The respondent was assessed to income tax as an individual. For the assessment year 1977-78 a notice under section 210 was issued by the AO on 18-11-1976 calling upon the respondent to pay advance tax of Rs. 1,153 during the financial year 1976-77. The respondent, however, paid a sum of Rs. 600 only and also did not file any estimate of advance tax as required by section 212. He had filed his return showing an income of Rs. 14,870. However, the income was assessed at Rs. 45,140. While passing the assessment order the AO omitted to charge interest under section 217(1A) and to initiate penalty proceedings under section 273. The CIT, on examination of the assessment record was of the opinion that the AO's omission to charge interest and initiate penalty proceedings was erroneous and was prejudicial to the interest of the revenue. After giving notice of an opportunity of hearing, the Commissioner in exercise of powers under section 263 cancelled the assessment order and directed the AO to reframe the same in accordance with law. Held: Was justified. Failure to initiate penalty proceedings to the course of the assessment did render the assessment order erroneous and prejudicial CIT the interest of the revenue. The CIT, therefore, had the jurisdiction to revise such an order. Ratio: Omission of the AO to initiate penalty proceedings during the course of assessment proceedings renders the order amenable to revision under section 263. Held: 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. Thus the omission of the 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. In view of the foregoing discussions 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 CIT had the jurisdiction to revise such an order. Case Law Analysis: Followed :Addl. CIT v. Indian Pharmaceuticals (1980) 123 ITR 874 (MP)Applied :Addl. CIT v. Saraiya Distillery (1978) 115 ITR 34 (All) Decision: Against the assessee Date of Judgment: 1 September 2004 Assessment Year: 1977-78 Cases Referred: Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC), Addl. CIT v. J.K. DCosta (1982) 133 ITR 7 (Del), Addl. CIT v. Achal Kumar Jain (1983) 142 ITR 606 (Del), CIT v. Nihal Chand Rekyan (2000) 242 ITR 45 (Del), P.C. Puri v. CIT (1985) 151 ITR 584 (Del), Addl. CIT v. Precision Metal Works (1985) 156 ITR 693 (Del), CWT v. A.N. Sarvaria (1986) 161 ITR 694 (Del), Addl CIT v. Sudershan Talkies (1993) 200 ITR 153 (Del), CIT v. Sudershan Talkies (1993) 201 ITR 289 (Del), CIT v. Keshrimal Parasmal (1986) 157 ITR 484 (Raj.), Surendra Prasad Singh v. CIT(1988) 173 ITR 610 (Gau), CIT v. Linotype & Machinery Ltd. (1991) 192 ITR 337 (Cal.), CIT v. C.R.K Swami (2002) 254 ITR 158 (Mad.), Addl. CIT v. Indian Pharmaceuticals (1980) 123 ITR 874 (MP), Addl. CIT v. Kantilal Jain (1980) 125 ITR 373 (MP), Addl. CWT v. Nathoolal Bala Ram (1980) 125 ITR 596 (MP), CIT v. Narpat Singh Malkhan Singh (1981) 128 ITR 77 (MP), CIT v. Cochin Malabar Estates Ltd. (1974) 97 ITR 466 (Ker.), Singho Mica Mining Co. Ltd v. CIT (1978) 111 ITR 231 (Cal.), C.A. Abraham v. ITO (1961) 41 ITR 425 (SC), CIT v. Bheekha Bhai Dada Bhai (1961) 42 ITR 123 (SC), Kunhayammed v. State of Kerala AIR 2000 SC 2587, Saurashtra Oil Mills Association v. State of Gujarat (2002) 3 SCC 220 (SC) and Justice P. Venugopal v. Union of India (2003) 7 SCC 726 (SC). . SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2005 TaxPub(DT) 0574 (All-HC) : (2005) 003 (I) ITCL 0177 : (2005) 275 ITR 0113 : (2005) 194 CTR 0161 : (2005) 142 TAXMAN 0653

CIT v. Surendra Prasad Agrawal ()

INCOME TAX

--Revision under s. 263----ERRONEOUS AND PREJUDICIAL ORDEROmission to initiate penalty proceeding in course of assessment--

Catch Note:

The respondent was assessed to income tax as an individual. For the assessment year 1977-78 a notice under section 210 was issued by the AO on 18-11-1976 calling upon the respondent to pay advance tax of Rs. 1,153 during the financial year 1976-77. The respondent, however, paid a sum of Rs. 600 only and also did not file any estimate of advance tax as required by section 212. He had filed his return showing an income of Rs. 14,870. However, the income was assessed at Rs. 45,140. While passing the assessment order the AO omitted to charge interest under section 217(1A) and to initiate penalty proceedings under section 273. The CIT, on examination of the assessment record was of the opinion that the AO's omission to charge interest and initiate penalty proceedings was erroneous and was prejudicial to the interest of the revenue. After giving notice of an opportunity of hearing, the Commissioner in exercise of powers under section 263 cancelled the assessment order and directed the AO to reframe the same in accordance with law. Held: Was justified. Failure to initiate penalty proceedings to the course of the assessment did render the assessment order erroneous and prejudicial CIT the interest of the revenue. The CIT, therefore, had the jurisdiction to revise such an order.

Ratio:

Omission of the AO to initiate penalty proceedings during the course of assessment proceedings renders the order amenable to revision under section 263.

Held:

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. Thus the omission of the 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. In view of the foregoing discussions 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 CIT had the jurisdiction to revise such an order.

Case Law Analysis:

Followed :Addl. CIT v. Indian Pharmaceuticals (1980) 123 ITR 874 (MP)Applied :Addl. CIT v. Saraiya Distillery (1978) 115 ITR 34 (All)

Decision:

Against the assessee

Date of Judgment:

1 September 2004

Assessment Year:

1977-78

Cases Referred:

Malabar Industrial Co. Ltd. v. CIT (2000) 243 ITR 83 (SC), Addl. CIT v. J.K. DCosta (1982) 133 ITR 7 (Del), Addl. CIT v. Achal Kumar Jain (1983) 142 ITR 606 (Del), CIT v. Nihal Chand Rekyan (2000) 242 ITR 45 (Del), P.C. Puri v. CIT (1985) 151 ITR 584 (Del), Addl. CIT v. Precision Metal Works (1985) 156 ITR 693 (Del), CWT v. A.N. Sarvaria (1986) 161 ITR 694 (Del), Addl CIT v. Sudershan Talkies (1993) 200 ITR 153 (Del), CIT v. Sudershan Talkies (1993) 201 ITR 289 (Del), CIT v. Keshrimal Parasmal (1986) 157 ITR 484 (Raj.), Surendra Prasad Singh v. CIT(1988) 173 ITR 610 (Gau), CIT v. Linotype & Machinery Ltd. (1991) 192 ITR 337 (Cal.), CIT v. C.R.K Swami (2002) 254 ITR 158 (Mad.), Addl. CIT v. Indian Pharmaceuticals (1980) 123 ITR 874 (MP), Addl. CIT v. Kantilal Jain (1980) 125 ITR 373 (MP), Addl. CWT v. Nathoolal Bala Ram (1980) 125 ITR 596 (MP), CIT v. Narpat Singh Malkhan Singh (1981) 128 ITR 77 (MP), CIT v. Cochin Malabar Estates Ltd. (1974) 97 ITR 466 (Ker.), Singho Mica Mining Co. Ltd v. CIT (1978) 111 ITR 231 (Cal.), C.A. Abraham v. ITO (1961) 41 ITR 425 (SC), CIT v. Bheekha Bhai Dada Bhai (1961) 42 ITR 123 (SC), Kunhayammed v. State of Kerala AIR 2000 SC 2587, Saurashtra Oil Mills Association v. State of Gujarat (2002) 3 SCC 220 (SC) and Justice P. Venugopal v. Union of India (2003) 7 SCC 726 (SC). .