COMMISSIONER OF INCOME TAX VS NIHAL CHAND REKYAN
2002 P T D 1339
[242 I T R 45]
[Delhi High Court (India)]
Before Arun Kumar and D. K. Jain, JJ
COMMISSIONER OF INCOME‑TAX
Versus
NIHAL CHAND REKYAN
Income‑tax Reference No. 143 of 1978, decided on 20/07/1999.
Income‑tax‑‑‑
‑‑‑‑Revision‑‑‑Commissioner‑‑‑Scope of powers ‑‑‑Penalty‑‑ Commissioner directing Income‑tax Officer to initiate penalty proceedings‑‑‑Penalty proceedings are not part of assessment proceedings‑‑‑Tribunal right in quashing direction given by Commissioner‑‑‑Indian Income Tax Act, 1961, Ss. 263 & 271(1)(a).
While examining the records of an assessment order in exercise of powers of revision under section 263 of the Income Tax Act, 1961, if the Commissioner finds that the Assessing Officer had not initiated penalty proceedings, the Commissioner cannot direct initiation of penalty proceedings because penalty proceedings are not a part of assessment proceedings.
CIT (Addl.) v. J.K. D'Costa (1982) 133 ITR 7 (Delhi) fol.
Sanjiv Khanna for the Commissioner.
S.K. Aggarwal for the Assessee.
JUDGMENT
ARUN KUMAR, J.‑‑‑At the instance of the Revenue, under section 256(1) of the Income Tax Act, 1961 (for short "the Act"), the Income‑tax Appellate Tribunal has referred the following question of law for the opinion of this Court, in respect of the assessment year 1970‑71:
Whether on the facts and in the circumstances of the case, the Appellate Tribunal was right. in law in quashing the direction given by the Commissioner of Income‑tax under section 263 of the Income Tax Act, 1961, to the Income‑tax Officer to initiate penalty proceedings under section 271(1)(a) of the Act, against the assessee for the assessment year 1970‑71?"
In so far as this Court is concerned the issue raised is no longer res integra. The scope of powers of the Commissioner under section 263 of the Act came up for consideration before this Court in Additional CIT v. J.K.D.' Costa (1982) 133 ITR 7, and it was held that even if, while examining the records of an assessment order in exercise of his powers of revision under the said 'section, the Commissioner finds that the Assessing Officer has not initiated penalty proceedings, he cannot direct initiation of penalty proceedings because penalty proceedings are not a part of assessment proceedings. It was, thus, held that the Commissioner cannot pass an order under section 263 of the Act pertaining to penalty.
Following the said judgment, with which we are in respectful agreement, the question is answered in the affirmative, i.e., in favour of the assessee and against the Revenue.
M.B.A./665/FCReference answered.