Revision u/s 263 upheld as AO failed to initiate penalty proceedings u/s 271(1)(c) on increased income

Revision u/s 263 upheld as AO failed to initiate penalty proceedings u/s 271(1)(c) where assessee increased income in revised return filed u/s 148

ABCAUS Case Law Citation:
ABCAUS 3091 (2019) (07) ITAT

Important Case Laws Cited/relied upon by the parties:
CIT v. Bhikaji Dadabhai and Co. [1961] 42 ITR 123
ACIT vs. Indian Pharmaceuticals (1980) 123 ITR 0874

The instant appeal was filed by the assessee against the revisonary order of Pr. Commissioner of Income Tax (PCIT) passed u/s 263 of the Income Tax Act, 1961 (the Act).

In this case, the assessment u/s 143(3) r.w.s. 147 of the Act had been completed. The case was reopened u/s 148 of the Act for mismatch between TDS claimed by the assessee and data available at 26AS.

In compliance u/s 148 of the Act the assessee filed revised return of income wherein he increased the income by more than double.

A notice u/s 263 of the Act was issued by the Principle Commissioner of Income Tax for the reasons that the assessee in the return filed in compliance to notice u/s 148 of the Act has increased his income but the Assessing Officer had not initiated penalty proceedings u/s 271 (1)(c) of the Act and also the assessee had not offered the interest income of income tax refund for taxation.

The Tribunal observed that similar issue had been decided by the Hon’ble jurisdictional High Court in favour of the revenue.

It was noted that the Hon’ble High Court had held that the Commissioner was right in exercising jurisdiction conferred on him u/s 263 of the Act as the AO during the course of assessment proceedings failed to take notice of the facts attracting the penalty u/s 271(1)(c) of the Act which ultimately ended in an order of assessment being erroneous.

The Tribunal observed that in the case in hand also the AO had failed to initiate the penalty proceedings u/s 271(1)(c) of the Act towards the income concealed by the assessee. Therefore the PCIT was right in exercising the power conferred to him u/s 263 of the Act and setting aside the assessment order u/s 143(3) of the Act treating it as erroneous and prejudicial to the interest of revenue.

Accordingly, the Tribunal dismissed the appeal of the assessee.

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addition u/s 68 addition u/s 69A ca misconduct cash deposit in bank cbdt circular CBDT Instruction cbdt notification cbdt order cbdt press release cgst circular cgst notification cit revision 263 concealment penalty condonation of delay covid-19 custom circular demonetisation due date extension e-way bill faq GST circular GST Council Meeting gst faq gstn advisory GSTR-3B GST rates IBBI ibc icai announcement income tax penalty itat ITAT Delhi mca circular MCA notification penalty 271(1)(c) penalty u/s 271(1)(c) Press Release reasons recorded reopening 148 Reopening us 147 Search & Seizure sebi circular unexplained cash credits validity of notice u/s 148 Withdrawal of 2000 500 Bank Notes