R.A. Himmatsingka & Co. v. CIT & Ors.

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The Tax Publishers2012 TaxPub(DT) 0695 (Pat-Trib) : (2012) 044 (I) ITCL 0435 : (2012) 340 ITR 0253 : (2012) 247 CTR 0546 INCOME TAX ACT, 1961 --Revision under section 263--Powers of CITOrder of AO dropping penalty proceedings initiated under section 271(1)(c)--During course of assessment, AO initiated proceedings under section 271(1)(c) on the ground that assessee had furnished inaccurate particualrs of income which came in compartment of concealment of income. Commissioner (Appeals) dismissed the appeal of assessee. Being aggrieved, assessee filed an appeal before Tribunal and the Tribunal allowed the appeal in part. Thereafter, AO, considering assessee's submission as well as case records dropped the penalty proceedings initiated under section 271(1)(c). After passing of the said order, CIT invoked section 263 having a view that order of dropping penalty proceedings by AO was erroneous and prejudicial to the interest of revenue. Assessee contended that Commissioner in exercise of power under section 263 could not direct for reopening of penal proceeding because of language employed in that section and also that order of AO could not be regarded as erroneous and prejudicial to the interest of revenue. Held: The initial words of section 263 'any proceedings' under the Act are of immense significance. Secondly, section 263 which uses the words 'any order passed therein' by AO also has its importance. It is also seen from section 263 that the said provision uses the words 'pass such order thereon as the circumstances of the case justify, including ...' The word, 'proceedings' is a wider term compared to the word 'assessment'. The word 'assessment' has been used only after the word 'including' towards the end of section 263 and in the earlier part of section 263, the only word used is 'proceedings'. Hence, in any proceeding in which an order was passed dropping penalty, was very much an order passed in any proceeding and, thus, the same would come under the exercise of revisional jurisdiction of section 263. Since CIT had passed a detailed order holding, inter alia, that loss of revenue had been caused as it was an erroneous order, therefore, revision order passed under section 263 was valid. Income Tax Act, 1961 Section 263 Income Tax Act, 1961 Section 271(1)(c) IN THE PATNA HIGH COURT DIPAK MISRA C. J. & MIHIR KUMAR JHA J. R.A. Himmatsingka and Co. v. CIT & Ors. CWJC No. 2786 of 2010 18 May, 2010 Petitioner by : Krishna Nandan Singh, Senior Advocate, with Abhimanya Sharma, Advocate, Respondent by : Harshwardhan Prasad, Senior Standing Counsel and Mrs. Archana Sinha, Junior Standing Counsel, SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2012 TaxPub(DT) 0695 (Pat-Trib) : (2012) 044 (I) ITCL 0435 : (2012) 340 ITR 0253 : (2012) 247 CTR 0546

INCOME TAX ACT, 1961

--Revision under section 263--Powers of CITOrder of AO dropping penalty proceedings initiated under section 271(1)(c)--During course of assessment, AO initiated proceedings under section 271(1)(c) on the ground that assessee had furnished inaccurate particualrs of income which came in compartment of concealment of income. Commissioner (Appeals) dismissed the appeal of assessee. Being aggrieved, assessee filed an appeal before Tribunal and the Tribunal allowed the appeal in part. Thereafter, AO, considering assessee's submission as well as case records dropped the penalty proceedings initiated under section 271(1)(c). After passing of the said order, CIT invoked section 263 having a view that order of dropping penalty proceedings by AO was erroneous and prejudicial to the interest of revenue. Assessee contended that Commissioner in exercise of power under section 263 could not direct for reopening of penal proceeding because of language employed in that section and also that order of AO could not be regarded as erroneous and prejudicial to the interest of revenue. Held: The initial words of section 263 'any proceedings' under the Act are of immense significance. Secondly, section 263 which uses the words 'any order passed therein' by AO also has its importance. It is also seen from section 263 that the said provision uses the words 'pass such order thereon as the circumstances of the case justify, including ...' The word, 'proceedings' is a wider term compared to the word 'assessment'. The word 'assessment' has been used only after the word 'including' towards the end of section 263 and in the earlier part of section 263, the only word used is 'proceedings'. Hence, in any proceeding in which an order was passed dropping penalty, was very much an order passed in any proceeding and, thus, the same would come under the exercise of revisional jurisdiction of section 263. Since CIT had passed a detailed order holding, inter alia, that loss of revenue had been caused as it was an erroneous order, therefore, revision order passed under section 263 was valid.

Income Tax Act, 1961 Section 263

Income Tax Act, 1961 Section 271(1)(c)

IN THE PATNA HIGH COURT

DIPAK MISRA C. J. & MIHIR KUMAR JHA J.

R.A. Himmatsingka and Co. v. CIT & Ors.

CWJC No. 2786 of 2010

18 May, 2010

Petitioner by : Krishna Nandan Singh, Senior Advocate, with Abhimanya Sharma, Advocate,

Respondent by : Harshwardhan Prasad, Senior Standing Counsel and Mrs. Archana Sinha, Junior Standing Counsel,