Commissioner of Income Tax vs C.R.K. Swamy

R. Jayasimha Babu, J.—The order of the Tribunal holding that the addition to income was not justified, having become final, the Tribunal''s

order holding that the revision of assessment by the Commissioner on the ground that penalty proceedings had not been initiated was unsustainable,

in the circumstances, is an order which is required to be upheld.

Moreover, as held by a Bench of the Delhi High Court in the case of Addl. Commissioner of Income Tax Vs. Sudershan Talkies, , failure on the

part of the assessing authority to initiate penalty proceedings would not give jurisdiction to the Commissioner of Income Tax to pass an order u/s

263 of the Income Tax Act, 1961 and to direct initiation of such proceedings. We are in respectful agreement with that view.

The question referred to us for the assessment year 1984-85, as to whether, on the facts and in the circumstances of the case, the Appellate

Tribunal was right in law in setting aside the order passed u/s 263 of the Income Tax Act and holding that non-initiation of penalty proceedings u/s

271(1)(c) do not render the assessment made dated January 16, 1989, erroneous or prejudicial to the interests of the Revenue and consequently

the Commissioner of Income Tax is not justified in assuming u/s 263, is therefore answered in favour of the assessee and against the Revenue.