Commissioner Of Income-Tax vs Nihal Chand Rekyan
1999 Latest Caselaw 546 Del

JUDGMENT

Arun Kumar, J.

1. 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 265 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 Addl. CIT v. J. K. D' Costa [1982] 133 1TR 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.

2. 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.

3. No costs.