M/S.ram Krishan Kulwant Rai Holding P. Ltd v. Principal Commissioner Of Income Tax Central-2

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED: 05.12.2019CORAMTHE HONOURABLE DR. JUSTICE ANITA SUMANTH W.P.No.15775 of 2018& WMP.No.18756 of 2018 M/s.Ram Krishan Kulwant Rai Holding P. Ltd.Represented by its DirectorMr.Joseph Philip...Petitioner --Vs-- 1.Principal Commissioner of Income Tax Central-2 No.46, Investigation Wing Mahatma Gandhi Road Chennai-6000342.Assistant Commissionre of Income Tax Central Circle-2(3), No.46, Mahatma Gandhi Road, Nungambakkam, Chennai-600034...Respondents **** Prayer: Writ Petition filed under Article 226 of theConstitution of India, to issue a Writ or order of direction orany other Writ in the nature Writ of Certiorari, calling for therecords on the file of the 1st respondent in C.No.2744/C-2/2018-19 dated 11.06.2018 under Section 263 of the income Tax Act,1961 and quash the same. For Petitioner : Mr.R.Sivaraman For Respondents: Mr.A.P.Srinivas Senior Standing Counsel The petitioner challenges order dated 11.06.2018 passed bythe Principle Commissioner of Income Tax, proposing to initiatepenalty in terms of Section 27(1)(c) of the Income Tax Act, 1961(in short 'Act') in respect of assessment year 2009-10, byinvocation of provisions of Section 263 of the Act. 2. Heard Mr.R.Sivaraman, learned counsel for the petitionerand Mr.A.P.Srinivas, learned Senior Standing Counsel for therespondents. 1 https://hcservices.ecourts.gov.in/hcservices/ 3. The show cause notice has necessarily to be quashed forthe following reasons: (i) the order of assessment originally passed on 30.03.2016,admittedly, does not contain the satisfaction of the AssessingOfficer initiating proceedings for penalty in terms of Section271(1)(c) of the Act. (ii) The above order of assessment has travelled in appealand Tax Case (Appeal) No.391 of 2019, filed by the Income TaxDepartment, has been dismissed. This order has attained finality. (iii) The impugned show cause notice proposes the initiationof penalty on the ground that the Assessing officer has notinitiated penalty proceedings in order dated 30.06.2016. Theprovisions of Section 271(1) of the Act call for thesatisfaction of the Assessing Officer/Commissioner (Appeals)/ orCommissioner, recorded 'in the course of any proceeding underthis Act' for the levy of penalty. Thus, while the PrincipleCommissioner or Commissioner could well initiate penalty underSection 271(1) of the Act if he proposed to effect modificationsto the assessment itself, he cannot, in law substitute hissatisfaction for that of the Assessing Officers' for levyingpenalty in regard to the modifications to income effected inoriginal assessment. 4. This tantamounts to the Commissioner putting himself theshoes of the Assessing Officer who had passed the original orderof assessment in 2016 and is impermissible in law. 5. In arriving at this conclusion, I draw support from anorder of a Division Bench of this Court in Commissioner ofIncome Tax Vs. C.R.K.Swami [254 ITR 158] to the following effect: The order of the Tribunal holding that theaddition to income was not justified, havingbecome final, the Tribunal's order holding thatthe revision of assessment by the Commissioner onthe ground that penalty proceedings had not beeninitiated was unsustainable, in the circumstances,is an order which is required to be upheld. 6. This writ petition is allowed and the impugned showcause notice quashed. Consequently, connected miscellaneouspetition is closed with no order as to costs. Sd/- Asst.Registrar (CO) /true copy/Sub Asst. Registrar skaTo1.Principal Commissioner of Income Tax Central-2 No.46, Investigation Wing Mahatma Gandhi Road Chennai-6000342.Assistant Commissionre of Income Tax Central Circle-2(3), No.46, Mahatma Gandhi Road, Nungambakkam, Chennai-600034 W.P.No.15775 of 2018& WMP.No.18756 of 2018 svi(co)aa13/01/2020