COMMISSIONER OF INCOME TAX Vs. NIHAL CHAND REKYAN

JUDGEMENT

(1.) AT the instance of the Revenue, under S. 256(1) of the INCOME TAX ACT, 1961 (for short the Act), the Tribunal has referred the following question of law for the opinion of this Court, in respect of the asst. yr. 1970 -71 :

(2.) INSOFAR as this Court is concerned the issue raised is not longer res integra. The scope of powers of the CIT under S. 263 of the Act came up for consideration before this Court in Addl. CIT vs. J.K.D' Costa (1981) 25 CTR (Del) 217 : (1982) 133 ITR 7 (Del) : TC 57R.244 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 CIT finds that the AO 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 CIT cannot pass an order under S. 263 of the Act pertaining to a penalty. 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 No costs.