COMMISSIONER OF INCOME TAX Vs. SURENDRA PRASAD AGRAWAL

JUDGEMENT

(1.) The Tribunal, Allahabad, has referred the following questions of law under Section 256(1) of the IT Act, 1961, hereinafter referred to as the Act, for opinion to this Court : "1. Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that the assessment order passed by the ITO without initiating penalty proceeding under Section 273 for committing breach of Section 212(3A) by the assessee, was not erroneous and prejudicial to the interests of the Revenue within the meaning of Section 263 of the IT Act, 1961 ?

(2.) Whether, on the facts and circumstances of the case, the Tribunal was correct in holding that the CIT exceeded the powers vested in him under Section 263 in cancellation of the entire assessment order to enable the Department to initiate penalty proceeding, while upholding the order of the CIT under Section 263 of the IT Act, regarding direction to the ITO to charge interest under Section 217(1A) of the IT Act ? 2. Briefly stated, the facts giving rise to the present reference are as follows : The reference relates to the asst. yr. 1977-78. The respondent is assessed to income-tax as an individual. For the asst. yr. 1977-78 a notice under Section 210 was issued by the ITO on 18th Nov., 1976, calling upon the respondent to pay advance tax of Rs. 1,153 during the financial year 1976-77. The respondent, however, paid a sum of Rs. 600 only and also did not file any estimate of advance tax as required by Section 212 of the Act. He had filed his return showing an income of Rs. 14,870. However, the income was assessed at Rs. 45,140. While passing the assessment order the ITO omitted to charge interest under Section 217(1A) and to initiate penalty proceedings under Section 273 of the Act.

(3.) The CIT on examination of the assessment record was of the opinion that the AO's omission to charge interest and initiate penalty proceedings was erroneous and was prejudicial to the interest of the Revenue. After giving notice and an opportunity of hearing, the CIT in exercise of powers under Section 263 of the Act cancelled the assessment order and directed the ITO to reframe the same in accordance with law.