ORDER
T. Venkatappa, Judicial Member
1. This is an appeal against the order of the Commissioner dated 8-8-1985 made under Section 263. The Commissioner found that though there was delay in filing of the return, the Income-tax Officer had not charged any interest under Sections 139(8) and 215 nor initiated penalty proceedings under Section 271(1)(a). After considering the objections of the assessee, he passed an order under Section 263 wherein he held that the assessment order is erroneous and prejudicial to the interests of revenue as the Income-tax Officer had not charged any interest under Section 139(8) or 215 and omitted to initiate penalty proceedings under Section 271(1)(a). Thus, he set aside the assessment order with a direction to the Income-tax Officer to redo the same by taking into account the aspects of levy of statutory interest and the initiation of statutory penalties. Against the said order, the assessee has preferred this appeal.
2. The learned counsel for the assessee did not dispute the finding of the Commissioner in invoking Section 263 to the extent of the levy of statutory interest under Sections 139(8) and 215. He only disputed the jurisdiction of the Commissioner in directing the Income-tax Officer to initiate penalty proceedings under Section 271(1)(a). The learned counsel submitted that the assessment proceedings and the penalty proceedings are separate and independent proceedings. On account of non-initiation of penalty proceedings under Section 271(1)(a), the Commissioner cannot invoke Section 263. He placed reliance on few decisions. The learned Departmental Representative submitted that even though the penalty order may be separate one, the initiation of penalty proceedings under Section 271(1)(a) has to be done before the completion of the assessment proceedings and as the Income-tax Officer has omitted to mention in the assessment order as to the initiation of penalty proceedings under Section 271(1)(a) the asst. order was erroneous and prejudicial to the interests of revenue and so the Commissioner was right in invoking Section 263. He placed reliance on few decisions.
3. We have considered the rival submissions. The assessment proceedings and the penalty proceedings are separate and independent proceedings. The penalty proceedings have to be initiated in the course of the assessment proceedings. The assessment order cannot be said to be erroneous merely because the Income-tax Officer has failed to mention in assessment order that the penalty proceedings are initiated. Thus, in our view, the CIT was not justified in invoking the provisions of Section 263. In coming to this conclusion, we derive support from the decisions of the Delhi High Court in the cases of Addl. CIT v. J.K. D’Costa [1982] 133 ITR 7, Addl. CIT v. Achal Kumar Jain [1983] 142 ITR 606, Addl. CIT v. Precision Metal Works [1985] 156 ITR 693 and the decision of the Rajasthan High Court in CIT v. Keshrimal Parasmal [1986] 157 ITR 484. It was held therein that the assessment order cannot be said to be erroneous and prejudicial to the interests of revenue because of the failure of the Income-tax Officer to record his opinion about the leviability of penalty and so the provisions of Section 263 cannot be invoked. Against the decision of J.K. D’Costa’s case (supra) a Special Leave Petition was preferred before the Supreme Court and it was dismissed by the Supreme Court in CIT v. J.K. Da’Costa [1984] 147 ITR (St.) 1. No doubt, contrary view has been taken by the Madhya Pradesh High Court in Addl. CIT v. Indian Pharmaceuticals [1980] 123 ITR 874, Addl. CIT v. Kantilal Jain [1980] 125 ITR 373 and Addl. CWT v. Nathoolal Balaram [1980] 125 ITR 596.
4. We prefer to follow the decisions of the Delhi High Court and the Rajasthan High Court referred to above. The Special Leave Petition preferred against the decision of J.K. Da’Costa’s case (supra) has also been dismissed by the Supreme Court.
5. We are of the view that the order of the Commissioner to the extent of directing the Income-tax Officer to initiate penalty proceedings under Section 271(1)(a) cannot be sustained. Accordingly, we set aside his order to that extent.
6. In the result, the appeal is allowed.