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Section 263 of the Income-tax Act, 1961 - Revision - Of orders prejudicial to interest of revenue - Assessment year 1980-81 - Whether non-initiation of penalty proceedings by assessing authority in course of assessment proceedings renders order erroneous and prejudicial to interest of revenue and, therefore, can be subject-matter of revision under section 263 - Held, yes CASE REVIEW CIT v. Surendra Prasad Agrawal [2005] (2005) 275 ITR 113 (All.)followed and relied on. CASES REFERRED TO Addl. CIT v. J.K D'Costa [1982] 133 ITR 7/ 9 Taxman 88 (Delhi) [Para 4] and CIT v. Sri Surendra Prasad Agrawal [IT Reference No. 148 of 1984, dated 1-9-2004] [Para 4]. Shambhoo Chopra for the Appellant. ORDER R.K. Agrawal, J. - The Income-tax Appellate Tribunal, Allahabad has referred the following questions of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for opinion to this Court:- "Whether, on the facts and in the circumstances of the case, the Income- tax Appellate Tribunal was justified in law in holding that the Commissioner of Income-tax had no jurisdiction to direct the Income-tax Officer to initiate the penalty proceedings under section 273(b) and under section 140A of Income-tax Act, 1961?" 2. Briefly stated, the facts giving rise to the present reference are as follows:- The present reference relates to the assessment year 1980-81. The relevant previous year ended on 30th September, 1979. For the assessment year in question, the Income-tax Officer assessed the income of the respondent at Rs. 3,78,900. He also allowed the depreciation as per annexure to the assessment order. The Commissioner of Income-tax called for and examined the records under section 263 of the Act. He was of the opinion that the order passed by the Income-tax Officer was erroneous and also prejudicial to the interest of the Revenue. After issuing notice and giving an opportunity of hearing to the respondent, he held that the Income-tax Officer had allowed excess depreciation amounting to Rs. 2,19,212 on various items. Apart from it excess travelling expenses of Rs. 950 had also been allowed and the penalty proceeding under sections 273(b) and 140A of…

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