TMI Blog2018 (2) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... .729 to 732/PUN/2015 And ITA Nos.733 to 736/PUN/2015 - - - Dated:- 9-2-2018 - MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM For The Appellant : Shri Rajiv Thakkar For The Respondent : Dr. Vivek Aggarwal And Shri Mukesh Jha ORDER PER SUSHMA CHOWLA, JM: This bunch of appeals filed by different assessees are against the respective orders of CIT(A)-4, Pune dated 13.03.2015 16.03.2015 relating to assessment year 2005-06 to 2009-10 against levy of penalty under section 271(1)(c) of the Income Tax Act 1961 (in short the Act ). 2. This bunch of appeals relating to three different assessees for different years were heard together and are being disposed of by this consolidated order for the sake of convenience. The only issue raised in the present bunch of appeals is against levy of penalty under section 271(1)(c) of the Act. However, we first take up the appeals in ITA Nos.725/PUN/2015 to 728/PUN/2015, relating to assessment year 2005-06 to 2008-09. In order to adjudicate the issue, we are making reference to the facts and issue in ITA No.725/PUN/2015, relating to assessment year 2005-06. 3. The assessee in ITA No.725/PUN/2015, relating to asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this respect. 5. The assessee by way of additional grounds of appeal has raised the preliminary issue of jurisdiction of the Assessing Officer in invoking provisions of section 271(1)(c) of the Act. 6. Briefly, in the facts of the case, the assessee had originally filed the return of income declaring total income of ₹ 9,76,430/- which included agricultural income of ₹ 7,30,000/-. The said return of income was processed under section 143(1) of the Act on 25.09.2006. The Assessing Officer received a letter from the DDIT of Investigation Unit-I(3), Pune that the assessee had unaccounted income which was applied for the payment of premiums for various insurance policies. Accordingly, notice under section 148 of the Act was served upon the assessee on 29.03.2012 after recording the reasons for reopening the assessment. The case was selected for scrutiny. In response to the notice issued under section 148 of the Act, the assessee declared additional income of ₹ 3,40,000/-. The Assessing Officer noted that total premium paid for various years was ₹ 1.74 crores. Smt. Shakuntala Jagtap and her son i.e. assessee before us had withdrawn sum of ₹ 36 lakhs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act, wherein the income offered by the assessee in the revised return of income was accepted as such. In the first instance, he challenged 148 proceedings, where no reasons were recorded. He pointed out that investigation was made in December, 2009 and on 10.02.2010, revised returns of income were filed. On 29.03.2012 / 30.03.2012 re-assessment proceedings were initiated and the income returned in the revised returns of income were accepted. He referred to the Paper Book and pointed out that in respect of assessment year 2005-06, copy of form for recording reasons for initiating proceedings under section 148 of the Act and for obtaining the approval of the Addl. / Joint CIT, Range 4, Pune is attached, which is dated 30.03.2012. The same was received by the Joint CIT on 30.03.2012. He then referred to the approval granted by the Joint CIT, which was given on 30.03.2012. He stressed that there was no independent application of mind by the JCIT and hence automatic approval granted was not correct. In this regard, he pointed out that in column No.7, the Assessing Officer had mentioned that the provisions of section 147 [Explanation 2(c)] of the Act were referred. Our attention was d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in DCIT Vs. B.J.D. Paper Products (2011) 134 ITD 552 (Lucknow Trib) and pointed out that the facts of said case were identical to the facts of present case and during penalty proceedings, the validity of reopening of assessment was challenged and penalty was held to be not leviable. He further placed reliance on the ratio laid down by the Mumbai Bench of Tribunal in Valiant Glass Works Pvt. Ltd. Vs. ACIT in ITA No.1612/Mum/2013, relating to assessment year 2002-03, order dated 27.07.2016 for the proposition that whether the jurisdiction or the legality of proceedings could be agitated in subsequent proceedings or even in collateral proceedings. 11. Coming to the merits of levy of penalty, he further pointed out that where the assessee had offered additional income after survey, there could not be any concealment or non disclosure as the offered income has been accepted in the hands of assessee and penalty was not leviable on the said income offered. Reliance was placed on the ratio laid down by the Hon ble High Court of Delhi in CIT Vs. SAS Pharmaceuticals (2011) 335 ITR 259 (Del) and also on the Pune Bench of Tribunal in the case of Shri Anand Suresh Jain Vs. DCIT in ITA No.35 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JCIT in this regard and notice under section 148 of the Act was issued on 29.03.2012 and served upon the assessee on 29.03.2012. Similar position was for assessment year 2008-09. The learned Departmental Representative for the Revenue was directed to file copies of reasons recorded for reopening the assessment. The learned Authorized Representative for the assessee here strongly objected and pointed out that no reasons were available on record and if even they were recorded online, since they were not signed, they were not valid reasons for re-assessment. For this, he placed reliance on the ratio laid down by the Mumbai Bench of Tribunal in ACIT Vs. Blue Star Ltd. (2015) 61 taxmann.com 248 (Mumbai Trib.). It may be pointed out herein itself that till the date of passing order, the learned Departmental Representative for the Revenue has failed to file the copies of reasons recorded online. In respect of merits of the addition, the learned Departmental Representative for the Revenue pointed out that in the case of Shri Anand Suresh Jain Vs. DCIT (supra), the return of income was filed within time allowed and hence, no merit in the plea of assessee. He further placed reliance on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /-; the return of income filed by the assessee was accepted as such and there was no addition in the hands of assessee. So, no question of any concealment of income and no question of levy of penalty in this regard. He stressed that time limit for taking up the case for scrutiny for issue of notice under section 143(2) of the Act had not passed. 17. We have heard the rival contentions and perused the record. The issue arising in the present appeal is against levy of penalty for concealment of income under section 271(1)(c) of the Act. The case of assessee before us is that originally for all the years under consideration, it had furnished the return of income in time. Subsequently, the Assessing Officer received certain information from the DDIT of Investigation Wing. The assessee filed revised return of income offering additional income in its hands in the respective years which are in appeal before us. Thereafter, the Assessing Officer has recorded reasons for reopening the assessment and issued notice under section 148 of the Act. The assessment order talks about the issue of notice under section 148 of the Act and its service on 29.03.2012 upon the assessee. The assessment w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ciding the issue of levy of penalty under section 271(1)(c) of the Act. The second aspect which has been put forward by the learned Departmental Representative for the Revenue is that though in the assessment order, the date for service of notice under section 148 of the Act is mentioned at 29.03.2012, however, there was a typographical error in the same as in most of the cases reasons were recorded, approved, notice issued and served upon the assessee on 30.03.2012 itself. This was the position in the case of assessee for assessment years 2005-06 and 2006-07. In respect of assessment years 2007-08 and 2008-09, the case of Revenue was that the reasons were recorded online as from 2012, digital platform was used for this purpose. However, the learned Departmental Representative for the Revenue has failed to file the copies of reasons recorded online to initiate re-assessment proceedings in assessment years 2007-08 and 2008-09 in the case of Shri Tushar R. Jagtap, Smt. Vaishali T. Jagtap and Smt. Shankuntala R. Jagtap. However, he fairly admitted that reasons for these years i.e. assessment years 2007-08 and 2008-09 were recorded on 29.03.2012, notice was issued on 29.03.2012 and was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uiescence of a party equally should not be permitted to defeat the legislative animation. The court cannot derive jurisdiction apart from the statute. 20. Similar proposition has been laid down by the Mumbai Bench of Tribunal in Valiant Glass Works Pvt. Ltd. Vs. ACIT (supra). 21. The Lucknow Bench of Tribunal in DCIT Vs. B.J.D. Paper Products (supra) on similar issue of validity of reopening of assessment being challenged by the assessee, while deciding penalty proceedings, held that the said issue was a pure question of law not involving investigation into the facts, therefore the same is to be considered. The Lucknow Bench of Tribunal held that it was open to the assessee to raise question of validity of assessment in appeal against levy of penalty proceedings. The learned Departmental Representative for the Revenue in the said case had relied on the ratio laid down by the Hon ble High Court of Jammu Kashmir in CIT Vs. The Hotel Highland Park (supra). In the appeal before us also, reliance has been placed on the said decision of the Hon ble High Court of Jammu Kashmir in CIT Vs. The Hotel Highland Park (supra). The Lucknow Bench of Tribunal relied on the decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dity of the assessment order in an appeal against the order of penalty. 8.2 In the above judgment Hon'ble Jammu Kashmir High Court has categorically held that validity of assessment order cannot be challenged in appeal against order of penalty. However, there is a-direct decision on the point by the jurisdictional High Court in the case of Jai Dayal Pyare Lal (supra) wherein the jurisdictional High Court held, with reference to a new plea taken in the penalty proceedings which was not taken in the regular assessment proceedings, as under : It is thus clear that regular assessment order is not a final word upon the plea taken therein or which might have been taken at this stage. The assessee is entitled to show cause in penalty proceedings and to establish the above material and relevant facts which may go to effect his liability or the quantum of penalty. He cannot be held to be debarred from taking appropriate plea simply on the ground that such a plea was not taken in the regular assessment proceedings. 8.3 In the case of Deep Chand Kothari (supra), the Hon'ble Rajasthan High Court held that an order passed by an authority without jurisdiction is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kothari (supra) is also in favour of the assessee and therefore we are of the view that the validity of assessment proceedings can be looked into during the penalty proceedings even though the assessment itself has not been challenged by the assessee. In that view of the matter, we do not see any merit in this submission of the learned Departmental Representative that validity of assessment order cannot be challenged in appeal against the order of penalty. 22. The learned Departmental Representative for the Revenue on the other hand, placed reliance on the ratio laid down by the Hon ble High Court of Karnataka in (1) CIT (2) ITO Vs. M/s. Manjunatha Cotton and Ginning Factory (supra), wherein it has been held that penalty proceedings are distinct from assessment proceedings and are independent. It is further held that the assessee is entitled to submit fresh evidence in the course of penalty proceedings. However, the assessee cannot question assessment jurisdiction in penalty proceedings. The jurisdiction under penalty proceedings could only be limited to the issue of penalty. So the validity of assessment or re-assessment in pursuance of which penalty is levied cannot be the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er is under challenge. Accordingly, we hold so. 26. The second aspect thus, needs to be seen is whether re-assessment proceedings completed in the case of assessee were as per proper jurisdiction entrusted upon Assessing Officer or not. The Assessing Officer after recording reasons for reopening the assessment had sought approval to the said proposal from JCIT. The issue which needs to be addressed is non application of mind by the JCIT while according approval to the proposal made by the Assessing Officer for reopening the assessment under section 148 of the Act. We have already noted that in some cases, reasons for reopening were recorded on 30.03.2012 and approval was sought from the JCIT on the said date itself, which was granted by the JCIT. The question is whether JCIT had accorded approval in a routine manner. 27. The document to be referred is the copy of form for recording reasons for initiating proceedings under section 148 of the Act and for obtaining approval of the Addl./JCIT, which is dated 30.03.2012. The perusal of copy filed by the Revenue reflects that JCIT has approved the same by holding Yes, I am satisfied; proposal for reopening of case herein approved. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce of any independent application of mind by the JCIT, the approval so granted is in a routine manner and the reopening of assessment under section 147 / 148 of the Act was thus, invalid and assessment completed under section 143(3) r.w.s. 147 of the Act does not stand. Accordingly, consequent penalty proceedings initiated and completed against the assessee under section 271(1)(c) of the Act are without jurisdiction and held to be invalid and bad in law. 29. In the case of Shri Tushar R. Jagtap relating to assessment years 2005-06 and 2006-07, in the case of Smt. Vaishali T. Jagtap for assessment years 2005-06 and 2006-07 and in the case of Smt.Shankuntala R. Jagtap for assessment year 2006-07, the above proposition is applied as in all the cases reasons were recorded on 30.03.2012, approval sought and notice issued and served on 30.03.2012. Hence, we hold that where assessment proceedings initiated are bad in law, consequent notice issued under section 271(1)(c) of the Act is without jurisdiction and hence, the order passed levying penalty under section 271(1)(c) of the Act is both invalid and bad in law. 30. Now, coming to assessment years 2007-08 and 2008-09 in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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