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2018 (12) TMI 42 - HC - Income TaxPenalty u/s 271(1)(c) - status of HUF coupled with the provisions of Section 292BB - Held that -The fact that the assessee himself had filed the return in the status of HUF coupled with the provisions of Section 292BB the Tribunal was not right in declaring the assessment as invalid and annulling the same in view of judgment of this Court in CIT, Faridabad v. Shri Mangal Singh 2015 (11) TMI 646 - PUNJAB & HARYANA HIGH COURT . The assessee did not dispute that the matter is required to be re-examined by the Tribunal. However, it was urged that the Tribunal while re-examining the issue be also directed to decide regarding assumption of jurisdiction under Section 148 of the Act by examining the records whether sufficient reasons and sanction of appropriate authority had been obtained before issuance of notice under Section 147/148 of the Act. The substantial questions of law are answered in favour of the revenue and against the assessee. Order regarding the penalty levied under Section 271(1)(c) of the Act challenged is also set aside. The matters are remanded to the Tribunal to adjudicate all the issues arising in the appeal after affording an opportunity of hearing to the parties in accordance with law.
Issues involved:
1. Validity of assessment framed under Section 143(3)/147 of the Income Tax Act. 2. Jurisdiction of the Assessing Officer to tax the assessee as an HUF. 3. Applicability of Section 292BB of the Income Tax Act. 4. Imposition of penalty under Section 271(1)(c) of the Act. Issue 1: Validity of assessment under Section 143(3)/147: The High Court addressed the issue of whether the assessment framed by the Assessing Officer under Section 143(3)/147 of the Income Tax Act was valid. The Tribunal held that the assessment was invalid as notices were issued to the assessee in an individual capacity, while the reassessment was done in the capacity of an HUF. The Court noted that the assessee had filed the return as an HUF and cited Section 292BB of the Act. However, the Court disagreed with the Tribunal's decision, citing a judgment in CIT, Faridabad v. Shri Mangal Singh, and held that the assessment was valid. Issue 2: Jurisdiction of the Assessing Officer: The Court considered whether the Assessing Officer had the jurisdiction to tax the assessee as an HUF. It was argued that the Tribunal should re-examine the issue and ensure that the appropriate authority had obtained sufficient reasons and sanction before issuing the notice under Section 147/148 of the Act. The Court directed the Tribunal to re-examine the matter, indicating that the jurisdiction under Section 148 needed further scrutiny. Issue 3: Applicability of Section 292BB: The Tribunal's decision was based on the application of Section 292BB of the Income Tax Act. However, the High Court disagreed with the Tribunal's interpretation and cited a previous judgment to support its decision that the assessment was valid despite the notices being issued in an individual capacity. Issue 4: Imposition of penalty under Section 271(1)(c): The penalty proceedings under Section 271(1)(c) for concealment of income were initiated against the assessee. The Court set aside the order imposing the penalty along with the assessment order, directing the matters to be remanded to the Tribunal for further adjudication after affording both parties an opportunity to be heard in accordance with the law. In conclusion, the High Court allowed the appeal, set aside the previous orders, and remanded the matters to the Tribunal for re-examination, emphasizing that the decision should not be construed as an expression of opinion on the merits of the controversy.
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