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TMI Blog2018 (2) TMI 1086X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 assessment year 2005-06 has raised the following grounds of appeal:- (Without prejudice to each other) 1. On the facts and circumstances of the case and in law the Ld. CIT(A) was not justified in confirming the penalty levied by the A.O. under S. 271(1)(c) of the Act of Rs. 88,638/- without applying mind to the written submissions submitted. The penalty levied and confirmed by Ld. CIT(A) is not sustainable in law. It be quashed and set aside. 2. On the facts and circumstances of the case and in law no concealment of income nor furnishing of any particulars of income is coming out of the Return of income filed and hence the Expln. 1 to S. 271(1)(c) becomes inapplicable. No penalty u/s 271(1)(c) under any of its limb is leviable. The penalty levied by the A.O. and confirmed by Ld. CIT(A) is illegal and without jurisdiction. It be quashed and set aside. 3. On the facts and circumstances of the case and in law the penalty levied u/s 271(1)(c) is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer noted that total premium paid for various years was Rs. 1.74 crores. Smt. Shakuntala Jagtap and her son i.e. assessee before us had withdrawn sum of Rs. 36 lakhs from two LIC policies and re-invested in six policies of Rs. 6 lakhs each. The Assessing Officer noted that sum of Rs. 1.38 crores was paid in cash out of unaccounted income premium. Regarding the source of Rs. 1.38 crores, Smt. Shakuntala Jagtap stated that the same was out of her undisclosed income and she admitted to pay the taxes on the same. In view thereof, sum of Rs. 3,40,000/- was added in the hands of assessee and penalty proceedings under section 271(1)(c) of the Act were initiated for concealment of income. The order levying penalty under section 271(1)(c) of the Act was passed by the Assessing Officer rejecting the explanation of assessee as to non-levy of penalty for concealment. The Assessing Officer was of the view that the additional income was offered only after the issue of notice under section 148 of the Act and hence, there was no basis in the plea of assessee that it had voluntarily disclosed the income. In view thereof, the assessee was held to have willfully concealed the particulars of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Assessing Officer had mentioned that the provisions of section 147 [Explanation 2(c)] of the Act were referred. Our attention was drawn to Explanation 2 (c), which provides that there is already assessment being made. However, in the case of assessee after revised return of income, there was no intimation sent under section 143(1) of the Act and only notice under section 148 of the Act was issued. Hence, it was case of non-application of mind, so the proceedings initiated under section 148 of the Act were wrong. Then, he pointed out that notice under section 148 of the Act was served upon the assessee on 30.03.2012, whereas the assessment order talks of service on 29.03.2012. Similarly, for assessment year 2006-07 in assessee's own case, approval form is placed at page 65, which is similarly filled and the approval is also dated 30.03.2012. The said approval was sought on 30.03.2012 itself. In respect of assessment years 2007-08 and 2008-09, he pointed out that though information was sought under RTI but the assessee has not received any copy of reasons recorded for reopening of assessment and notice under section 148 of the Act was issued on 29.03.2012. 10. The learned Auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceuticals (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.353/PUN/2015 and in Shri Suresh N. Jain Vs. DCIT in ITA No.354/PUN/2015, both relating to assessment year 2006-07, order dated 13.01.2017. He also placed reliance on the ratio laid down in the following decisions:- i) Ravi Sud Vs. ACIT (2015) 39 ITR (Trib) 356 (Mumbai) ii) Muninaga Reddy Vs. ACIT (2013) 37 taxmann.com 440 (Bangalore - Trib) iii) Vasavi Shelters Vs. ITO (2013) 141 ITD 590 (Bangalore) 12. The learned Departmental Representative for the Revenue on the other hand, pointed out that the assessee is precluded from challenging the validity of assessment proceedings during penalty proceedings. In this regard, he 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 in ITA No.2564 of 2005, judgment dated 13.12.2012 with special reference to para 62. He further pointed out that similar proposition has been laid down by the Hon'ble High Court of Jammu & Kashmir in CIT Vs. The Hotel Highland Park (2000) 246 ITR 130 (J&K). Another reliance placed upon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income was filed within time allowed and hence, no merit in the plea of assessee. He further placed reliance on the ratio laid down by the Hon'ble High Court of Madras in N. Ranjit Vs. CIT (2013) 35 taxmann.com 555 (Mad). 15. In the case of Smt. Vaishali Tushar Jagtap, the facts are same and the assessment order talks of service of notice under section 148 of the Act upon the assessee on 29.03.2012. The learned Departmental Representative for the Revenue in this regard points out that for assessment years 2005-06 and 2006-07, reasons were recorded on 30.03.2012, the approval from JCIT was received on 30.03.2012 and the notice under section 148 of the Act was issued on 30.03.2012 itself. For assessment years 2007-08 and 2008-09, the learned Authorized Representative for the assessee pointed out that no reasons were recorded and the same were not available on record and notice under section 148 of the Act was served upon the assessee on 29.03.2012. The learned Departmental Representative for the Revenue has filed separate Paper Book for assessment year 2007-08, in which there is an acknowledgement which is signed by the assessee on 29.03.2012 and upon notice issued under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice under section 148 of the Act and its service on 29.03.2012 upon the assessee. The assessment was completed in the case of assessee by accepting revised income offered by the assessee. However, penalty proceedings were initiated for concealment of income in respect of additional income offered. The assessee before us has challenged the assessment proceedings being invalid on the ground of recording of reasons for reopening the assessment under section 147 of the Act and its approval thereafter by the JCIT, Pune and issue of notice under section 148 of the Act and its service upon the assessee. The first plea raised by the assessee was that where notice under section 148 of the Act has been served upon the assessee on 29.03.2012 itself and where the reasons have been recorded on 30.03.2012, its approval received on 30.03.2012, hence proceedings for re-assessment are invalid for want of proper jurisdiction. Another linked issue which has been raised by the assessee before us is that for some of the years in the case of assessee which are in appeal before us, the reasons recorded for reopening are not available on record and have not been made available by the learned Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment years 2007-08 and 2008-09 were recorded on 29.03.2012, notice was issued on 29.03.2012 and was served upon the assessee on 29.03.2012. In respect of assessment year 2009-10 in the case of Smt. Shankuntala R. Jagtap, the learned Departmental Representative for the Revenue has failed to meet the case of assessee that there is first factual error recorded in the assessment order i.e. reference is made to the return of income filed for assessment year 2008-09 and also where the time limit for issue of notice under section 143(2) of the Act had not expired, then no proceedings could be initiated under section 148 of the Act. 18. First, we take up the issue whether the assessee during penalty proceedings could raise objections against assessment completed in the hands of assessee i.e. can the assessee challenge the jurisdiction of Assessing Officer in completing assessment which has been accepted by it, while pursuing its case of non-levy of penalty for concealment under section 271(1)(c) of the Act. We proceed to first take into consideration various judicial propositions laid down on the issue, which has been relied upon by both the learned Authorized Representatives before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Hotel Highland Park (supra). The Lucknow Bench of Tribunal relied on the decision of jurisdictional Hon'ble High Court of Allahabad in the case of Jai Dayal Pyare Lal v. CIT [1972] UPTC 596, wherein it was held that new plea which was not taken in the regular assessment proceedings could be taken in the penalty proceedings. Further, reference was made to the decision of the Hon'ble Supreme Court in National Thermal Power Co. Ltd. Vs. CIT (1998) 229 ITR 383 (SC) which was relied upon by the Delhi Bench of Tribunal to observe that it was open to the assessee to set up / raise question of validity of assessment in the appeal against levy of penalty. The Lucknow Bench of Tribunal applying the ratio laid down by the jurisdictional Allahabad High Court in Jai Dayal Pyare Lal Vs. CIT (supra) held that the said ratio is to be applied in preference to the decision of the Hon'ble High Court of Jammu & Kashmir in CIT Vs. The Hotel Highland Park (supra) relied upon by the learned Departmental Representative for the Revenue. The relevant findings of the Tribunal are as under:- "8.1 Now the question before us is that as to whether the assessee can raise question of validity of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court held that an order passed by an authority without jurisdiction is a nullity, and that its invalidity could be set up whenever and wherever it is sought to be enforced or relied upon. 8.4 There is a direct-decision on the point rendered by the Tribunal Delhi Bench in the case of Tidewater Marine International Inc. (supra). The Tribunal relying on the decision of the Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383, held that in view of the decision of the Hon'ble Supreme Court, we are of the view that it is open to the assessee to set up/raise the question of validity of assessment in the appeal against the levy of penalty. Since the question of validity of assessment made in the matter is raised, which is a pure question of law and not involving any investigation into the facts as the same are on record, we admit the additional ground raised by the assessee for decisions. 8.5 It is relevant to state that since there is a direct decision of the Hon'ble jurisdictional High Court in the case of Jai Dayal Pyare Lal (supra) on the issue in hand and therefore we are bound to follow the same and therefore in preferenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment in pursuance of which penalty is levied cannot be the subject matter in penalty proceedings. It is not possible to give a finding that re-assessment is invalid in such penalty proceedings. 23. The learned Departmental Representative for the Revenue has also relied on the proposition laid down by the Hon'ble High Court of Jammu & Kashmir in CIT Vs. The Hotel Highland Park (supra), wherein it has been held that if an order of assessment or re-assessment is not challenged, it becomes final and cannot be challenged in an appeal against the order of penalty. The challenge in such appeal is confined to imposition of penalty. The Hon'ble High Court held that validity of assessment order which has attained finality cannot be challenged in such appeal. 24. The next reliance by the learned Departmental Representative for the Revenue on the ratio laid down by the Chandigarh Bench of Tribunal in Dewan Engg. Work Vs. DCIT (supra), in which JM is party, wherein it has been held that penalty proceedings are independent from the assessment proceedings and the assessment proceedings could not be agitated during penalty proceedings. Reliance was placed on different decisions including the j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed; proposal for reopening of case herein approved. Sd/-, dated 30.03.2012. The notice under section 148 of the Act is dated 30.03.2012 and is served upon the assessee on 30.03.2012 itself. The first aspect is whether there is any independent application of mind by the JCIT. The perusal of said form reflects that in column No.7, it is recorded that provisions of section 147 [Explanation 2(c)] of the Act are application. Explanation 2(c) under section 147 of the Act talks of where assessment has been made but the income chargeable to tax had been under-assessed or excessive relief has been given. In the facts and circumstances of the present case, where re-assessment proceedings were initiated under section 148 of the Act against additional income offered by the assessee in the revised return of income, there was no assessment under section 143(1) of the Act itself. Hence, mention of Explanation 2(c) is incorrect. The JCIT had approved the same in an automatic fashion. We hold that in such circumstances, where the satisfaction had been recorded by the JCIT in mechanical manner and without application of mind for according his sanction for issuing notice under section 148 of the Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment years 2007-08 and 2008-09 in the case of Shri Shri Tushar R. Jagtap, Smt. Vaishali T. Jagtap and Smt.Shankuntala R. Jagtap, though the assessment has been completed under section 143(3) r.w.s. 148 of the Act in all these cases, the assessee claims that no reasons were recorded as no such reasons were available on record and / or had been served upon the assessee. Further, the claim of learned Departmental Representative for the Revenue was that the reasons were recorded online but he has failed to file the copies of same and in the absence of it, we hold that reopening of assessment was invalid. Another point to be noted is that in all these years, assessment was allegedly reopened on 29.03.2012. However, in the absence of any reasons being recorded, merely issue of notice under section 148 of the Act and its service upon the assessee and even the participation of assessee in assessment proceedings does not confer jurisdiction upon the Assessing Officer and since this issue goes to the root of cause i.e. whether the Assessing Officer has jurisdiction to complete assessment or not, then the same can be questioned during penalty proceedings. Accordingly, we hold that where the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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