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Facts
The Assessing Officer (AO) initiated proceedings under Section 153C for A.Y. 2014-15 and imposed a penalty of Rs.60,000/- under Section 271(1)(b) for non-compliance with notices issued under Sections 142(1) and 143(2). The assessee challenged the jurisdiction of Section 153C proceedings, but the CIT(A) upheld the penalty.
Held
The Tribunal noted the assessment was completed under Section 143(3) and found extenuating circumstances, particularly questioning the jurisdiction under Section 153C for A.Y. 2014-15 due to the timing of the "satisfaction note" as per a Supreme Court judgment. Consequently, the penalty imposed under Section 271(1)(b) was cancelled.
Key Issues
Whether the penalty imposed under Section 271(1)(b) for non-compliance with notices during an assessment under Section 153C was sustainable, given the challenge to the jurisdiction of Section 153C proceedings for A.Y. 2014-15.
Sections Cited
271(1)(b), 153C, 143(3), 142(1), 143(2)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH “H” DELHI
Before: SHRI PRADIP KUMAR KEDIA & SHRI SUDHIR KUMAR
PER PRADIP KUMAR KEDIA - A.M.: The captioned appeal has been filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-30, New Delhi (‘CIT(A)’ in short) dated 27.10.2023 arising from the penalty order dated 23.09.2022 passed by the Assessing Officer (AO) under Section 271(1)(b) of the Income Tax Act, 1961 (the Act) concerning A.Y. 2014-15.
As per the grounds of appeal, the assessee has challenged the imposition of penalty of Rs.60,000/- on account of alleged non- compliance of various statutory notices issued for the purposes of carrying out assessment under Section 153C r.w. Section 143(3) of the Act.
On perusal of the case records, it is observed that original
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return of income in the present case was filed on 30.11.2014 declaring income of Rs.22,35,700/-. Subsequently, the AO initiated proceedings under Section 153C of the Act. The AO issued notice under Section 142(1) r.w. Section 143(2) of the Act which allegedly remained uncomplied with. The AO accordingly imposed penalty of Rs.10,000/- for non-compliance of each notice issued under Section 142(1) of the Act while framing the assessment under Section 153C r.w. Section 143(3) of the Act.
Before the First Appellate Authority, the assessee pointed out that the proceedings under Section 153C itself is vitiated by lack of jurisdiction and initiated without any material and documents pertaining to the assessee found in the course of search of other person. Despite several requisitions, the AO failed to provide copy of documents and material purportedly seized as required under law for valid initiation of proceedings under Section 153C. The assessee thus sought reversal of the imposition of penalty which was declined by the CIT(A) vide order dated 27.10.2023.
Hence the present appeal.
The assessee contends that notice issued under Section 153C and consequent proceedings in which the penalty was imposed for non-compliance of the notices is, at the first instance, outside the ambit of the assessment under Section 153C of the Act. The A.Y. 2014-15 in question is outside the purview of Section 153C owing to the fact that the ‘satisfaction note’ giving rise to jurisdiction under Section 153C has been recorded in the previous year 2022-23 relevant to A.Y. 2023-24 when six years are counted with reference to such assessment year. The assessee contends that such view is fortified from the judgment in the case of CIT vs Jasjit Singh [2023] 155 Taxmann.com 155 (SC). It was contended that by virtue of such
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judgment, the previous year of search would stand substituted by the date or the year in which books of account or documents etc. are handed over to the jurisdictional Assessing Officer. In the light of such observations, the A.Y. 2014-15 is out of reckoning for the purposes of Section 153C of the Act.
On perusal, two relevant facts come to surface. Firstly, the assessment has been ultimately carried out under Section 143(3) of the Act. Hence, the assessee cannot be treated as chronic defaulter. Secondly, the assessee has raised question mark on the assumption of jurisdiction itself. Without going into the merits of the contentions raised on behalf of the assessee on the aspects of jurisdiction in view of later amendments in main provisions of Section 153C of the Act by the Finance Act, 2017, we are of the view that the extenuating circumstances exists to reverse the penalty imposed under Section 153C of the Act. The penalty imposed under Section 271(1)(b) in dispute is thus cancelled.
In the result, the appeal of the assessee is allowed.
Order pronounced in the open Court on 27th June, 2024.
Sd/- Sd/- [SUDHIR KUMAR] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: June, 2024 Prabhat