Penalty proceedings voided due to lack of jurisdiction; Assessing Officer's penalties cancelled.

The Tribunal allowed the appeals of the assessees, finding that the penalty proceedings under s. 271(1)(c) for the assessment years 1996-97 and 1997-98 were without jurisdiction as the assessments were deemed null and void. The Tribunal held that if the assessment proceedings lacked jurisdiction, the penalty proceedings would also be void, leading to the cancellation of the penalties levied by the Assessing Officer and upheld by the CIT(A).

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Issues:
Levy of penalty under s. 271(1)(c) for asst. yrs. 1996-97 and 1997-98.

Analysis:
The appeals involved a common issue of penalty under s. 271(1)(c) for the assessment years 1996-97 and 1997-98. The assessee was treated as an agent for expatriate employees, and returns were filed for various employees on different dates. The Assessing Officer (AO) issued notices under s. 148 after the returns were filed, and assessments were completed subsequently. Penalty proceedings under s. 271(1)(c) were initiated and confirmed by the CIT(A), leading to the appeals before the Tribunal.

The counsel for the assessees argued that the notices under s. 148 were issued after the statutory time limit specified in s. 149(3), rendering the assessments without jurisdiction. Therefore, it was contended that the penalty proceedings should be deemed void as well. The Tribunal had previously canceled penalty proceedings under similar circumstances, admitting additional grounds challenging the jurisdiction of assessments. The Departmental Representative, however, relied on the decisions of the lower authorities.

Considering the arguments, the Tribunal admitted the additional ground raised by the assessees challenging the jurisdiction of the penalty order under s. 271(1)(c). Referring to a previous judgment, the Tribunal held that if the assessment proceedings were without jurisdiction, the penalty proceedings would also be null and void, even if the assessments were not challenged in the quantum proceedings. Consequently, the penalties levied by the AO and upheld by the CIT(A) were deemed without jurisdiction, leading to the cancellation of the penalty proceedings in all cases.

In conclusion, the appeals of the assessees were allowed based on the finding that the penalty proceedings were without jurisdiction due to the assessments being null and void.

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