TaxTMI 
TaxTMI 
2005 (5) TMI 261
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....ection 271(1)(c) of the Income-tax Act, 1961 (the Act) is without jurisdiction, illegal, bad in law and void ab initio." 3. Briefly stated the facts of ITA No. 5393/Del/2003 are that the assessee, Mr. Greer Robert was a non-resident person. Proceedings under section 147 were initiated in the case of the assessee, Mr. Greer Robert vide notice-dated 13th February, 2001 issued under section 148 of the Act in the name of 'Tidewater Marine International Inc.' treating it as agent of the nonresident assessee. The assessment was completed under section 143(3)/148 of the Act. Thereafter, penalty proceedings under section 271(1)(c) of the Act were initiated and penalty was levied by the Assessing Officer under section 271(1)(c). On appeal, the CIT(A) confirmed the same. 4. The ld. counsel has submitted that section 149(3) provides that no notice under section 148 shall be served on a person treating as agent of a non-resident under section 163 of the Act after the expiry of a period of two years from the end of the relevant assessment year. The said sections reads as under:- "If the person on whom a notice under section 148 is to be served is a person treated as the agent of a n....
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.... in penalty proceedings upon the pleas taken which can be taken at the penalty stage and howsoever relevant and good. The findings in the assessment proceedings may be, they are not conclusive so far as the penalty proceedings are concerned. Reliance has been placed on the following decisions: (i) CIT v. Anwar Ali [1970] 76 ITR 696 (SC); (ii) CIT v. J.K. Synthetics Ltd. [1996] 219 ITR 267 (Delhi); (iii) Jainarayan Babulal v. CIT [1988] 170 ITR 399 (Bom.); (iv) BanarasTextorium v. CIT [1988] 169 ITR 782 (All.); (v) CIT v. H. Abdul Bakshi & Bros. [1986] 160 ITR 94 (AP) (FB); and (vi) CIT v. Rupabani Theatres (P.) Ltd [1981] 130 ITR 747 (Cal). 6. The ld. counsel has further submitted that conditions precedent for initiating reassessment proceedings under section 147/148 are mandatory. There could never be a waiver of mandatory provisions of the Act. Reliance in this regard has been made upon the decision in the matter of P.V. Doshi v. CIT [1978] 113 ITR 22 (Guj.). Assessment framed was since bad in law no penalty in consequent thereto could be levied under section 271(1)(c) of the Act. He has further submitted that the complete details of the salary received by the assess....
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....iod of limitation under section 149(3) to hold that assessee as agent had expired owing to default on the part of the assessee, giving no opportunity to the Department to be able to treat the assessee as agent? Thus he has urged that penalty imposed under section 271(1)(c) be sustained. 9. We have heard the rival contentions of the parties and has perused the material to which our attention was drawn during the course of hearing and the case laws referred to at the bar. The basic question arises for consideration whether the assessee having failed to raise the question of validity of assessment either before the Assessing Officer in the assessment proceedings or in the quantum appeal and having neither raised this issue before the Assessing Officer in the penalty proceedings or in the appellate proceedings against the penalty order could raise the question of validity of assessment order before the Tribunal at this stage. It may be mentioned in the case of Jainarayan Babulal v. CIT [1988] 170 ITR 399 (Bom.) their Lordships have held that assessment proceedings are taxing proceedings and penalty proceedings are criminal proceedings in their very nature. A decision given in an asses....
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....n should not be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee". 14. In view of the above legal position, 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 decision. 15. The agent of a non-resident is a representative assessee in respect of a non-resident specified in section 9(1) of the Income-tax Act, the assessee is a non-resident and the representative assessee's liability does not arise unless and until the non-resident has income .... Or arising in India and such income is taxable under the Act. In the instant case, Mr. Greer Robert, a non-resident person is the assessee. The proceedings under section 147 was initiated in the case of the assessee vide notice dated 13th February, 2001 issued under section 148 of the Act in the name of Tidewater Marine In....