TaxTMI 
TaxTMI 
2008 (4) TMI 367
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....ered without any evidence only to cover up the low income declared in the return filed earlier. 3. Further, learned CIT(A)-I, Kanpur has erred in law and on facts, in observing that the assessment was passed without jurisdiction, which is no more valid in view of the amendment proposed in the Finance Bill, 2008 with retrospective effect that if a notice is not challenged before the AO. It cannot be challenged afterwards. 4. That the order of the learned CIT(A)-I, Kanpur being erroneous in law and on facts be vacated and the order of the AO be restored." 3. Similar grounds have been raised for asst. yr. 2004-05. 4. The facts of the case are that a search and seizure operation under s. 132 of the Act was carried out on 13th Aug., 2004 at the business and residential premises of one Shri Paramjeet Singh and his family members. The assessee, Smt. Surinder Kaur is wife of Shri Paramjeet Singh and has been declaring her income from business of trading in battery spare parts and from other sources. The AO issued notice under s. 153A to the assessee. who filed return of income on an income of Rs. 2,05,950 against original returned income of Rs. 1,49,950 which was filed on 31st ....
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....out any particular entry which was escaped from income. The entire income was shown and nothing was hidden or concealed. The assessee had a part-time accountant who could not complete the books in time." 9. The AO rejected the explanation on the ground that assessee has not maintained books of account on regular basis, sales and purchase register has been written in pencil. No surrender was made during the course of search under s. 132 and therefore, Expln. 5 to s. 271(1)(c) is attracted. He accordingly, levied a penalty of Rs. 1,10,000. 10. The learned CIT(A) cancelled the penalty for asst. yr. 2000-01 on the ground that no concealment of income has been found and secondly that no search warrant was issued in the name of the assessee and therefore, assessment under s. 153A could not be made. No evidence has been found in the search for making alleged additions. In this regard we refer to paras 5 and 6 from the order of learned CIT(A) for asst. yr. 2000-01 as under: "5. I have considered the submissions of the appellant. I also find that no search warrant was issued in the name of the appellant and no statement of the appellant was ever recorded either at the time of searc....
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....s. 60,000 in the return filed response to notice under s. 153A of IT Act. There is no evidence to hold that amount of Rs. 60,000 was ever detected by the AO or by authorised officers, who conducted the search action under s. 132 of IT Act. The sequence of events clearly illustrates complete absence of mens rea on the part of the appellant or deliberate intention on her part to evade the payment of taxes on the income of Rs. 60,000. As such, imposition of penalty under s. 271(1)(c) is not considered justified. The penalty order is cancelled." 11. The learned CIT(A) has taken similar view for asst. yr. 2004-05 cancelling the penalty. 12. Before us, the learned Departmental Representative submitted that assessment framed under s. 153A should be read as the one framed under s. 153C/153A. Evidence in the form of shortage of cash for the asst. yr. 2000-01 and unverifiable expenses in asst. yr. 2004-05 were found which compelled the assessee to declare the same in the return of income filed in response to notice under s. 153A and disclosed that sum. He submitted that Expln. 5 to s. 271(1)(c) of the Act is clearly attracted in this case. Entries are not found in the accounts of the a....
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....r particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under s. 139; (b) assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made." 15. The first requirement for invoking this section against a person is that a search is initiated against him under s. 132 or books of account, other documents or any assets are requisitioned under s. 132A after the 31st May, 2003. Therefore, issuance of notice under s. 153A on the face of it is clearly invalid. The AO does not get jurisdiction to issue this notice. 16. For the sake of argument if it is considered that this notice under s. 153A is issued r/w s. 153C, then still we are of the considered view that issuance of notice under s. 153A r/w s. 153C is also invalid. Sec. 153C reads as under: "153C. Assessment of income of any other person.-Notwithstanding anything contained in s. 139, s. 147, s. 148, s. 149, s. 151 and s. 153, where the AO is satisfied that any money, bullion, jewellery or othe....
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....earch of the person against whom search warrant was issued is necessary for giving jurisdiction to the AO of such other person to whom such tangible assets/documents are required to be handed over. Since in the present case, neither there was any seizure of any tangible assets/documents which could belong to the assessee nor there is any satisfaction of the AO of Shri Paramjeet Singh, husband of the assessee or any other person who was subjected to search, the question of invoking the provisions of s. 153C does not arise. For this, we derive support from the decision of Hon'ble Supreme Court in the case of Manish Maheshwari vs. Asstt. CIT (2007) 208 CTR (SC) 97 : (2007) 289 ITR 341 (SC). Therefore, the issuance of notice under s. 153A against the assessee could not be said to be the one issued as read with s. 153C. Once the basic premise for initiating the provisions of s. 153A is incorrect, the question of levying penalty on the basis of such assessment does not arise. Even if penalty was levied, it cannot be sustained. For levy of penalty under s. 27l(1)(c) of the Act, there should be a legally valid assessment order. Even though such assessment order has not been challenged and ....