TaxTMI 
TaxTMI 
2023 (11) TMI 795
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.... in upholding levy of penalty of Rs.60,738/- u/s. 271(1)(c) of the Act. The appellant craves leave to add, amend, alter and withdraw any ground of appeal anytime up to the hearing of this appeal. 3.1 The assessee vide letter dated 26-10-2020 has also raised the additional grounds of appeal which are reproduced as under: Additional Grounds of appeal a) On the facts and Circumstances of the case and on the basis of information obtained under RTI dated 24.06.2020, the order of AO levying penalty is void ab initio as the same has been initiated in pursuance to an order of assessment, dated 27.12.2016, which itself was a nullity, as the approval granted u/s 153D of the Act is mechanical approval. b) On the facts and under the circumstances of the case the penalty levied under section 271(1)(c) of the Act is void as no specific notice u/s 274 has been issued by the AO. c) On the facts and circumstances of the case the penalty order is bad in law as the approval of JCIT dated 24.05.2017 was an approval without application of mind. 6. It is well settled that an assessee can raise a legal additional ground or even fresh legal plea at ....
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....no reason why the assessee should be prevented from raising that question before the Tribunal for the first time, so long as the relevant facts are on record in respect of that item. There is no reason to restrict the power of the Tribunal under section 254 only to decide the grounds which arise from the order of the Commissioner (Appeals). Both the assessee as well as the Department have a right to file an appeal/cross-objections before the Tribunal. There is no reason why the Tribunal should be prevented from considering questions of law arising in assessment proceedings although not raised earlier. ******** The view that the Tribunal is confined only to issues arising out of the appeal before the Commissioner (Appeals) takes too narrow a view of the powers of the Tribunal. Undoubtedly, the Tribunal will have the discretion to allow or not allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings there is no reason why such a question should not be allowed to be raised when it is necessary to consider that question in order to correctly assess th....
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....s has challenged the penalty levied by the authorities below under section 271(1)(c) of the Act on merit as well as on the technical ground i.e. validity of the penalty order was tested on two counts. 11.1 The contention of the learned AR on the legal point was that the assessment under section 153(3) read with section 143(3) of the Act has been framed without obtaining the proper approval from the Joint Commissioner under the provisions of section 153D of the Act. Therefore, the assessment framed under section 153(3) read with section 143(3) of the Act is bad in law. Thus, the learned AR pointed out that once the assessment is bad in law and liable to be quashed, then the penalty arising out of such assessment order is not sustainable. Thus, the penalty order framed under section 271(1)(c) of the Act is not maintainable under the provisions of law. 12. On the contrary, the learned DR vide letter dated 5 October 2023 supported by the letter of the DCIT dated 5th of September 2023 has submitted as under: 3. Following are the salient aspects of the CBDT instruction relevant to the issue at hand. Para 1.3 mandates that AO and range head should jointly scrutinize apprais....
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....dication so as to whether the penalty can be levied where the validity of assessment order itself is in doubt. In this regard, the contention of the learned AR is that the assessment under section 153C read with section 143(3) of the Act was framed without proper approval under section 153D of the Act. Thus, the order passed under section 153C read with section 143(3) is bad in law and therefore no penalty proceeding can be initiated under section 271(1)(c) of the Act based on invalid assessment order. 13.1 The procedure under section 153D provides that where the assessment order u/s 153A(1)(b) or 153B(1)(b) is passed by AO below the rank of JCIT, he has to seek approval from the JCIT. The issue arises whether assessment/ reassessment made u/s 153C requires approval from JCIT. It seems that such approval is necessary because after receipt of seized material from the AO of the person searched, the AO of "other person" "shall proceed against such other person and issue notice and assess or reassess the income of "other person" in accordance with the provisions of section 153A of the Act, if the AO of the "other person" is satisfied that books of account/ documents/ assets seized/ ....
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.... IV. The approval was sought by the ACIT through single email with respect of 10 different assessee. V. The approval letter by the Joint Commissioner was dated 27 December 2016. 13.4 The above facts can be verified from RTI filed by the ld. AR which is placed on record and the ld. DR has also not controverted the same. 13.5 The issue which we must decide whether the approval on hand given by the Joint Commissioner is fulfilling the mandate of the provisions of Sec. 153D of the Act vis-à-vis the legislative intent of inserting the said section in the statute. The provisions of section 153D of the Act read as under: 153D. No order of assessment or reassessment shall be passed by an Assessing Officer below the rank of Joint Commissioner in respect of each assessment year referred to in clause (b) of sub-section (1) of section 153A or the assessment year referred to in clause (b) of sub-section (1) of section 153B, except with the prior approval of the Joint Commissioner: Provided that nothing contained in this section shall apply where the assessment or reassessment order, as the case may be, is required to be passed by the Assessing Officer w....
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....rds, the application of mind of the joint Commissioner was necessary in order to achieve the legislature intent. 13.9 Hon'ble Supreme Court in the case of Sahara India (Firm) v. CIT[2008] 169 Taxman 328/300 ITR 403 in the provisions of section 142(2A) where the AO after having regard to the nature and complexity/ volume of the accounts etc. was of the opinion that it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Chief Commissioner or Commissioner, direct the assessee to get the accounts audited by an accountant. The Hon'ble Supreme Court observed as under: "Needless to emphasise that before granting approval, the Chief Commissioner or the Commissioner, as the case may be, must have before him the material on the basis whereof an opinion in this behalf has been formed by the Assessing Officer. The approval must reflect the application of mind to the facts of the case." 13.10 The Hon'ble Supreme Court in the case of ACIT Vs Seerajuddin & CO. in ITA Nos. 39 to 45 of 2022 order dated 15-03-2023 has also observed as under: 25. For all of the aforementioned reasons, the Court finds that the ITAT has correctly se....
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.... under section 132 or books of account, other documents or any assets requisitioned under section 132A, after the 30th day of June, 1995 but before the 1st day of January, 1997; (b) the Joint Commissioner or the Joint Director, as the case may be, in respect of search initiated under section 132 or books of account, other documents or any assets requisitioned under section 132A, on or after the 1st day of January, 1997. 13.13 In this section also it is provided that the order cannot be passed without the previous approval. This section was thoroughly scrutinized by the Tribunal Madras Bench in the case of Kirtilal Kalidas & Co. v. Dy. CIT [1998] 67 ITD 573, at para-41 of its order the observations of the Tribunal are as under: 41. In these cases, the Commissioner has passed an order granting approval under section 158BG of the Act through a single order passed on 31-3-1997 without giving any reason whatsoever. As we have recorded elsewhere above, the draft assessment orders of the block period in all these cases were made on 31-3-1997 and on the very same day, i.e., on 31-3-1997 the Commissioner grants approval and that too without giving or recording any reaso....
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....ng proposed to make addition on account of difference in profit and capital employed as per disclosed books viz-a-viz alleged undisclosed book seized during the search at the premises of searched person which was accepted by assessee. Accordingly, the assessment framed under section 153C read with section 143(3) of the Act vide order dated 27-12-2016 assessing the income at Rs. 2,02,459/- against the NIL income offered by the assessee. In other words, the assessee accepted the assessment framed under section 153C read with section 143(3) of the Act despite the fact that the procedures as specified under section 153D of the Act were not complied with by the AO. Now the issue arises whether the assessment order can be challenged in the penalty proceedings and consequently penalty order can be held as invalid. This question has been answered by this Tribunal in the case of M/s Atlanta Electricals Pvt. Ltd. Vs ACIT in ITA Nos. 551 & 552/AHD/2012 vide order dated 26-09-2019 by observing as under: "9.2 We however also advert to another plea raised on behalf of the assessee while assailing imposition of penalty. A plea has been inter alia raised on behalf of the assessee towards ....