TaxTMI 
TaxTMI 
2024 (7) TMI 87
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....), dated 20.09.2023 passed against the penalty order by the Additional Commissioner of Income Tax, Range 13(3), Mumbai, u/s. 271E of the Act, dated 24.07.2018 for AY 2010-11. 2. All the three appeals relate to common issues in respect of imposition of penalty u/s. 271D and 271E for AY 2011-12 and AY 2010-11. Since, similar issue is involved in all the three appeals, we take them up together by passing a consolidated order. For the purpose of drawing the facts, we take up appeal in ITA No. 4140/MUM/2023 for AY 2011-12 in which penalty u/s. 2701E of Rs.11,40,000/- is imposed. 3. In ground No.1, assessee has challenged the imposition of penalty by submitting that the reassessment proceedings which had been quashed by the Hon'ble ITAT and therefore the penalty proceedings do not survive. 4. Brief facts of the case are that assessee is engaged in real estate business. It filed its return of income for AY 2011-12 by reporting the total income at nil. Case of the assessee was reopened u/s. 147 by issuing notice u/s. 148 on 30.03.2018. In the reasons to believe recorded by the ld. Assessing Officer, it was noted that information was received from the office of, ACIT, Central Circl....
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....only u/s. 153C of the Act, not under section 147 of the Act. Accordingly, we are in agreement with the grounds raised by the assessee that the proceedings initiated u/s. 147 of the Act is void ab initio. Accordingly, any proceedings relating to the above assessment is also becomes invalid. Accordingly, the appeal filed by the assessee is allowed in this regard. We have not adjudicated the main grounds of appeal at this stage and kept it open. 11. Coming to the appeal relating to A.Y. 2011-12, since facts in this appeal are mutatis mutandis, therefore the decision taken in A.*. 2010- 11 is applicable to this assessment year also. Accordingly, this appeal is also allowed." 6.1. In view of the above decision of the Co-ordinate Bench, assessee strongly submitted before the ld. CIT(A) that when the reassessment proceeding itself has been quashed, the penalty proceedings so initiated by the ld. Assessing Officer would not survive and therefore the penalty so imposed ought to be deleted. Ld. CIT(A) did not accept the claim of the assessee by holding that penalty proceedings are distinct from assessment proceedings. According to him, levy of penalty u/s. 271E of the Ac....
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....on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed thereby setting aside the assessment order itself. It is in this backdrop, a question has arisen as to whether the penalty order, which was passed on the basis of original assessment order and when that assessment order had been set aside, could still survive. The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding under Section 271E would also not survive, This according to us is the correct proposition of law stated by the High Court in the impugned order. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proc....
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....partment." 8.3. From the above, it was pointed out that similar facts exist in the case of the assessee also, where the quantum reassessment order has been quashed as void ab initio without dealing with the other issues on merit. It was further submitted that the Co-ordinate Bench had also considered the ratio laid down by the Hon'ble Apex Court in the case of Jai Laxmi Rice Mills (Supra) which dealt with the issue that with the annulling of the initial assessment order passed in the case of the assessee by the ITAT, the penalty initiated therein u/s. 271D also did not survive. 9. We have heard the rival contentions and perused the material on record. Admittedly, it is a fact on record that the reassessment proceedings, u/s. 147 of the Act in the course of which penalty proceedings u/s. 271D and 271E were initiated have been quashed as void ab initio by the Co-ordinate Bench. This fact was put forth before the ld. CIT(A) by the assessee but has been negated to upheld the penalty imposed by the ld. Assessing Officer. Based on these facts, we have perused the order of the Hon'ble Apex Court in the case of Jayalakshmi Rice Mills (supra), and find that it clearly applies in the p....