Pawan Kumar Vs DCIT (ITAT Amritsar)
ITAT Amritsar held that initiation of Assessment Proceedings u/s 153C, instead of section 153A, in case of the searched assessee makes the entire assessment invalid. Accordingly, penalty levied u/s 271(1)(c) is not maintainable.
Facts- There was search and seizure proceedings u/s 132 on 25.09.2019 conducted on the premises of M/s AIRWINGS SERVICES PVT. LTD in which the appellant is an employee. A search was also conducted separately at the residential premises of the appellant.
Subsequently, the proceedings u/s 153C were initiated on the basis of material seized from Cambridge International Foundation school that the documents seized pertain to noting of salary in respect of school and includes the salary ‘paid to maids’ amounting to Rs. 205390/- which pertain to M/s Pal Enterprises for which the appellant is a proprietor. The said noting pertains to 06.08.2019 based on which, the whole proceedings u/s 153C have been initiated.
It was also submitted that the provisions of section 153C were not relevant in the instant case as the notice u/s 153C is to be issued to a person other than the persons referred to in section 153A. It is a matter of record that the appellant was also subjected to search on 25.09.2019 and as such the appellant cannot be referred to as a person other than the person referred in section 153A. In the present case, the AO has himself admitted that the appellant was searched and as such, the proceedings-initiated u/s 153C were without jurisdiction.
CIT(A) confirmed the action of the AO in respect of penalty levied u/s 271 (l)(c) and 270A on the ground that the AO has rightly framed the assessment u/s 153C.
Conclusion- Held that the impugned assessments suffers from a patent legal defect at the threshold itself since the Assessing Officer ought to have initiated the Assessment Proceedings u/s. 153A in case of the searched assessee. The impugned assessment itself as ‘invalid’. Thus, when the assessment itself is held invalid, the penalty levied u/s 271(1)(c) is not maintainable and as such same is dismissed as void ab initio.
FULL TEXT OF THE ORDER OF ITAT AMRITSAR
This bunch of appeals is filed by the assessee against the orders of the ld. Commissioner of Income Tax (Appeals)-5, Ludhiana even dated 09.12.2022in respect of Assessment Years: 2014-15to 2019-20 wherein the assessee has challenged the confirmation of penalty u/s 271(1)(c) of the Act.
2. At the outset, the LD. Counsel submitted identical facts, the case in ITA No. 16/Asr/2023 may be taken as a lead case. There was search and seizure proceedings u/s 132 on 25.09.2019 conducted on the premises of M/s AIRWINGS SERVICES PVT. LTD in which the appellant is an employee. A search was also conducted separately at the residential premises of the appellant. In this regard, the LD. AR filed the copy of Panchnama [Refer page no. 4-9] from which it is evident that there was an independent search on the appellant. Subsequently, the proceedings u/s 153C were initiated on the basis of material seized from Cambridge International Foundation school that the documents seized pertain to noting of salary in respect of school and includes the salary ‘paid to maids’ amounting to Rs. 205390/- which pertain to M/s Pal Enterprises for which the appellant is a proprietor. The said noting pertains to 06.08.2019 based on which, the whole proceedings u/s 153C have been initiated. The Ld.AR argued that the assessment in the case of Pawan Kumar was framed u/s 1 53C because certain incriminating documents were found and seized from the premises of Cambridge international School which belongs to Pawan kumar alias Lucky [Please refer para 4.1 on page no 17 of paper book and internal page no 7 of the CIT(A) order for AY 2014-15]. It was also submitted before the CIT(A) that the provisions of section 153C were not relevant in the instant case as the notice u/s 1 53C is to be issued to a person other than the persons referred to in section 1 53A. It is a matter of record that the appellant was also subjected to search on 25.09.2019 and as such the appellant cannot be referred to as a person other than the person referred in section 153A. In the present case, the AO has himself admitted that the appellant was searched and as such, the proceedings-initiated u/s 1 53C were without jurisdiction. The said issue was also raised in the appellate proceedings before CIT(A) and as a consequence of the same, report was called from the AO vide letter no 1575 dated 15.11.2022. In the said letter, the AO has admitted the fact that the appellant was searched but he has pointed out that certain incriminating material was found from the premises of Cambridge International School out of which a sum of Rs. 205390/- was paid as ‘salaries paid to maid’ to M/s Pal Enterprises in cash. The facts that the AO has admitted that the appellant was searched aresummarized as under: –
