|The Tax Publishers2021 TaxPub(DT) 0686 (Del-HC) : (2021) 432 ITR 0134 : (2021) 280 TAXMAN 0011
INCOME TAX ACT, 1961
Where assessee's application for settlement was pending then the AO was not justified in passing penalty order for violation of section 269ST.
Settlement Commission - Levy of penalty for violation of section 269ST - AO passed order levying penalty during pendency of assessee's application before ITSC -
That a search and seizure operation under section 132 of the Act as well as survey under section 133A of the Act was carried out on 29-5-2018 in the case of the petitioner and thereafter the investigation wing referred the case of the petitioner to the concerned AO; Joint CIT, being the Range Head of the AO of the petitioner, after going through the seized material, presumed that the petitioner had violated the provisions of section 269ST of the Act and issued a Notice, dt. 30-9-2019 to the petitioner, for assessment years 2018-19 and 2019-20, calling upon the petitioner to show cause why penalty under section 271DA of the Act, for violating the provisions of section 269ST of the Act, be not imposed on the petitioner and fixed the case for hearing on 10-10-2019; the petitioner requested for adjournment and the case was adjourned to 16-10-2019; in the meanwhile, in pursuance to the search and seizure operation, notices under section 153A of the Act were issued to the petitioner for the assessment years 2013-14 to 2018-19. The petitioner, to buy peace of mind and to avoid litigation, on 1-11-2019 approached the Income Tax Settlement Commission for assessment years 2012-13 and 2013-14 to 2019-20; the petitioner, in accordance with the provisions of the Act, on 1-11-2019 itself also informed the AO about the filing of the application before the Settlement Commission; the petitioner, though not required to, by way of abundant caution, vide e-mail dt. 4-11-2019, at 9:46 AM, also informed the Joint CIT of having approached the Settlement Commission; the Joint CIT however proceeded to thereafter pass the impugned penalty Order, dt. 4-11-2019 and communicated the same to the petitioner. Vide the impugned penalty order, penalty under section 271DA for the assessment years 201819 and 2019-20 has been imposed on the petitioner, ignoring the fact that the petitioner had already preferred an application before the Settlement Commission. Held: Settlement Commission under proviso to section 245F(2), with effect from 1-11-2019, when assessee admittedly made application under section 245C before it, had exclusive jurisdiction to deal with the matter relating to violation of section 269ST also and AO on 4-11-2019 did not have jurisdiction to impose penalty for violation of section 269ST on assessee and, therefore, impugned order was without jurisdiction and was quashed. AO was directed to await the decision of Settlement Commission on application of assessee and to abide by the same. If Settlement Commission grants immunity from penalty within the meaning of section 245H, for violation of section 269ST, needless to state, the notices issued by AO to assessee would automatically lapse and/or would not remain actionable. However, if no immunity with respect thereto is granted, AO would be entitled to take further proceedings in pursuance to the notices.
Relied:CIT v. ITSC (2014) 360 ITR 407 (Del) : 2013 TaxPub(DT) 2101 (Del-HC).
FAVOUR : In assessee's favour.
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