Tribunal grants appeal, orders fresh review on loan vs deposit issue under penalty section

The tribunal allowed the appeal for statistical purposes, sending the case back to the Ld. CIT(A) for a fresh review. The issue of determining certain amounts as a loan or deposit for penalty u/s 271D was to be re-evaluated. The appellant's failure to provide bank statements and lack of evidence led to the confirmation of the penalty. The tribunal clarified that penalty proceedings need not be initiated during the assessment process under Section 271D, dismissing the appellant's arguments regarding timing and limitations for passing the penalty order.

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Issues involved:
The judgment involves issues related to penalty under u/s 271D of the Income Tax Act, 1961. The main issues include the initiation of penalty proceedings, the time limitation for passing the penalty order, and the requirement of providing bank statements.

Initiation of Penalty Proceedings:
The appellant contended that penalty u/s 271D should be deleted as there was no mention of such default in the assessment order. The appellant argued that penalty proceedings were initiated much after the completion of the assessment proceedings. However, the revenue argued that there is no requirement for initiation of penalty proceedings during the course of assessment as per Section 271D of the Income Tax Act, 1961. The tribunal dismissed the additional ground, stating that the requirement of initiation during the course of proceedings is prescribed in a different section, Section 271(1) of the Act.

Time Limitation for Passing Penalty Order:
The appellant raised another ground that the penalty was levied after a lapse of many years, therefore barred by limitation and bad in law. The appellant argued that the delay in passing the penalty order was undue. The revenue contended that there is no legal requirement to pass an order u/s 271D within a specified time period. The tribunal noted that the penalty was imposed within a few months after the completion of the assessment order and dismissed this additional ground.

Requirement of Providing Bank Statements:
The appellant failed to furnish all bank statements during the proceedings, which was considered as a systematic avoidance of the proceedings by the Ld. CIT(A). The tribunal found it absurd that the appellant asked the department to furnish bank statements when the appellant should have had access to them. Despite opportunities granted, the appellant failed to pinpoint any transaction through banking channels not in contravention with the Act. The penalty u/s 271D was confirmed due to the appellant's failure to provide sufficient evidence.

Conclusion:
The tribunal allowed the appeal of the assessee for statistical purposes and restored the issue back to the stage of Ld. CIT(A) for fresh adjudication. The issue of whether certain amounts should be considered as a loan or deposit for the purpose of penalty u/s 271D was to be examined afresh.

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