Penalty under Section 271D Cancelled as Time-Barred; Revenue's Appeal Dismissed

The Tribunal upheld the CIT(A)'s decision to cancel the penalty imposed under section 271D of the Act, ruling that the penalty proceedings were time-barred as per section 275(1)(c) of the Act. The Tribunal found that the initiation of penalty proceedings after the completion of assessment exceeded the limitation period. The Revenue's appeal was dismissed, affirming the CIT(A)'s order.

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Issues Involved:
1. Justification of CIT(A) in canceling the penalty imposed u/s. 271D of the Act.
2. Applicability of provisions u/s. 275(1)(c) of the Act regarding the limitation period for initiating penalty proceedings.

Summary:

Issue 1: Justification of CIT(A) in Canceling Penalty Imposed u/s. 271D of the Act

The Revenue challenged the CIT(A)'s order canceling the penalty imposed by the Addl. CIT u/s. 271D of the Act. The Addl. CIT had initiated penalty proceedings based on the assessee taking a cash loan of Rs. 23,28,690/- and repaying it in cash, violating sections 269SS and 269T. The CIT(A) quashed the penalty proceedings, considering them barred by limitation, as per the Tribunal's earlier decision in the assessee's own case for penalty u/s. 271E of the Act. The Tribunal upheld the CIT(A)'s decision, noting that the penalty proceedings initiated on 11-03-2010 were beyond the limitation period, as the assessment was completed on 30-11-2007.

Issue 2: Applicability of Provisions u/s. 275(1)(c) of the Act Regarding Limitation Period

The Tribunal discussed the legislative history and provisions of section 275(1)(c) of the Act, which prescribes the bar of limitation for imposing penalties. It was noted that the Addl. CIT initiated penalty proceedings after the expiry of the financial year in which the assessment was completed, thus barred by limitation. The Tribunal referred to the decision of the Hon'ble High Court of Rajasthan in the case of Hissaria Bros., which was confirmed by the Supreme Court, and held that section 275(1)(c) applies to independent penalty proceedings not linked to assessment proceedings. The Tribunal found no merit in the Revenue's reliance on the Hissaria Bros. case and upheld the CIT(A)'s order, dismissing the Revenue's appeal.

Conclusion:

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision that the penalty proceedings initiated u/s. 271D of the Act were barred by limitation, as per section 275(1)(c) of the Act. The order was pronounced on 14th August 2023.

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