TaxTMI 
TaxTMI 
2001 (8) TMI 295
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....nue for asst. yr. 1993-94, 1994-95 and 1995-96 in respect of penalties under s. 271E cancelled by the learned CIT(A), Udaipur. 3.(i) The facts, in brief, as per the assessee, are that the assessee is a firm doing the business of Kachha Arhatiya, acting as agent for its farmer-constituents, who used to bring their crops to the assessee for sale, and the assessee in this relationship used to sell their crops and keep/retain the sale proceeds of crops so as to be adjusted against their time to time withdrawals and buying of goods. The assessee was catering to their needs like payment in cash, supply of goods like fertilizer (Khad) seeds, pesticides, etc. retaining sale proceeds of crops accepting amounts given by farmers for the purpose of meeting on their time to time needs. The nature of dealings between Kachha Arhatiya and the farmer were fast, frequent and of current nature. No stipulation ever existed in regard to amounts, if any, given by the fanner to the assessee for keeping it for the purpose of making out their time to time needs. The farmer-constituents were hesitant in having dealings through banks, due to time constraints, tedious formalities, etc., etc. The dealings b....
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....fied in Annexure B and Annexure C, being receipts in cash exceeding Rs. 20,000 as also withdrawals therefrom being in excess of Rs. 20,000, held to be repayments, and thus liable for penalties on both the counts under ss. 271D and 271E. However, the learned CIT(A) directed the AO/Jt. CIT for allowing some relief after verification regarding the facts of extent of receipt. The learned CIT(A) did not accept the assessee's plea regarding the above receipts being not deposits, nor did he accept the assessee's plea regarding bona fide belief coupled with genuineness of transactions. (iv) In asst. yr. 1995-96, involved in assessee's appeals Nos. 432/Jdpr/2000 and 431/Jdpr/2000 and Revenue's appeals Nos. 502/Ju/2000 and 501/Ju/2000, the AO/Jt. CIT levied penalties for the instances mentioned in Annexure A, Annexure B and Annexure C to the penalty orders. However, the learned CIT(A) cancelled the penalties in respect of instances specified in Annexure A and Annexure C, accepting the assessee's plea of there being reasonable cause and bona fide belief. But the learned CIT(A) did not accept the assessee's contention regarding the receipts of instances mentioned in Annexure A not being in ....
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....bsp; 47,62,386 50,22,864 (Annex. (Annex. A-30,31,465 + A-32,90,993 + B-8,99,963 + B-8,99,963 + C-17,31,371 C-17,31,371 --------------------------------------------------------------------- Table Continues... --------------------------------------------------------------------- CIT(A) sustained penalty Remarks under s. 271D under s. 271E --------------------------------------------------------------------- 1,89,000 1,89,000 CIT(A) deleted penalty of Rs. 75,000  ....
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....h clearly show that the said penalty orders under ss. 271D and 271E are barred by limitation as prescribed under s. 275(1)(c). It has been contended orally as also in writing on behalf of the assessee that the relevant finding of Jt. CIT for asst. yr. 1993-94 have been given in para 5(viii) on p. 4 of the penalty order for asst. yr. 1993-94 wherein he has held the penalty order to be within limitation applying cl. (a) of s. 275(1), and that the Jt. CIT has also held in para 5(ix) on p. 5 of his penalty order for asst. yr. 1993-94 that even if the cl. (c) is applicable, the penalty order is within limitation. It has been contended that the Jt. CIT has made similar observations in respect of penalties for asst. yrs. 1994-95 and 1995-96. For the sake of convenience and ready reference, we quote the provisions of s. 275(1)(a), (b) and (c) as under: "No order imposing a penalty under this Chapter shall be passed: (a) in a case where the relevant assessment or other order is the subject-matter of an appeal of the CIT(A) under s. 246 or an appeal to the Appellate Tribunal under s. 253, after the expiry of the financial year in which the proceedings, in the course of which action for....
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....t the initiation of penalty proceedings for all the assessment years involved in appeals under consideration is identical and identical findings were given by AO and Jt. CIT in respective orders in all the cases. It has also been contended that the gist of assessee's contentions has been reproduced by Jt. CIT in para 4 on pgs. 2 and 3 of the penalty order under s. 271D for asst. yr. 1993-94 wherein the issuance of show-cause notice by Jt. CIT on 15th March, 1996, 12th Sept., 1996,and 20th Dec, 1996, for asst. yrs. 1993-94, 1994-95 and 1995-96 has been mentioned, it has been contended that in view of the aforesaid facts, the order of penalty should have been passed within six months from the end of the month wherein assessment was completed. It has also been contended that the provisions of s. 275(1)(a) have no application to the facts of the instant cases for the reasons that the penalties under ss. 271D and 271E have no dependence on or relevance with the computation of income being done in the assessment and so the decision of the appeals against assessment orders would not have any bearing on the concerned limitation. It has been contended that the Jt. CIT rejected the assessee'....
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....y of any beneficial provision, if two views are possible, then that view should be taken which is beneficial to the assessee. 9. He has contended that the impugned orders of imposition of penalty were barred by limitation and deserve to be cancelled. 10. As against this, the learned Departmental Representative or Revenue has contended that Chapter XXI containing ss. 270 to 275 deals with penalty. He has contended that learned authorised representative contention that s. 275(1)(c) is relevant is not correct. He has contended that the Department's plea is that the provision of s. 275(1)(a) is relevant. He has contended that the assessed income includes various additions including cash credits and if cash credit is treated as genuine and addition under s. 68 is not tenable, then penalty under s. 271D is leviable because there is violation of s. 269SS; if cash credit is held to be income of assessee under-s. 68 then s. 269SS will not operate and in turn, no penalty leviable under s. 271D. He has contended that because assessment was subject-matter of appeal before the Tribunal so the time-limit for levy of penalty is governed by s. 275(1)(a), i.e., within six months from the date....
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....bsp; Notice by Jt. CIT under s. 271D under s. 271E under s. 271D under s. 271E ----------------------------------------------------------------------- 93-94 15-3-1996/P2 PB 15-3-1996/P3 PB 21-1-2000 21-1-2000 94-95 12-9-1996/P3 PB 12-9-1996/P4 PB 21-1-2000 21-1-2000 95-96 20-12-1996/P1 20-12-1996/P3 21-1-2000/P2 21-1-2000/P4 ----------------------------------------------------------------------- Table Continues... --------------------------------------------------------------- Last Date for Levy Last date for Levy Date of Penalty order of penalty as per of penalty as per Revenue assessee --------------------------------------------------------------- 31-3-2000 30-9-96 &nbs....
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....etion of the assessment in view of s. 275(1)(c). In (1983) 37 CTR (Raj) 19 : (1984) 147 ITR 361 (Raj) the Hon'ble Rajasthan High Court has held as under: "While considering the accessibility or applicability of any beneficial provision or any interpretation of facts or inferences to be drawn from facts, if two views are possible, then, that view should be taken which may be beneficial to the assessee." 14. In our considered opinion, the matter is squarely covered by the decision of Tribunal, Jaipur, rendered in the case of Manoharlal vs. Dy. CIT (1995) 53 TTJ (Jp) 105 discussed above which is further supported by the decision of Tribunal, Jaipur, rendered in the case of Manoj Lalwani vs. Jt. CIT as also by the above referred decision of the Hon'ble jurisdictional High Court in the case of Mansinghka Bros. (P) Ltd. vs. CIT. As mentioned above, it has been held by the Tribunal, Jaipur, in the case of Manoharlal vs. Dy. CIT that the penalties under ss. 271D and 271E are quite independent of assessment proceedings and initiation of these penalty proceedings can be independent of the assessment proceedings and that in respect of the penalties under ss. 271D and 271E the period of ....
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....ty order, as pointed out by the learned authorised representative of assessee in para. 1.9 on p. 6 of his w/s, that s. 275(1)(a) is applicable to the penalty proceedings initiated under Chapter XXI cannot be accepted as correct as rightly pointed out by the learned authorised representative of assessee in his w/s. If that were the situation, and the provision of s. 275(1)(a) were to apply to all the penalty proceedings initiated under Chapter XXI then the provisions of cls. (b) and (c) of s. 275(1) will be rendered redundant and inapplicable in any case. As such, considering all the facts and circumstances of the case, we respectfully follow the decision of Tribunal, Jaipur, in the case of Manoharlal vs. Dy. CIT and accordingly hold that in respect of the penalty proceedings under ss. 271D and 271E, the period of limitation prescribed under s. 275(1)(c) is applicable and not that prescribed under s. 275(1)(a). 15. As regards the factum of initiation of these penalty proceedings, it is revealed from record that the AO while completing assessment, took cognizance of the default under ss. 269SS and 269T, and in turn, of penalties under ss. 271D and 271E, and issued notices for the ....
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....ge 19 (vi), (ix) on para 19(ii) para 19(iii) pages 3 to 5, page 20 page 20 para 6 on page 5 1994-95 12-9-1996 para 21 pare 22 para 5(iii),(vii), page 23 page 23 (ix) on pages 3 para 24(ii) para 24(iii) to 5, para 6 on page 24 page 24 page 5 1995-96 20-12-1996 para 17 pare 1....
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.... of the matter, the AO having initiated these penalty proceedings and issued notices under ss. 271D and 271E in respect of asst. yrs. 1993-94, 1994-95 and 1995-96 on 15th March, 1996 12th Sept., 1996, and 20th Dec, 1996, respectively, the last day for the levy of penalty as per the period of limitation prescribed under s. 275(1)(c) fell on 30th Sept., 1996, 31st March, 1997 and 30th June, 1997, respectively, but the penalty orders under ss. 271D and 271E for the said three assessment years were made on 29th March, 2000, 29th March, 2000 and 28th March, 2000, as detailed above in the table given in para 11. Obviously, the penalty orders under ss. 271D and 271E for all the above three asst. yrs. 1993-94, 1994-95 and 1995-96 have been passed after the period of limitation as prescribed under s. 275(1)(c). As such, all the aforesaid six penalty orders having been passed beyond the prescribed period of limitation, the same are barred by limitation and so not tenable in law, and liable to be quashed. 17. In view of our conclusion drawn above, regarding all the penalty orders under ss. 271D and 271E for the three asst. yrs. 1993-94 to 1995-96 involved in these twelve appeals as being t....
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....p; cause regarding Annexure 'B' fide belief regarding Annexure 'B' under s. 273B Note: CIT(A) accepted Note: CIT(A) accepted reasonable and sufficient reasonable and sufficient cause of bona fide belief reg. cause and bona fide belief Annexs 'A' & 'C (refer reg. Annexs 'A' & 'C (refer statement of facts and statement of facts of ground-5) &nbs....
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....ut of Rs. 2,64,000 of Annexure 'A', and thus sustained in respect of Rs. 1,89,000 of Annexure 'A' only. Similarly as regards asst. yr. 1994-95, the Jt. CIT levied penalties in respect of amounts of Annexures 'A', 'B', 'C & 'D'. The amount of Annexure 'A' pertains to sale of wheat by 14 agriculturists to FCI amounts of Annexure 'B' stated to be cash deposits by six farmers amounts of Annexure 'C represent sale of crops by farmers. In respect of tallying credit entries. The learned CIT(A) has sustained penalties in respect of amount of Annexure 'B' and 'C being Rs. 7,20,443 (Rs. 2,30,536 + 4,89,907) under s. 271D and Rs. 8,30,247 (3,01,931 + 5,28,316 under s. 271E. In the same manner, the Jt. CIT levied penalties in respect of amounts of Annexure 'A', 'B' & 'C'. The amounts of annexure 'A' represent deposit by farmers of cash receipts from FCI, being sale proceeds of wheat; the amounts of Annexure 'B' represent non-tallied credit entries pertaining to farmers in notebook A-1/11; and the amount of Annexure 'C' represent tallying credit entries. Deposited by farmers out of sale of crops. The learned CIT(A) sustained the penalties of Rs. 8,99,963 each under ss. 271D and 271E representin....
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.... has to be accepted, and principle of res judicata applies Radha Soami Satsang vs. CIT (1991) 100 CTR (SC) 267 : (1992) 193 CTR 321 (SC), Sardar Kehar Singh vs. CIT (1991) 92 CTR (Raj) 88 : (1992) 195 ITR 769 (Raj) and Pukhraj Rikhabdas vs. CWT (1993) 203 ITR 770 (Raj) been referred. (vi) The assessee has bona fide belief of permissibility of transactions by R.A. with farmers. Harpal Singh Jaswant Singh vs. ITO (1996) 51 TTJ (Asr) 383 has been cited. Even mistaken belief about the provision constitutes reasonable cause for cancellation of penalty under s. 271D ITO vs. Babu Lal Singhvi 23 T.W. 223 (Jodhpur-ITAT) has been cited. (vii) When transactions are not impeached as bogus, no penalty can be levied under ss. 271D and 271E. M.M. George Brothers (1993) 47 TTJ (Coch) 434, Industrial Enterprises vs. Dy. CIT (2000) 68 TTJ (Hyd) 373 : (2000) 73 ITD 252 (Hyd), Vir Sales Corpn. vs. Asstt. CIT (1994) 50 TTJ (Ahd) 130 and Dr. Deepak Muchala vs. ITO (1997) 58 TTJ (Bom) 524 have been referred to. 22.(i) In (1991) 100 CTR (SC) 267 : (1992) 193 ITR 321 (SC) it has been held by Hon'ble Supreme Court that where a fundamental aspect permeating through the different assessment years has....