TaxTMI 
TaxTMI 
2008 (8) TMI 420
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....j Lal Rs. 1,00,000 (b) Shri Shankar Lal Rs. 50,000 (c) Shri Trilok Chand Rs. 50,000 (d) Shri Bal Chand Rs. 55,000 ------------ Rs. 2,55,000 ------------ 3. The assessee having failed to give any explanation in support of contravention of provisions of s. 269SS, the AO held the assessee liable for penalty under s. 271D of the Act and there being no reasonable cause having been brought on record for violation of provisions of s. 269SS of the Act, the penalty of Rs. 2,55,000 on account of aforesaid deposits having been accepted in cash st....
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....ions of s. 269SS of the Act and no reasonable cause having been explained, he held that the AO was well justified both in law and in facts in imposing penalty of Rs. 2,55,000 under s. 271D of the Act. Reliance was placed on the judgment rendered by the Bombay High Court in the case of Dhanji R. Zalte vs. Asstt. CIT (2004) 186 CTR (Bom) 772 : (2004) 265 ITR 204 (Bom) and also various Tribunal orders referred in the impugned order. 6. The assessee's counsel, Shri Amit Kothari, while assailing the order of the learned CIT(A) made oral as well as written submissions which are placed on record. It was stated that the AO before completing the block assessment on 24th May, 2000 (which ought to have been completed before 30th Nov., 1999 as held by the Hon'ble Tribunal and Hon'ble jurisdictional High Court) had initiated the penalty proceedings under s. 271D as is evident from the opening para of penalty order under s. 271D in which the Asstt. CIT had inter alia stated the following facts: "During the course of assessment proceedings, the AO has pointed out that the assessee has accepted the deposits other than by account payee cheques/drafts and the assessee has contravened the provi....
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.... impugned penalty order under s. 271D passed beyond 6 months from the end of the month in which the assessments were completed were barred by time. 2. Vir Sales Corporation vs. Asstt. CIT (1994) 121 CTR (Ahd) 46 : (1994) 50 TTJ (AM) 130. 7. In the subsequent written submissions, the assessee's counsel Shri Kothari contends that penalty proceedings under s. 271D is necessarily required to be initiated during the pendency of valid assessment proceedings or any other valid pending proceedings. Since the assessment proceedings in the present case have been held to be time-barred and void, this mandatory requirement of initiation of proceedings under s. 271D cannot be treated as having been complied with by the AO. Reliance is placed on the following judgments : - Sharda Educational Trust vs. Asstt. CIT (2006) 99 7TJ (Agra) 212 at p. 218 para 12 the Tribunal has held as under: "Before coming to the findings, we first of all, consider it necessary to consider the provisions of s. 275(1)(c) and various decisions relied upon by the counsel for the assessee which are in the following terms: (1) No order imposing a penalty under this chapter shall be passed- (c) in any othe....
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....hich has been deleted w.e.f. 1st April, 1976), action could be considered to have been initiated if the officer had made a reference to the IAC under that provision though the IAC might apply his mind and issue a further notice to the assessee only long thereafter. But some definite step by way of initiation of penalty proceedings should be taken by the officer before the assessment proceedings come to an end." Even if it is held that penalty proceedings under s. 271D can be initiated without there being pending assessment proceedings or any other valid pending proceedings, the penalty proceedings have to be completed within six months from the date of initiation of such penalty proceedings, which will be treated as having been initiated on the date on which the AO had recorded satisfaction before completion of the invalid and time-barred assessment on 25th May, 2000. The penalty order ought to have been passed within six months from that date i.e., from 25th May, 2000. The limitation for imposition of penalty accordingly expired on or before 30th Nov., 2000. The learned CIT(A) on page of the impugned order has misapplied the assessee thumb rule of law that any authority who is ....
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....But no such corresponding provision is found in ss. 271D(2) and 271E(2). In such a situation, we find substance in the contention of the learned Authorised Representative of assessee, as made on p. 11 of his written submission that these penalty proceedings will have to be held as having been initiated during the course of assessment proceedings by the AO when he completed the assessment proceedings, took cognizance of the fact of violation and issued the notices prescribed under the relevant sections. In the circumstances, these penalty proceedings are found to have been initiated by AO while completing assessment and issuing notices; and the initiation of these penalty proceedings cannot be said to have been on the dates when the Jt. CIT issued notices", 8. 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); penalty order under ss. 271D and 271E passed after the period of limitation as prescribed under s. 275(1)(c) were barred by limitation. It will be imperative here to mention that this decision of the Tribunal, Jodhpur has been approved and confirmed by....
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....It is well settled law that the date of satisfaction by the AO and the date of issue of notice by the AO is the date of initiation for penalty proceedings under s. 271D and not the date on which the Addl. CIT issued successive penalty notices. In the present case the date on which the AO recorded the satisfaction i.e., on or before 25th May, 2000 when the invalid and time-barred assessment was made and notices under s. 271D were issued by the AO, is the date of initiation of penalty proceedings. The six months period of limitation expired on 30th Nov., 2000. The penalty levied by order dt. 13th Feb., 2001 is clearly barred by limitation and is patently invalid in view of the aforesaid judgments of jurisdictional Bench of Tribunal, Hon'ble High Court and Hon'ble Supreme Court and also Hon'ble Delhi High Court referred to in paras 1 to 3 above. Without prejudice to the aforesaid submissions, the learned Authorised Representative further submitted that the penalty proceedings were initiated by the AO on the basis of alleged unexplained cash credits, added as income under s. 68 in the block assessment order. The initiation and levy of penalty under s. 271D in respect of cash credits, t....
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....the claim for cancellation of penalty in view of s. 273B. - CIT vs. Manoj Lalwani (2003) 180 CTR (Raj) 394 : (2003) 260 ITR 590 (Raj) "No penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure. The Tribunal, in these circumstances, has arrived at a conclusion that the cash loan was taken by the assessee in the exceptional circumstances and that it is a case of reasonable cause, and as a consequence thereof set aside the penalty imposed by the Revenue authorities." - CIT vs. Ajanta Dyeing & Printing Mills (2003) 264 ITR 505 (Raj) "The Tribunal was held justified in directing the Dy. CIT to recalculate the penalty under s. 271D only on the amount accepted during the year and that too on the amount which exceeds Rs. 20,000 in contravention of the unambiguous provisions of s. 271D(1) and s. 269SS of the Act of 1961." - Asstt. Director of Inspection (Inv.) vs. Kum. A.B. Shanthi (2002) 174 CTR (SC) 513 : (2002) 255 ITR 258 (SC) at 266. "Sec. 269SS is neither violative of Art. 14 of the Constitution, nor it was enacted without legisl....
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.... account payees cheques/drafts in contravention of provisions of s. 269SS of the Act. Acting on that basis, he made a reference to the Addl. CIT, Bikaner Range, Bikaner on 10th Aug., 2000 for considering the case for levy of penalty under s. 271D of the Act. It is not disputed that the Jt. CIT, as defined under s. 2(28C) of the Act including the Addl. CIT had the power to impose penalty in terms of provisions contained under sub-s. (2) of s. 274 of the Act. After the consideration of this reference, the learned Addl. CIT, Bikaner, issued a show-cause notice to the assessee on 17th Aug., 2000, which we find to be within his competence and jurisdiction which was complete only when the order of reference was received by the Addl. CIT, Bikaner. A reference to this principle is found laid in judgment rendered by the Bench of Kerala High Court in the case of CIT vs. Late S.M. Syed Mohamed (1995) 128 CTR (Ker)(FB) 172 : (1995) 216 ITR 331(Ker)(FB). In that view of the matter and penalty having not been initiated during the course of assessment proceedings, it is only the second limb of s. 275(1)(c) of the Act, which will govern limitation for imposition of penalty. Even the jurisdictional....