TaxTMI 
TaxTMI 
2015 (8) TMI 1214
X X X X Extracts X X X X
X X X X Extracts X X X X
....E of the Income Tax Act (hereinafter referred to as 'Act') confirmed by the Commissioner of Income Tax (Appeals) were upheld. 2. We heard the counsel for the appellant and the Standing Counsel for the Revenue. 3. Briefly stated, the facts of the case are that for the assessment year 2005-2006, the assessee had filed returns declaring loss. The returns were accepted and finally, on 6.11.2007, assessment order was passed. In the assessment order, it was found that by accepting deposits and making repayments in violation of the provisions contained in Section 269SS and 269T of the Income Tax Act, penalty provisions of Section 271D and 271E are initiated. Accordingly, the matter was referred to the Joint Commissioner of Income Tax....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... These contentions were reiterated before us by the learned counsel for the assessee and were contradicted by the learned Senior Counsel appearing for the Revenue. 6. Section 269SS of the Act, occurring in Chapter XXB, provide for mode of taking or accepting certain loans and deposits. Insofar as it is relevant, the Section provides that no person shall, after 30th day of June 1984, take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if the aggregate amount of such loan or deposit is Rs. 20,000/- or more. Section 269T of the Act, also occurring in Chapter XXB of the Act, provides for the mode of repayment of certain loans or deposits. As per this provision, no fir....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. (vide Section 275(1)(c) of the Act). 8. Insofar as these cases are concerned, the assessment order was passed on 6.11.2007 and the assessment order concluded by stating thus: "Since the assessee has violated the provisions of section 269SS and 269T of the IT Act by accepting and repaying loans exceeding Rs. 20,000/- aggregating and otherwise at any point of time, as given above, penalty provisions of Section 271D and 271E of the IT Act are attracted. Accordingly initiated penalty proceedings under Section 271D and 271E." It was relying on the last sentence in the assessment order that "Accordingly init....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under Section 271D and E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply. 11. The only case of the assessee is that if the period of limitation prescribed in Section 271(1)(c) is reckoned from the date of the assessment order dated 6.11.200....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... case may be, for any failure referred in the provisions, if he proves that there was reasonable cause for the failure. Insofar as this case is concerned, reading of the reply given by the assessee shows that the amount in cash was taken from the partners of the firm to meet certain urgent business expenditure. It is also stated that the amount in cash was taken from M/S Grihalakshmi Music and M/S Kerala Transport Company for meeting various business expenditure at the location where serial was being shot. The explanation offered was considered by the Assessing Officer and he examined the question whether this was a reasonable cause as provided under Section 273B. Answering this question, the Assessing Officer has stated thus: "The said ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se' has been repaid and whether there has been any 'reasonable cause' for the said failure. The said section 269T does not say anything about how the loan or deposit amount is being utilized, or sourced or by whom paid or received or flexibility of ash/'otherwise' loan/deposit (other than account payee cheque or account payee bank draft). It is only referring why the cash loan or 'otherwise' must not be repaid other than by an account payee cheque or account payee bank draft. So, I am not inclined to give the benefit of provision of Section 273B of the Income Tax Act, 1961, since the assessee firm has not proved any 'reasonable cause' for the said failure." 14. It is this finding which has been confirm....