TaxTMI 
TaxTMI 
2019 (8) TMI 499
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.... account payee cheque or account payee bank draft drawn in the name of the person who gave the loan, if the loan or interest payable thereon exceeds Rs. 20,000/-. Under section 271-E of the Act, if a person repays any loan or deposit or specified advance referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan. In the order of assessment passed by the AO dated 24.3.2016, the AO i.e., the Asst. Commissioner of Income- Tax, Circle-3(2)(1), Bangalore, has observed as follows:- "Penalty u/s.271-E for repayment of loan given in cash in violation of provision of Sec.269-T will be attracted." 3. Section 271-E(2) of the Act provides that penalty imposable u/s. 271-E of the Act shall be imposed by Joint Commissioner of Income Tax (JCIT). The AO vide letter dated 9.8.2016 intimated the JCIT, range 3(2), Bangalore (JCIT) regarding the default u/s.269-T. The JCIT issued a show cause notice u/s.271-E of the Act before imposing penalty dated 10.8.2016. The JCIT finally by order dated 27.1.2017 imposed penalty on the Assessee. 4. It was the plea of the Assessee before CIT(....
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....said order in the quantum proceedings to be disposed of before the penalty proceedings could be initiated. In other words, the initiation of penalty proceedings did not hinge on the completion of the appellate quantum proceedings. 7. The argument did not find favour with the CIT(A), who held that the proceedings were not barred by time. The CIT(A) firstly held that in the assessment order dated 24.3.2016, the AO has not initiated penalty proceedings u/s.271-E of the Act and has merely made an observation that there is a default attracting penalty u/s.271E of the Act. Secondly, he held that the letter of the AO to the JCIT recommending penalty was dated 9.8.2016 and on the basis of the same the JCIT issued show cause notice to the Assessee u/s.271-E of the Act on 10.8.2016. That was the date of initiation according to him. Six months from the end of the month in which proceedings were initiated would therefore be 28.2.2017 and since the impugned order was passed on 27.1.2017, the CIT(A) held that the order passed was well within time. The following were the observations of the CIT(A):- "5.1 On perusal of the above two decisions, it is observed that in the case of CIT vs Hissaria ....
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.... Anyhow due to different facts of the case under consideration, as discussed supra, the decision in case of CIT vs Hissaria Bros. (Supra) would not be applicable. As regards decision in case of Mahesh Wood Products (Supra), the order in the case under consideration has been passed well within the time barring date." The learned counsel for the Assessee relied on the decision of the Hon'ble Delhi High court in CIT (Principal) Vs JKD Capital and Finley Ltd 378 ITR 614 for the proposition that if the assessing officer mentions in the assessment order that the penalty proceedings u/s 271E of the Act are to be initiated, the date of initiation of penalty proceedings as per the later portion of S.275(1)(c ) of the Act is the date of the assessment order. The ld. AR relies on the observation in paragraph 11, page 619 wherein it was observed as under:- "In a case where the proceedings stood initiated with the order passed by the Assessing Officer, by delaying the issuance of the notice under section 271E beyond June 30, 2008, the Additional Commissioner of Income-tax defeated the very object of section 275(1)(c)" 8. The Hon'ble High Court has relied on the decision of the Raj....
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....the present case is as to, what is the starting point of time u/s.275(1)(c) of the Act in the present case. As far as applicability of the first part of sec.275(1)(c) of the Act is concerned, the same is with regard to "after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed." In the present case, at the level of the AO, the quantum proceedings was completed on 24.3.2016. Going by this date, the penalty order could not have been passed later than 30.9.2016. Considering that the subject matter of the quantum proceedings was the non-compliance with Section 269 T of the Act, there was no need for the appeal against the said order in the quantum proceedings to be disposed of before the penalty proceedings could be initiated. In other words, the initiation of penalty proceedings did not hinge on the completion of the appellate quantum proceedings. The Hon'ble Rajasthan High Court in the case of Commissioner of Income- Tax v. Hissaria Bros. (2007) 291 ITR 244(Raj) took the view that default in not having transactions through the bank as required under sections 269SS and 269T are not rel....