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2023 (5) TMI 63
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.... following common grounds:- "ITA No. 3107/Del/2019 1. That the Learned Joint Commissioner of Income Tax and Learned Commissioner of Income Tax (Appeals) have erred in not appreciating the facts of the appellant's case, properly. 2. That the Learned Joint Commissioner of Income Tax has erred is in imposing a penalty and Learned Commissioner of Income Tax (Appeals) has erred in confirming the penalty u/s 271D in contravention of 269SS after the expiry of limitation period provided u/s 275(1)(c) of the income tax Act, 1961. 3. That the Learned Joint Commissioner of Income Tax has erred in imposing a penalty of Rs. 16,71,24,134/- u/s 271D, of the Income Tax Act,1961 and Learned Commissioner of Income Tax (Appeals) has erred in confirming the same. 4. That the orders of the Learned Joint Commissioner of Income Tax and Learned Commissioner of Income Tax (Appeals) are bad in law as well as on the facts of the appellant's case. ITA No. 3108/Del/2019 1. That the Learned Joint Commissioner of Income Tax (JCIT) and Learned Commissioner of Income Tax (Appeals) have erred in not appreciating the facts of the appellant's case, proper....
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....table to the Ld. JCIT who in para 3.1 of his order observed that during the assessment proceedings, the Ld. AO vide ordersheet entry dated 23.02.2016 sought list of members of the assessee society from whom deposits have been accepted. On perusal, cash deposits of Rs. 16,71,24,134/- and repayment of deposits of Rs. 2,01,58,524/- were found to be in contravention of section 269SS and 269T respectively of the Act. In para 3.2, the Ld. JCIT noted from the assessee's reply dated 15.03.2017 the contention of the assessee that audit report under section 44AB of the Act obtained from an independent Chartered Accountant also confirmed that the provisions of section 269SS and 269T are not applicable to the society. The society is under bonafide belief that the deposits are made/repaid voluntarily by the members and are genuine. The case of the assessee is of mutually aided society for the benefit of its members. The penalty proceedings be kindly dropped. 5. The Ld. JCIT did not accept the contention of the assessee by observing that the Chartered Accountant mentioned against column 24(a) of the report 'nil'. So the Chartered Accountant tried to conceal the facts. According to Ld. JCIT ge....
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....ntext of penalty under section 271E in the case of CIT vs. Jai Laxmi Rice Mills (2015) 64 taxmann.com 75 (SC) wherein the Hon'ble Supreme Court held that there was no satisfaction recorded regarding penalty proceedings under section 271E of the Act, though in that order the Assessing Officer wanted penalty proceedings to be initiated under section 271(1)(c) of the Act. Thus, in so far as penalty under section 271E is concerned, it was without any satisfaction and therefore no such penalty could be levied. The assessee also relied on the decision of Mumbai ITAT in Keshu Ramsay vs. JCIT (2006) 5 SOT 9 (Mumbai). 6.2 It was contended by the assessee that the impugned penalty order is barred by limitation as assessment under section 143(3) of the Act was made on 30.03.2016. The first penalty notice was issued on 04.05.2016 and the penalty order was passed on 24.04.2017 which is barred by limitation as provided under section 275(1)(c) of the Act. As per section 275(1)(c) no order of penalty can be passed 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, or six months from the e....
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....activities and the depositors were its members. 6.7 In its submission dated 08.03.2019, the assessee reiterated the earlier submissions. 6.8 Vide letter dated 25.03.2019 to the Ld. CIT(A), the assessee pointed out that during the penalty proceedings the Ld. JCIT had issued/served notice dated 04.05.2016, 26.07.2016 and 29.09.2016 at the correct address of the assessee fixing hearing on 16.05.2016, 05.08.2016 and 06.10.2016 respectively. In response to each notice the assessee submitted reply with correct name and PAN. Details called for relating to deposits received in cash, repayments made in cash, confirmation of account of members etc. were submitted which were verified by the Ld. JCIT. It was thus submitted that the Ld. JCIT erred in computing the time limit from 29.11.2016 as against from 28.04.2016 when the Ld. AO made reference for initiation of penalty proceedings on the basis of which notices dated 04.05.2016, 26.07.2016 and 29.09.2016 were issued. The assessee further pointed out that the Ld. JCIT sought to rely on decisions in which Revenue had issued notices to non existing entities and the courts unanimously held that such notice(s) contain jurisdictional defect ....
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....y is barred by limitation within the meaning of section 275(1)(c) of the Act, the Ld. CIT(A) observed at page 62 of his appellate order that admittedly first information by the Ld. AO was sent to the Ld. JCIT vide letter dated 28.04.2016. However it was subsequently informed by the Ld. AO on 28.11.2016 to the Ld. JCIT that there was error in the said intimation/request as the name of the assessee was given wrong and fresh proposal to initiate penalty was sent to Ld. JCIT who vide ordersheet entry dated 29.11.2016 filed the notice(s) and stated that fresh notice is to be issued with correct name of the assessee along with PAN. 7.3 On page 65 of the appellate order, the Ld. CIT(A) observed and held as under: "The report of the A.O. dated 01.02.2019 was duly provided to the appellant. It is noted by me that the penalty proceedings which had been initiated by issue of notice dated 04.05.2016 stood nullified, as were other notices issued till 29.11.2016. This is for the reason that the earlier notices issued did not carry the name of the appellant and did not carry the PAN of the appellant. It is noted that when the notice for levy of penalty itself does not specify the name....
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.....1 The Ld. AR stated that initiation of proceedings in the absence of any finding /satisfaction recorded by the Ld. AO in the assessment order passed under section 143(3) which is a condition precedent is without jurisdiction. He referred to Jai Laxmi Rice Mills's case (supra). He further submitted that penalty is not leviable for technical/venial breach of statutory provision as held by the Hon'ble Supreme Court in Hindustan Steel vs. State of Orissa 83 ITR 26 (SC). 9.2 It was pointed out by the Ld. AR that as per section 273B, penalty under sections mentioned therein is not exigible if there is reasonable cause. On identical facts in the case of Mamurpur Co-operative Thrift and Credit Society Ltd. vs. Addl. CIT, Delhi Bench of the Tribunal in its order dated 10.09.2020 in ITA Nos. 1370 & 1371/Del/2019 for AY 2014-15, held that considering the bonafide and genuine transaction reasonable cause in terms of section 273B of the Act did exist for not complying with the provisions of section 269SS and 269T and cancelled the penalties levied under section 271D and 271E of the Act. Our attention was also drawn to the CBDT Circular No. 415/6/2000-17(Inv I) dated 25.03.2004 wherein the B....
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....hich the AO wrote a letter to the ACIT recommending the issuance of show cause notice (SCN). 9.6 It has also been submitted that penalty proceedings can be initiated only once and cannot be re-initiated as has been done in the case of the assessee. Decision of Hyderabad Bench of the Tribunal in Dillu Cine Enterprises P. Ltd. vs. Addl. CIT (2002) 80 ITD 484 (Hyd.) was relied upon. 9.7 Impugned penalties were also assailed on the ground that no proceedings were pending on the date of initiation of penalty proceedings. So the orders passed are void and without jurisdiction as held in CIT vs. Rajinder Kumar Somani (1980) 4 Taxman 549 (Delhi). 10. The Ld. DR strongly supported the order of the Ld. CIT(A). He submitted that recording of satisfaction in assessment order is not required for initiation of proceedings under section 271D and 271E of the Act. Due satisfaction was recorded by the Ld. AO while referring the issue to Ld. JCIT for initiation of penalty proceedings. Scanned copies of Ld. AO's letter may be seen in the order of the Ld. CIT(A). 10.1 The Ld. DR pointed out that the initial SCN was treated as invalid and penalty proceedings initiated by such notice stood nu....
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....whether penalty order was passed within time with reference to the date of initiation of penalty proceedings is a matter, which should have been adjudicated by the Tribunal before considering the merits of the case. 12.1. In the light of the decision of Hon'ble Delhi High Court in CIT vs. Worldwide Township Projects Ltd. in ITA No. 232/2014 dated 21.05.2014 and the CBDT Circular F. No. 279/Misc./M-140/2015-ITJ dated 26th April, 2016 stating therein that the period of limitation of penalty proceedings under section 271D and 271E of the Act is governed by the provisions of section 275(1)(c) of the Act, we proceed further. 12.2. For ready reference, section 275 of the Act which falls under "Chapter XXI. Penalties Imposable", is reproduced below:- "275.(1) No order imposing a penalty under this chapter shall be passed - (a) xxx (not applicable) (b) xxx (not applicable) (c) in any case, 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, or six months from the end of the month in which action for imposition of penalty initiated whichever p....
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....that all the three SCNs dated 04.05.2016, 26.07.2016 and 29.09.2016 were issued by three different JCIT(s). 14.2 It was asserted by the assessee that all the above notices were duly served on the assessee and the assessee responded to each of them with correct name and PAN. All the requisite details were furnished and the Ld. JCIT(s) verified/examined them. 14.3 The letter F. No. ITO/W-60(5)/2016-17/13 dated 28.04.2016 of the Ld. AO referring the case for initiation of the impugned penalty proceedings for contravention by the assessee of the provisions of section 269SS and 269T to the Ld. JCIT which formed the basis of issuance of SCN dated 04.05.2016 is at page 56 of the Ld. CIT(A)'s order. It is observed therefrom that in this reference letter the Ld. AO has mentioned the names of the assessee as M/s. Delhi Taxi Co-op. Thrift & Credit Society. This reference letter dated 28.04.2016 is issued by the same Ld. AO who had framed assessment in the case of the assessee for AY 2013-14 on 30.03.2016 barely 28 days earlier in the name of M/s. Delhi State Taxi Operators Co-operative Thrift Credit & Service Society Ltd. Even assuming for a moment but not admitting that it was a case o....
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....ued with correct name of the A along with PAN". 14.5 In para 2 of the impugned penalty orders dated 24.4.2017 the Ld. JCIT observes as under:- "2. The undersigned initiated penalty proceedings under section 271D/271E of the Income Tax Act, 1961 on 29.11.2016 by issuing show cause notice dated 29.11.2016 to the assessee." 14.6 The Ld. JCIT passed the order on 24.04.2017 imposing the impugned penalty under section 271D and 271E of the Act. 14.7 The assessee submitted before the Ld. CIT(A) that the assessment under section 143(3) for AY 2013-14 was made on 30.03.2016 and the first penalty notice under section 271D and 271E was issued on 04.05.2016 and the penalty orders have been passed on 24.04.2017 in violation of section 275(1)(c) of the Act and thus are barred by limitation. Reliance among others was placed on the decisions of Hon'ble Delhi High Court in ITO vs. Dinesh Jain (2014) 53 taxman.com 108 (Delhi) and Hon'ble Supreme Court's decision in Hissaria Brothers (2016) 74 taxman.com 22 (SC) wherein it is held that period of limitation for purpose of penalty is to be reckoned from date of first show cause notice issued for imposing penalty. 14.8 Strangely enou....
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.... No. 2 is decided in favour of the assessee. 16. We take up now ground No. 1, 3 and 4 which challenge the impugned penalty levied under section 271D and 271E by the Ld. JCIT on merits which has been confirmed by the Ld. CIT(A). Perusal of the assessment order dated 30.03.2016 passed by the Ld. AO under section 143(3) of the Act reveals that the assessee is a co-operative society involved in the activity of granting thrift and credit facilities to its members who are the taxi operators. The assessee claimed deduction under section 80P amounting to Rs. 4,96,78,980/- which the Ld. AO allowed to the assessee. However, income of Rs. 1,40,000/- from house property and miscellaneous income of Rs.5,980/- were brought to tax. This assessment was completed on total income of Rs. 1,45,980/- as against income declared at Nil. It is observed that there is no initiation/satisfaction in the order of assessment to levy penalty under section 271D and 271E of the Act. The submission of the Ld. AR before us is that in the absence of any finding/satisfaction for violation of the provisions of section 269SS and 269T recorded by the Ld. AO in the order of assessment passed under section 143(3) of the....
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....transactions are genuine and accordingly the purpose for which the enactment of section 269SS and 269T was introduced has no application to the assessee's case. This plea of the assessee was not acceptable to the Ld. CIT(A) who at page 55 of his appellate order observed, as pointed out by the Ld. DR as well that genuineness of transaction is not a valid plea, as even in genuine transactions, transacting in cash is not allowed. We deliberated. In our opinion, it is imperative to keep in mind the legislative intent in order to judicially appreciated a fact situation wherein the loans/deposits brought in by the assessee were not to explain its unaccounted cash and there was no material on record to suggest that by way of accepting loans/deposits in cash the assessee had introduced its unaccounted cash in books of account in the garb of loans. There is no allegation at all against the assessee that by accepting loans/deposits in cash its intention ever was to avoid payment of tax or to defraud Revenue. 18. The case of the assessee has along been that it is a co-operative society engaged in the business of banking by providing credit facility to its members and as such neither sectio....
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....ar F. No. 415/6/2000-IT(Inv.I) dated 25th March, 2004 that it was a widespread belief, even if erroneous that the provisions of section 269SS do not apply to the credit co-operative societies and advised the field officers not to impose penalty under section 271D and 271E indiscriminately and should keep in view the provisions of section 273B of the Act. 20. Section 273 of the Act ordains that no penalty under section 271D and 271E shall be imposable on the person or the assessee if he proves that there was reasonable cause for the failure. During penalty proceedings before the Ld. JCIT, the assessee vide reply dated 15.03.2017 submitted that the audit report under section 44AB of the Act obtained from an independent Chartered Accountant confirmed that the provisions of section 269SS and 269T are not applicable to the society; the provisions of section 269SS and 269 have no application to the facts of the case and the society is under bonafide belief, the deposits are made/repaid are voluntarily by the members and are genuine; it is a case of mutually aided society for the benefit of its members and the proceedings for imposing penalty under section 271D and 271E may kindly be d....
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....ity of the provisions in ADIT vs. AB Shanthi 255 ITR 258 (SC) the Hon'ble Supreme Court observed that the object of introducing section 269SS is to ensure that a taxpayer is not allowed to give false explanation for its unaccounted money, or if he has given some false entries in its accounts, he shall not escape by giving false explanation for the same. Provisions inserted to curb the rampant circulation of black money. The Ld. JCIT relied upon the decision of Hon'ble Supreme Court (supra) to justify levy of impugned penalty upon the assessee but he failed to appreciate that none of the observations of the Hon'ble Supreme Court apply to the facts of the assessee's case. It is not a case of search operations conducted on the assessee. There is no allegation levelled by the Revenue that false explanation at any point of time has been given by the assessee. Neither any false entry was ever detected by the Revenue in the books of account of the assessee. We are at pains to say that further observations made by the Hon'ble Supreme Court in the decision (supra) escaped the attention of the Ld. JCIT/CIT(A). The Hon'ble Supreme Court further observed in para 19 that it is important to note....
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....thority has to see is whether or not such an explanation stands the preponderance of probabilities, and whether there are any inconsistencies or fallacies in such an explanation which demonstrate that the explanation is a make believe story. The Tribunal went on to observe further that it is important to bear in mind that section 273B comes into play when the assesee has committed a lapse but the assessee can demonstrate that there was reasonable cause for having committed that lapse. 24. We may also refer to the decision of the co-ordinate bench of Delhi Tribunal in the Mamurpur Co-operative Thrift and Credit Society Ltd. vs. Addl. CIT rendered on 10.09.2020 in ITA No. 1370 & 1371/Del/2019. In this case also the assessee is a co-operative society registered under the Co-operative Society Act and is engaged in carrying on the business of providing credit facilities to its members. The assessment year involved is 2014-15 in which for the first time violation of section 269SS/269T has been pointed out. Even the tax auditor has not made any remark in their Tax Audit Report regarding violation of section 269SS or 269T in this year or in earlier years. In view of past history of the ....