TaxTMI 
TaxTMI 
2017 (11) TMI 2047
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....alty u/s. 271E. 2) On the facts and the circumstances of the case and in law, the Ld. CIT(A) was not justified in deleting the penalty u/s 271E of the Income Tax Act, 1961 by accepting the contention of the assessee that the transaction in question did not belong to him, ignoring the statement of employee of Aman Chote Vyapari Sahakari Patsanstha Shri Allabaksh M. Hussain recorded u/s 131 of the Income Tax Act, 1961 wherein he had accepted that he had himself made entries regarding the loan and the interest thereof and the said entries belonged the assessee. 3) The order of the Ld. CIT(A) may be vacated and that of the Assessing Officer be restored. 3. The Revenue is in appeal against the order of CIT(A) in deleting the penalty levied under section 271E of the Act. 4. The learned Authorized Representative for the assessee at the outset pointed out that the issue raised in the present appeal is covered by the order of Tribunal in Shri Devidas Ramchandra Kulkarni Vs. JCIT in ITA No.444/PN/2013, relating to assessment year 2009-10, order dated 29.07.2016 and also by the Circular No.09/DV/2016, dated 26.04.2016 passed by the CBDT. 5. The learned Departmental ....
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....nd as per records, it was seen that the assessee had preferred an appeal before the CIT(A). Hence, as per Addl.CIT, where the assessment order was subject matter of appeal, the provisions of section 275(1)(c) of the Act did not come into consideration, therefore, no relevance of the order of Pune Bench of Tribunal in the case of Shri Gajanan Mahadeo Chimankar in ITA No.1702/PN/2004, dated 27.12.2006. The Addl. Commissioner was of the view that the Legislature had allowed the Assessing Officer to go back six years from the relevant assessment year and further, it was held that the notice was served well within the time period and hence, it could not be said that there was inordinate delay in issue of notice. The Addl. CIT held the assessee to have repaid the loan of Rs.23,03,690/- in cash in the instant assessment year and levied penalty under section 269T of the Act at Rs.23,03,690/-. 7. The CIT(A) rejected initial issue raised by the assessee that penalty proceedings were barred by limitation under section 275(1)(c) of the Act. The CIT(A) however, deleted addition on merits holding that the transaction was of daily running current account and not of a loan or deposit and outsid....
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....t further challenged the finding on this ground then as per rule 27 of the Income-tax (Appellate Tribunal) Rules, the assessee can advance his arguments even though he has not filed cross objection against the finding on the assessee against him. So the learned Income-tax Appellate Tribunal did not commit any mistake in permitting the assessee to support the order of the Commissioner of Income-tax (Appeals) on the ground that have been decided against him. Consequently, this question of law is also decided against the Revenue and in favour of the respondent-assessee." 13. In view thereof, we find merit in the plea of assessee and proceed to decide the issue raised by the assessee by way of his arguments under Rule 27 of the ITAT Rules. 14. The issue raised is with regard to initiation of penalty proceedings under section 271E of the Act, wherein penalty proceedings were initiated by the Addl.CIT after completion of assessment order. The assessee has placed reliance on the ratio laid down by the Pune Bench of Tribunal in Shri Devidas Ramchandra Kulkarni Vs. JCIT (supra), wherein it was held as under:- "10. Under the provisions of section 272A(3)(c) of the Act, it is p....
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....e initiated in the course of assessment proceedings or any other proceedings under the Act. In the above said circumstances, penalty order passed in the present case by way of reference made by the Assessing Officer to JCIT vide letter dated 03.05.2012 is beyond limits prescribed, where the assessment order was completed on 28.12.2011. Hence on this count, penalty order merits to be dismissed and the same is so dismissed." 15. The case of the Revenue on the other hand, is that there is no limit for initiation of penalty proceedings and had placed reliance on the ratio laid down by the Hon'ble High Court of Rajasthan in CIT Vs. Hissaria Bros. (supra). The relevant findings of the Hon'ble High Court are as under:- "35. We have also noticed that Sections 271 and 273 were the two original penalty provisions, which require the penalty proceedings to be initiated during the course of relevant assessment proceedings or the other relevant proceedings as the case may be. The penalty proceedings could also be initiated during the appellate proceedings arising out of the relevant assessment proceedings. It is only where the assessment proceedings are independent and not directly l....
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....ings under Sections 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, Clause (a) of Sub-section (1) of Section 275 cannot be attracted to such proceedings. If that were not so Clause (c) of Section 275(1) would be redundant because otherwise as a matter of fact every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if Clause (a) was to be invoked, no necessity of Clause (c) would arise. 39. Thus, both on the ground that the transaction in question retention of sale price by the kachha adhatiya did not amount to deposit and its utilisation and dealing with it at the instance of farmer constituents did not amount to r....