TaxTMI 
TaxTMI 
2024 (2) TMI 218
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....r more than Rs.20,000/- from the parties. B] "The order of the Ld. CIT(A) is erroneous in facts". C] "Any other Ground that may be abducted at the time of hearing". Also the assessee has assailed the impugned order on the following additional grounds of appeal before us: "Additional Gr. No.1. "1. On the facts and circumstances of the case and in law, penalty levied u/s. 271D of Rs.27,00,000 by ld. Jt.CIT dt.31-10-13 is invalid, as assessment order made u/s. 143(3) dt.25-3-13 by ld. AO (i.e. DCIT-1, Bhilai) wherein he has not recorded any satisfaction about violation/infraction of Sec. 269SS & thereby initiation of penalty u/s. 271D; there is no whisper about initiation of penalty u/s.271D in the assessment order; in absence of this. pre-requisite which sine qua non for levying penalty u/s. 271D; penalty levied u/s. 271D would be invalid and is liable to be quashed." Additional Gr.No.2: "1. On the facts and circumstances of the case and in law, penalty levied u/s. 271D of Rs.27,00,000 by id Jt. CIT dt.31-10-13 is invalid as it is time barred by limitation provided u/s. 275(1)(c) as assessment order made u1s143(3) on 25-3....
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....s. Also, it was stated by the assessee that on receipt of the material from the principal, the same was supplied to the aforementioned parties and their accounts were settled. It was, thus, the claim of the assessee that the amount received from the parties was in the nature of trading receipts and not loans/advances. For the sake of clarity, the reply filed by the assessee before the Jt. CIT is culled out as under: "That the assessee accepted advance against order from M/s. Bansilal and Sons : Rs.5.00 lacs; M/s. Choudhary Enterprises : Rs.7.00 lacs; M/s. Dhapriya Trading : Rs.5.00 lacs; M/s. Hari Om Traders : Rs.5.00 lacs; M/s. H.P & Sons : Rs.5.00 lacs {the parties} during the year which was deposited in bank and transferred to the principal for supplying material. This advance was received only once from these parties. On receipt of material from the principal it was sold to the parties thereby setting their account. Thus the amount received from the parties was not of the nature of loan rather it was advance against order." 4. However, the Jt. CIT did not find favor with the aforesaid explanation of the assessee. The Jt. CIT observed that the assessee's claim of hav....
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....d for the appellant in accepting the cash for his day to day running of the business. I also observe that no material whatsoever has been brought on record regarding the necessity and establishing reasonable cause for accepting such cash deposits in contravention of the provision of section 269SS. No element of urgency, or exceptional circumstances beyond the control of the appellant have been explained for not accepting the deposits by account payee cheque. The AO has rightly observed that accepting cash deposits of Rs.27,00,000/- is an unusual feature which never occurred previously and to counter the observations of the AO the Id. Counsel has produced no material evidence to highlight and substantiate the necessity of accepting such cash deposits during the year. The explanation offered by the appellant is not supported by any material evidence, lacks justification and is against the provisions of law and hence I have no reason to interfere with the observations of the assessing officer on this point. Coming to the shortage or scarcity of such commodity I observe that the immediate requirement for accepting cash deposits from the parties had no direct correlation with the sale o....
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....penalty provisions u/s. 271D. The following judicial pronouncements are also squarely applicable to the facts and circumstances of the instant case: i) Auto Piston Mfg.Co (P) Ltd vs. CIT 38 Taxman.com 61(Punjab & Haryana). (ii) ITO 13(1) New Delhi vs Nandi promoters 13 Taxmann.com 213 ITAT(Delhi)(iii) ACIT vs Jabalpur Hospital & Research Centre (P) Ltd. 11 SOT 19 (Jab)." 6. The assessee, being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal before us. 7. Shri Sunil Kumar Agrawal, Ld. Authorized Representative (for short 'AR') for the assessee at the threshold of hearing of the appeal assailed the validity of the jurisdiction assumed by the Jt. CIT for imposing penalty u/s. 271D of the Act. Elaborating on his aforesaid contention, it was submitted by the Ld. AR that as the A.O while framing the assessment vide his order u/s.143(3) dated 25.03.2013 had not recorded any satisfaction regarding penalty proceedings u/s. 271D of the Act; therefore, the Jt. CIT in the absence of the said statutory requirement could not have assumed jurisdiction and imposed penalty u/s.271D of the Act vide his order dated 31.10.2013. The Ld. AR, in support of his aforesai....
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....ACIT (2014) 163 TTJ 778 (Mum-Trib) 9. Per contra, the Ld. Departmental Representative (for short, 'DR') relied on the orders of the lower authorities. The Ld. DR submitted that as the initiation of penalty u/s. 271D of the Act was done by the Jt. CIT/Addl. CIT, therefore, it was incorrect on the part of the A.O. to claim that in the absence of any mention of the same in the assessment order the Jt. CIT was divested of his jurisdiction to impose penalty u/s.271D of the Act. The Ld. DR in order to buttress his contention had drawn our attention to Section 269SS of the Act. As regards the claim of the assessee's counsel that penalty imposed u/s. 271D of the Act was barred by limitation, the Ld. DR submitted that the said contention was based on misconstruing of the settled position of law. Elaborating on his aforesaid contention, the Ld. DR submitted that though the imposition of penalty u/s. 271D is regulated by the time frame contemplated in Section 275(1)(c) of the Act but there is nothing provided in the Act that the said period is to be reckoned from the date on which the A.O. passes the order of assessment. The Ld. DR submitted that now when penalty u/s. 271D of the Act is in....
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....the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation.-For the purposes of this section,- (i) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; (ii) "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; (iii) "loan or deposit" means loan or deposit of money; (iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place." As the failure to comply wi....
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....e notice to the assessee and imposed penalty u/s. 271D of the Act dated 23.09.1996. It was, thus, in the backdrop of the aforesaid facts that the sustainability of the penalty imposed u/s. 271D of the Act based on the original assessment order which did no more survive therein surfaced. On being tested on the touchstone of the fact that the original assessment order wherein, satisfaction for initiating proceedings u/s. 271D of the Act was recorded, having been set-aside, thus, did no more survive, the Tribunal and the High Court concluded that the penalty imposed u/s. 271D of the Act could not be sustained. 13. On further appeal, the Hon'ble Apex Court concluded that as the A.O in the fresh assessment order had not recorded his satisfaction regarding penalty u/s. 271D of the Act, therefore, de-hors recording of requisite satisfaction the penalty imposed u/s. 271D of the Act could not be sustained and was liable to be quashed. For the sake of clarity, the relevant observation of the Hon'ble Apex Court is culled out as under: "6. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Sec....
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....gs bank or cooperative bank etc. As per the second proviso, this provision would also not be applicable where both the depositor and the receiver are having agricultural income and neither of them has any income chargeable to tax under the Act. 18. Section 271D of the Act deals with penalty for failure to comply with the provisions of Section 269SS of the Act. Section 271D of the Act being relevant is extracted hereunder: Penalty for failure to comply with the provisions of section 269SS. 271D. (1) If a person takes or accepts any loan or deposit [or specified sum] in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit [or specified sum] so taken or accepted.] [(2) Any penalty imposable under sub- section (1) shall be imposed by the [Joint] Commissioner.] 19. Thus, what sub-section (1) of Section 271D provides for is that if a person takes or accepts any loan or deposit or specified amount in contravention of the provisions of Section 269SS, he shall be liable to pay by way of penalty, a sum equal to the amount of the loan or deposit or specified....
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....e Act would be imposable on a person who makes or repays the loan or deposit or specified advance in contravention of Section 269T. Therefore, in a way, the two provisions are complimentary to each other. 23. In Jai Laxmi Rice Mills Ambala City (supra), Supreme Court considered the question as to whether penalty proceedings under Section 271D of the Act is independent of the assessment proceeding ? In the facts of that case, it was found that the penalty order was issued following the assessment order. However in appeal, Commissioner of Income Tax (Appeals) had set aside the original assessment order with a direction to frame assessment de novo. In the fresh assessment order, no satisfaction was recorded by the assessing officer regarding initiation of penalty proceedings under Section 271E of the Act. It was noticed that the penalty order was passed before the appeal of the assessee was allowed by the Commissioner of Income Tax (Appeals). It was in that context that Supreme Court held as follows: The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfact....
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....on of penalty proceedings under Section 271E of the Act. We have already discussed above that provisions of Section 271E and 271D of the Act are in pari materia. When there is a decision of the Supreme Court, it is the bounden duty of an adjudicating authority, be it an income tax authority or any other civil authority or for that matter any court in the country, to comply with the decision of the Supreme Court. 26. Article 141 of the Constitution of India is clear that law declared by the Supreme Court shall be binding on all courts within the territory of India. This is further clarified in Article 144, which says that all authorities, civil and judicial, in the territory of India shall act in aid of the Supreme Court. We are therefore, of the unhesitant view that respondent No.1 overlooked the relevant considerations while passing the impugned order dated.29.11.2022. 27. Further, issue in the present writ petition is not the competence of the Joint Commissioner in issuing the order of penalty. Therefore, reference to Grihalaxmi Vision (2 supra) was wholly unnecessary. 28. Consequently, we set aside the impugned order dated 29.11.2022 and remand the mat....