AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (7) TMI 1588
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....Kayyum Shaikh, Cashier. The assessee filed its return of income on 17.08.2022 declaring total loss of Rs. 5,24,019/- which was the income declared in the original return for the impugned assessment year. Subsequently, during the pendency of the assessment proceedings, the Assessing Officer issued a show cause notice u/s 274 r.w.s. 269SS of the Act on 24.08.2022 asking the assessee to explain as to why the penalty u/s 271D of the Act should not be levied on account of violation of the provisions of section 269SS of the Act which prohibits the acceptance of any loan in cash if it exceeds Rs. 20,000/-. Rejecting the various explanations given by the assessee and observing that the assessee has received cash loan of Rs. 1 crore, the Assessing Officer levied penalty of Rs. 1 crore u/s 271D of the Act. 3. In appeal, the Ld. CIT(A) / NFAC confirmed the penalty so levied by the Assessing Officer by observing as under: "6. Decision- I have gone through the impugned order of the AO, 'Statement of Facts', 'Grounds of Appeal', and written submission of the appellant. In this case, the appellant failed to make compliance to provisions of section 269SS as he acce....
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....aves leave to add, amend, delete or substitute its grounds of appeal and lead evidence. 5. The assessee has also raised the following additional ground: 1] The assessee submits that the notice u/s 148 for A.Y 2017-18 was issued on 28.07.2022 by obtaining approval u/s 151 from Pr. CIT-4, Pune vide Reference No. PN/Pr.CIT-4/148/ Proposal / 2022-23/1272 who is not the Authority prescribed for obtaining sanction u/s 151 for issuing the present notice u/s 148 issued after lapse of three ears from end of A.Y.2017-18 and therefore, the proceedings u/s 147, in the course of which the impugned penalty proceedings u/s 271D, were initiated, itself are null and void in the eyes of law and therefore, the consequential penalty proceedings u/s 271D are also unsustainable in law. 6. The Ld. Counsel for the assessee referring to the above additional ground submitted that the additional ground so raised is purely legal in nature which goes to the root of the matter and all necessary facts are already available on record. Referring to the decision of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC) and in the case of Jute Corporation O....
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.... the penalty order which has not been passed within the statutory due date has to be quashed being void ab initio. 12. In his another plank of argument, he submitted that the notice u/s 148 of the Act for the impugned assessment year i.e. assessment year 2017-18 was issued on 28.07.2022 after obtaining the approval u/s 151 of the Act from the PCIT-4, Pune. He submitted that since the present notice u/s 148 of the Act was issued after a lapse of three years from the end of the assessment year 2017-18, therefore, the competent authority for granting approval is the Principal Chief Commissioner or Principal Director General or Chief Commissioner or Director General. 13. However, in the instant case the approval has been granted by the Principal Commissioner of Income Tax. Therefore, such approval being not in accordance with law, the entire assessment proceedings have to be quashed. For the above proposition, he relied on the following decisions: i) Bhagwan Sahai Sharma vs. DCIT & Anr. vide WP No.3220 of 2023, order dated 14.05.2025 ii) ITO vs. Rajaram Ramswarup Jaju vide ITA No.1882/PUN/2024 for assessment year 2016-17, order dated 07.03.2025 iii) Din....
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....2023. Before completion of the assessment, a notice u/s 274 r.w.s. 271D of the Act was issued to the assessee on 17.08.2022 which reads as under: 19. Thus, the penalty proceedings were initiated on 17.08.2022. We find the JCIT in the show cause notice for penalty u/s 271D of the Act issued on 13.02.2023 has also mentioned the time barring date i.e. 28.02.2023 for levy of penalty. The Annexure to the notice dated 13.02.2023 reads as under: AADFK5220B- KARIA BUILDERS A.Y. 2017-18 ITBA/PNL/F/271D/2022-23/1049708976(1) ANNEXURE Ref: Notice u/s 274 r.w.s. 271D of the Income-tax Act, 1961 dated 17/08/2022 in DIN & Notice No. : ITBA/PNL/F/271D/2022-23/1044702466(1). 2) Your reply dated 20.08.2022 uploaded 23.08.2022. ******* Please refer to the above. It is hereby informed that there is no valid assessment proceedings is necessary for initiation of penalty u/s 271D of the Income-tax Act, 1961 for violation of provision of section 269SS of the Income-tax Act, 1961. You have replied that "we vehemently deny acceptance of any cash loan attracting levy of the penalty" and the reply filed by you is not satisfactory. However, ....
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.... I, therefore, propose to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the Assessment Year 2017-18 and I, hereby, require you to furnish, within 30 days from the service of this notice, a return in the prescribed form for Assessment Year. 3. This notice is being issued after obtaining the prior approval of the Pr.CIT-4, Pune accorded on date : 27/07/2022 vide Reference No.PN/Pr.CIT4/148/Proposal/2022-23/1272. Sd/- (Ritesh Kumar) ITO Ward-14(3), Pune" 22. Even the Assessing Officer at page 4 of the assessment order has also mentioned as under: "The assessee replied during the proceedings, but the Jurisdictional Officer was not satisfied with his reply and therefore, the JAO concluded the following in his order U/s 148 A(d) of the IT Act dated 28.07.2022: 06. In view of the above facts, the information in my possession as mentioned above suggests that by not showing cash loan of Rs. 1,00,00,000/-, the assessee has not shown its correct income. Therefore, assets to the tune of Rs. 1,00,00,000/- has escaped assessment. Therefore this is a fit case for i....
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.... TOLA. 25. We find the Hon'ble Bombay High Court in the case of Cipla Pharma and Life Sciences Ltd. vs. DCIT (supra) has held as under: "8. On a plain reading of Section 148A it is clear that the Assessing officer before issuing any notice under section 148 is required to follow the procedure as set out in clauses (a) to (d) of Section 148A. One of the pre-conditions as ordained by clause (d) of Section 148A is that an order under such provision can be passed by the Assessing Officer only with the approval of "Specified Authority". Thus, necessarily when clause (d) of Section 148A provides for prior approval of specified authority, it relates to the provisions of Section 151 of the Act providing for 'Specified authority for the purposes of Section 148 and Section 148A of the Act'. In the present case, Section 151 as amended by the Finance Act, 2021 and Section 148A as also introduced by Finance Act, 2021 have become applicable, as although the assessment year in question is 2016-17 in respect of which the assessment is sought to be reopened by issuance of notice under section 148, which is dated 30 July, 2022. Such amended provision would squarely become applica....
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....notification dated 31 March, 2020 issued under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (for short, 'TOLA') was concerned, the Court held that such notification was a subordinate legislation and it could not override the statute enacted by the Parliament and in that regard, the position in law was discussed by the Division Bench in paragraph 27 of the said decision. 12. In the present case, it is not in dispute that an appropriate sanction of the specified authority as per the provisions of Section 151(ii) of the Act was not obtained and for such reason, certainly, as held by this Court in Siemens Financial Services Pvt. Ltd. (supra), the impugned notices would be rendered bad and illegal. The petition accordingly needs to succeed on such ground of the Court requiring to delve on such issues of challenge as raised by the petitioner as also prior procedure adopted in that regard. 13. In the light of the above discussion, the petition needs to succeed. It is accordingly allowed by the following order:- Order i. The impugned notice dt. 30th July, 2022 issued under s. 148 of the Act is quashed and....
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.... the ld. Sr. DR have been dealt with by the Co-ordinate Bench of ITAT in the case of Karan Empire Pvt. Ltd. (supra) in paragraph 9, wherein it is noted as under: "though undeniably, there is a difference in the facts of both the cases as in the case before the Hon'ble Apex Court, the assessment had been set aside with the direction to frame a fresh assessment. While in the present case before us, the assessment order passed has been held to be invalid, the proposition laid by the Hon'ble Apex Court Hon'ble Apex Court still applies since the ultimate effect of the facts in both the cases still results in the original assessment order, not surviving, as also the satisfaction recorded therein for the purpose of initiation of penalty proceedings under section 271E/271D of the Act." 10.1. Considering the facts on record and the judicial precedents dealt in above, more importantly, by placing reliance on the decision of the Hon'ble Supreme Court, in the case of Jayalakshmi Rice Mills (supra), and the decision of the Co-ordinate Bench of ITAT, Chandigarh in the case of Karan Empire Pvt. Ltd. (supra), which has dealt with the decision of Hon'ble Supreme Court as well as s....