AI Drafter 
TaxTMI 
TaxTMI 
2025 (11) TMI 1168
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.... Date and section under which the Addl./Jt. CIT passed order which was disputed before ld.CIT(A) 1 1162/JP/2025 2015-16 19.06.2025 Levy of penalty u/s 271D of the Act vide order dated 28.08.2023 for an amount of Rs. 2,37,98,650/- 2 1164/JP/2025 2015-16 19.06.2025 Levy of penalty u/s 271E of the Act vide order dated 28.08.2023 for an amount of Rs. 1,40,80,050/- 3 1165/JP/2025 2016-17 19.06.2025 Levy of penalty u/s 271D of the Act vide order dated 28.08.2023 for an amount of Rs. 1,26,03,513/- 4 1166/JP/2025 2016-17 19.06.2025 Levy of penalty u/s 271E of the Act vide order dated 28.08.2023 for an amount of Rs. 1,13,34,587/- 5 1167/JP/2025 2017-18 19.06.2025 Levy of penalty u/s 271D of the Act vide order dated 28.08.2023 for an amount of Rs. 1,02,13,000/- 6 1168/JP/2025 2017-18 19.06.2025 Levy of penalty u/s 271E of the Act vide order dated 28.08.2023 for an amount of Rs. 90,95,257/- 7 1169/JP/2025 2018-19 19.06.2025 Levy of penalty u/s 271E of the Act vide order dated 28.08.2023 for an amount of Rs. 3,22,15,053/- 8 1170/JP/2025 2019-20 19.06.2025 Levy of penalty u/s....
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.... and circumstances of the case, the Ld.CIT(A) has erred in holding that the relevant date for determining the limitation period for imposing penalty u/s 271E of LT. Act is the date when the assessment order was passed by the A.O. and not the date when show cause notice was issued by the Addl/Jt. CIT & ignoring the legal aspect that the A.O. was not allowed to impose penalty u/s 271E of I.T. Act and therefore passing of assessment order by the A.O. and reference made by A.O. has no bearing on deciding the limitation date for imposing penalty u/s 271E of 1.T. Act? (iii) Whether on the facts and in circumstances of the case, the Ld.CIT(A) has erred in ignoring the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v Addl. Commissioner of Income Tax, Range-1, Kozhikode in ITA No 83 & 86 of 2014 dated 08.07.2015, wherein it was held that limitation of penalty proceedings u/s 271D/E of LT. Act start from the issue of show cause notice(s) by the Addl/Jt. CIT? (iv) Whether on the facts and in circumstances of the case Ld.CIT(A) has erred in relying on the decision of Hon'ble Apex court in the case of Hissaria Brothers without appreciating the fa....
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....of assessee company i.e. in the business of real estate done by the assessee company. Further, during the course of assessment proceedings, the assessee company was asked to explain these financial transactions done through its key persons for the purpose of business of real estate conducted by the assessee company, i.e. cash loans repayments by the assessee company through its key persons but the assessee was failed to provide any satisfactory reply regarding these cash loan repayments. Accordingly, the Assessing Officer i.e., ACIT, Central Circle-2, Jaipur referred the matter to Addl./Jt. CIT, Central Range, Jaipur for initiation of penalty proceedings under section 271E of the Act for contravention to the provisions of section 269T of the Act i.e. the assessee accepted loan or deposit in an amount exceeding the limit specified in section 269T by other than a cheque or bank draft, in violation of provisions of section 269T of the Act. The Addl. CIT, Central Range, Jaipur issued notice u/s 274 r.w.s. 271E of the Act on 14.02.2023 initiating penalty under section 271E of the Act for violation of provisions of section 269T of the Act vide show cause notice dated 01.03.2023. The asse....
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....Secondly, the company being a artificial person always controlled by persons, here in this case being Sh. Sumer Singh Saini, Sh. Phool Chand Saini, Sh. Rajesh Kumar and Sh. Ganaga Singh Tanwar, who had been handling the day to day business activities of the assessee company le. business of real estate (developing different residential/commercial plotting schemes) c) Thirdly, the assessee Group has filed returns as a company for the real estate business, neither any legal entity being AOP was created nor returns for AOP had been filed by the assessee group for transactions done in the name of M/s GKCDPL. d) Fourthly, the assessee company has itself filed affidavits of its key persons during the course of assessment proceedings stating therein that "to avoid the additions in multiple hands and to avoid the multiple proceedings the same may kindly be considered in hands our lead company naming M/s. Gokul Kripa Colonizers & Developers Private Limited because the end use of such funds was for real estate business being carried out by us. This admission is given to our assessing officer just to avoid the addition in multiple hands and by way of this affidavit we hereby ....
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....ed because the end use of such funds was for real estate business being carried out by us. This admission is given to our assessing officer just to avoid the addition in multiple hands and by way of this affidavit we hereby confirm that in future we will never challenge to the addition on the ground that the same has been considered in wrong hands. 5) During the course of search several data were found from the mobile of Shri Vikas Saini and the explanation of the same has been submitted in our submission filed to assessing officer. In this regard we also submitted to our assessing officer that Shri Vikash Saini in his individual capacity was not carrying any such activities for which the transactions noted in captioned images or data, would have been made by him as Individual. Shri Vikas Saini is mainly assisting to his father Shri Phool Chand Saini in the real estate business of Gokul Kripa Group and he has no business in his individual capacity. The transactions mentioned in the data extracted from the mobile of Shri Vikas Saini is either pertaining to real estate business of the Gokul Kripa Group or someone else as explained in respective reply. Therefore, we have requ....
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....ompany during the search proceedings and it had been always available with the assessee company. Para 4 & Para 5: The assessee company has taken the plea of artificial person so it cannot repaid the loans, it always act through living persons and the further that the onus is on the department to shown that the assessee company has taken cash loan which has not been discharged: 1 At the outset, the plea of the assessee company being artificial person so it cannot take the loans, it always act through living persons is totally irrelevant in the instant case as the company always being run by living persons and key managerial persons are the one totally responsible for the business activities conducted by the company. 2. Here, the assessee company has itself accepted the fact that in case of company, it always act through the living persons which is the case in the present scenario and this fact has been discussed in the assessment orders that these cash loans were repaid through its key persons namely Sh. Sumer Singh Saini, Sh. Phool Chand Saini, Sh. Rajesh Kumar and Sh. Ganaga Singh Tanwar for the business of the assessee company. Further, the affidavit fi....
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....sment proceedings being separate proceedings cannot be taken. (ii) Further, the additions as unexplained business receipts are exclusive and independent of the fact that the cash loans repayments were made in contraventions to the provisions of section 269T of the Act. Based on the above discussion ld. AO did not accepted the contention of the assessee company and thereby he concluded that the assessee has violated the provisions of section 269T and thereby liable for levy of penalty as per provisions of section 271E of the Act for an amount of Rs. 90,95,257/- and she ordered accordingly vide her order dated 28.08.2023. 6. Aggrieved from the order of Assessing Officer, assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: 4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the penalty order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under: In this case it is noticed that assessee company has made repa....
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....r period expires later Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Joint Commissioner (Appeals) or to the Commissioner (Appeals) under section 246 or section 246A, and the Joint Commissioner (Appeals) or the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Joint Commissioner (Appeals) or the Commissioner (Appeals) is received by the Principal Commissioner or Commissioner, whichever is later (b) in a case where the relevant assessment or other order is the subject matter of revision under section 263 or section 264, after the expiry of six months from the end of the month in which such order of revision is passed, (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has....
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....gs" Hon'ble ITAT Jaipur Bench in the case of Jagdish Chandra Suwalka v. Joint Commissioner of Income-tax [2023] 154 taxmann.com 504 (Jaipur - Trib.) held as under:- "Thus, a penalty u/s 271D could not be imposed after the expiry of the larger period of limitation. In this case, we find that the Id. JCIT in the impugned penalty order has clearly observed that the assessment for A.Y 2015-16 was completed by the AO (ACIT Tonk) vide assessment order dated 28-12-2017 u/s 147/143(3) of the Act. The Id. JCIT also referred to the observation made by the AO that the assessee had received cash payment of Rs. 47,50,000/- from various persons as per details given, which are in contravention of Sec. 269SS of the IT Act. Thus, the relevant proceedings were the assessment proceedings during the course of which, the default of accepting cash over the prescribed limit was noted by the AO and since the assessment proceedings were completed on 28-12-2017, the related financial year ended on 31-3-2018. Accordingly, the first time limit thus expired on 31-3-2018. For the second time limit, an action for imposition of penalty was taken on 28-12-2017 by the AO, when the assessment w....
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....IT, the period of limitation for the purpose of such penalty proceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings" Since there is no dispute on the facts stated above, hence respectfully applying the binding judicial precedents, I hold that the penalty imposed u/s 271D, under challenge, is barred by limitation u/s 275(1)(c) of the Act. Hence, the same is hereby quashed. The additional ground of appeal taken by the assessee is therefore, allowed 8. Since I have already quashed the penally on the short ground of limitation, we do not propose to adjudicate the other grounds on merits." Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax-5 v. JKD Capital & Finlease Ltd. [2017] 81 taxmann.com 80 (Delhi)/[2015] 378 ITR 614 (Delhi)[13-10-2015] held as under:- "10. Considering that the subject matter of the quantum proceedings was the noncompliance with Section 269T of the Act, there was no need for the appeal against the said order in the quantum proceedings to be di....
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....ection 271-E (1) till 20th March 2012. There is no explanation whatsoever for the delay of nearly five years after the assessment order in the Additional CIT issuing notice under Section 271-E of the Act. The Additional CIT ought to have been conscious of the limitation under Section 275 (1) (c). i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case where the proceedings stood initiated with the order passed by the AO, by delaying the issuance of the notice under Section 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275 (1) (c)." Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax (Central)-2 v. Mahesh Wood Products (P.) Ltd. [2017] 82 taxmann.com 39 (Delhi)/[2017] 394 ITR 312 (Delhi) [05-05-2017] held as under- "9. However, this question came up for consideration in JKD Capital & Finlease Ltd. (supra). The date on which the AO recommended the initiation of penalty proceedings was taken to be the....
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....is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off. 6. In the result, the appeal of the appellant is allowed. 7. Feeeling dissatisfied with the above finding so recorded in the order of the ld. CIT(A), revenue preferred the present appeal before this tribunal on the grounds as reiterated herein above. Ld. DR vehemently argued that the ld. Addl./Jt. CIT considered the legal as well as the technical aspect raised by the assessee and has passed a detailed speaking order dealing with the merits of the case. While passing the order in dispute the ld. CIT(A) has totally ignored the merits of the dispute and has merely considered the technical ground and directed to delete the huge amount of penalty which is otherwise has merits and therefore, the issue being in favour of the revenue as decided in the case of Grihalaxmi Vision Vs. Addl. CIT in ITA no. 83 & 86 of 2014 by the Hon'ble Kerala High Court. In that case the High Court has held that the limitation of penalty proceeding u/s. 271D & 271E start from the issue of show cause notice by the Addl. CIT. Therefore, action of the ld. CIT(A) in not considering that as....
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....e plots to various persons. 1.2 The Search & seizure operations were carried out by the I.T. Department on 19-01-2021 on Gokul Kripa Group and the assessee was also covered in search. In consequent to search action, the assessment of the assessee for A.Y. 2015-16 to A.Y. 2020-21 was made u/s 153A of the Act and the assessment for A.Y. 2021-22 was made u/s 143(3) of the Act. The summary of the assessment made is as under: - A.Y. Date of Assessment Returned income Assessed income Addition made PB Page where assessment order available 2015-16 27.04.2022 1,45,95,550 6,49,33,920 5,03,38,369 1-30 2016-17 27.04.2022 1,68,70,840 5,60,04,220 3,91,33,381 31-85 2017-18 29.04.2022 2,87,89,300 19,44,18,090 16,56,28,786 86-146 2018-19 27.04.2022 18,28,93,140 21,75,43,310 3,46,50,173 147-203 2019-20 27.04.2022 3,92,77,480 17,02,82,090 13,10,04,612 204-273 2020-21 26.04.2022 6,69,95,750 18,79,04,440 12,09,08,688 274-324 2021-22 26.04.2022 10,49,04,680 65,30,18,040 54,81,13,364 325-405 Aggrieved from the additions made in the assessment or....
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....03.08.2023 (Copy PB page 447-474) was issued by Joint Commissioner of Income Tax, Central, Jaipur and reply of the same was filed on 10.08.2023, wherein it was requested that the reply filed on 15.03.2023 may be considered as reply to this notice. 2.3 The ld. Joint Commissioner of Income Tax, Central Range, Jaipur, without accepting the submission of the assessee, passed the penalty order on 28.08.2023 and imposed the penalties u/s 271D and 271E of the amounts mentioned in table in para 1.3 supra. The salient main crux, in the light of which the penalty u/s 271D and 271E of the Act was imposed is as under: - 1. Ongoing through the assessment record, it may be noted that the assessee company had taken cash loans including repayments through the key persons of Gokul kripa Group. It is also apparent from the assessment order itself that the details of loans were found in the seized record and all the key persons of the group accepted the receipt of cash loans taken by any of the key persons/associates, is for the business of the assessee company. 2. The AO has comprehensively discussed the seized records, submissions of the assessee company which clearly sho....
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.... 6. Complete working was not given either assessment stage or penalty proceeding stage: - 7. The first onus is on department to show that the assessee company has taken cash loan which has not been discharged: - 8. Presumption u/s 132(4) not available for penalty proceedings. The assessment proceedings and penalty proceedings are two separate proceedings. and in penalty proceedings relying on such finding it cannot be opined that the assessee has controverted the provision of relevant section. 9. Motive for which provisions of section 269SS and 269T were brought in statue were not proved. 3.2 The CIT (A) decided the appeal of the assessee vide order dated 19.06.2025. The CIT (A) deleted the penalty on the ground that the same is beyond the date of limitation. The other issues raised by the assessee in appeal were not adjudicated. 3.3 The finding of CIT (A) is at Para 4.2 (Page 27 to 33 of CIT (A) order of A.Y. 2015-16 271D penalty) and for ready reference, the finding of CIT (A) is reproduced hereunder: - 4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of ....
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....h the order of the Joint Commissioner (Appeals) or the Commissioner (Appeals) or as the case may be, the Appellate Tribunal is received by the Principal Commissioner or Commissioner, whichever period expires later : Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Joint Commissioner (Appeals) or to the Commissioner (Appeals) under section 246 or section 246A, and the Joint Commissioner (Appeals) or the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Joint Commissioner (Appeals) or the Commissioner (Appeals) is received by the Principal Commissioner or Commissioner, whichever is later; (b) in a case where the relevant assessment or other order is the subject matter of revision under section 263 or section 264, after the expiry of six months from the end of the month in which ....
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....s not to be reckoned from the issue of show cause by the Jt. CIT, but the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings". Hon'ble ITAT Jaipur Bench in the case of Jagdish Chandra Suwalka v. Joint Commissioner of Income-tax [2023] 154 taxmann.com 504 (Jaipur - Trib.) held as under:- "Thus, a penalty u/s 271D could not be imposed after the expiry of the larger period of limitation. In this case, we find that the ld. JCIT in the impugned penalty order has clearly observed that the assessment for A.Y 2015-16 was completed by the AO (ACIT Tonk) vide assessment order dated 28-12-2017 u/s 147/143(3) of the Act. The ld. JCIT also referred to the observation made by the AO that the assessee had received cash payment of Rs. 47,50,000/- from various persons as per details given, which are in contravention of Sec.269SS of the IT Act. Thus, the relevant proceedings were the assessment proceedings during the course of which, the default of accepting cash over the prescribed limit was noted by the AO and since the assessment proceedings were completed on 28-12-2017, the related financial year ended o....
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....ty levied by Jt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was applicable to the case Even when the authority competent to impose penalty under s. 271D was the Jt. CIT, the period of limitation for the purpose of such penalty proceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings". Since there is no dispute on the facts stated above, hence respectfully applying the binding judicial precedents, I hold that the penalty imposed u/s 271D, under challenge, is barred by limitation u/s 275(1)(c) of the Act. Hence, the same is hereby quashed. The additional ground of appeal taken by the assessee is therefore, allowed. 8. Since I have already quashed the penalty on the short ground of limitation, we do not propose to adjudicate the other grounds on merits." Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax-5 v. JKD Capital & Finlease Ltd. [2017] 81 taxmann.com 80 (Delhi)/[2015] 378 ITR 614 (Delhi)[13- 10-2015] held as under:- "10. Considering ....
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....fore, referred the matter concerning penalty proceedings under Section 271-E to the Additional CIT. For some reason, the Additional CIT did not issue a show cause notice to the Assessee under Section 271-E (1) till 20th March 2012. There is no explanation whatsoever for the delay of nearly five years after the assessment order in the Additional CIT issuing notice under Section 271-E of the Act. The Additional CIT ought to have been conscious of the limitation under Section 275 (1) (c), i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case where the proceedings stood initiated with the order passed by the AO, by delaying the issuance of the notice under Section 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275 (1) (c)." Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax (Central)- 2 v. Mahesh Wood Products (P.) Ltd. [2017] 82 taxmann.com 39 (Delhi)/[2017] 394 ITR 312 (Delhi)[05-05-2017] held as under:- ....
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....hereunder: - (i) Whether on the facts and circumstances of the case, the Ld. CIT (A) has erred in deleting levy of penalty by Addl./Jt. CIT only on technical ground without giving any finding on the merits of levy of penalty? (ii) Whether on the facts and circumstances of the case, the Ld. CIT(A) has erred in holding that the relevant date for determining the limitation period for imposing penalty u/s 271D of I.T. Act is the date when the assessment order was passed by the A.O and not the date when show cause notice was issued by the Addl./Jt. CIT & ignoring the legal aspect that Act the AO was not allowed to impose penalty u/s 271D of I.T. Act and therefore passing of assessment order by the A.O and reference made by A.O. has no bearing on deciding the limitation date for imposing penalty u/'s 271D of T. T. Act? (iii) Whether on the facts and in circumstances of the case, the Ld. CIT(A) has erred in ignoring the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v AddI. Commissioner of Income Tax, Range-1, Kozhikode in ITA No 83 & 86 of 2014 dated 08.07.2015, wherein it was held that limitation of penalty proceedings w/'s 271D/....
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....view of section 269T of the Act. c) The ground taken in cross objection filed for A.Y. 2016-17 to 2021-22 are same as reproduced hereinabove except change in amount of penalty. 5. Submission on grounds of appeal of departmental appeal (ITA No. 1162, 1164 to 1170 and 1174 to 1178/JPR/2025) 5.1 Since, the grounds taken by the department for deleting the penalty u/s 271D as well as 271E of the Act are similar, therefore the same are commonly dealt with. Before submitting the submission on each ground of appeal, firstly it would be relevant to tabulate the chronology of relevant dates from the assessment to penalty order and thus the same is tabulated hereunder: - A.Y. Date of Assessment Date of reference sent by A.O to Addl./Jt. CIT for penalty u/s 271D/271E Financial Year of assessment made expires on 6 months expires from date of asstt. 6 months expires from date of letter of AO sent to Addl CIT for levy of penalty 2015-16 27.04.2022 21.07.2022 31-03-2023 31-10-2022 31-01-2023 2016-17 27.04.2022 21.07.2022 31-03-2023 31-10-2022 31-01-2023 2017-18 29.04.2022 21.07.2022 31-03-2023 31-10-202....
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....pproval u/s 153D from Addl CIT. Therefore, the action of levy of penalty starts from the date of assessment or in worst case from the date of issue of letter by AO to Addl CIT for levy of penalty u/s 271D and 271E. 5.2.3 The assessment order of the assessee u/s 153A of the Income Tax Act, 1961 for AY 2015-16 was passed on dated 27/04/2022 after prior approval of Addl CIT/Joint CIT, Central Range Jaipur. Before the approval, Addl CIT/Joint CIT gone thoroughly the draft assessment order, seized records and other material relevant to Assessment Order. In assessment order the cash loan is clearly mentioned. Therefore, the cause of action of levy of penalty arose on the date of the assessment order which was April-2022. 5.2.4 Furthermore, ld. AO referred the matter to Additional Commissioner of Income Tax, Central Range, Jaipur for initiating the penalty proceedings u/s 271D/271E of the Act vide letter dated 21/07/2022. 5.2.5 Therefore, the time limit u/s 275(1)(c) of the Act for passing the order u/s 271D of I. Tax Act should be as under: - (i) On the basis of date of assessment order 31/03/2023 (after the expiration of the financial year in which th....
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....e show cause notice was issued by the Id. Addl. Commissioner. He thereby noted that in the present case the reference was made by the Id. AO to the Id. Addl. Commissioner on the date of 20.01.2020. Accordingly considering the period provided under section 275 of the Act, the penalty order should have been passed on or before 31.07. 2020. However, the order has been passed on 30.08.2022 and therefore, the penalty order is found to have been passed beyond the date of limitation and thus the same cannot be sustained and due to this position, he directed that the penalty levied is to be deleted. Appeals of the revenue are dismissed. 5.2.8 The further reliance is also placed on following judgements: - 1. The Hon'ble Jurisdictional High Court in case of CIT vs. M.A. Presstressed Works, 220 ITR 226 (Raj.) (Copy at Case laws PB Page No. 44-46). 2. ITAT Jaipur in the case of Shri Ram Kishan Verma Vs Addl CIT, Range -1 Kota ITA No 405/JP/2019 AY 2015-16 order dated 03/07/2019. (Copy at Case laws PB Page No. 88-105 3. Lodha Builders (P) LTD. vs. ACIT (2014) 163 TTJ (Mumbai) 778 The relevant finding of these judgement are available at Page ....
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....the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v AddI. Commissioner of Income Tax, Range-1, Kozhikode in ITA No 83 & 86 of 2014 dated 08.07.2015. 5.4.1 In this regard this is to submit that decision of Hon'ble Kerla High Court is not binding in the case of assessee because the binding judicial precedence of jurisdictional Rajasthan High Court on this issue is available in favour of assessee. Based on that binding precedent the Ld. CIT(A) held that the relevant date for determining the limitation period is the date when the assessment order is passed by Id. AO and not the date when the show cause notice was issued by the Id. Addl./Jt. CIT. The Ld. CIT (A) thereby noted that in the present case the assessment orders were passed in the month of April-2022 and accordingly considering the period provided under section 275 of the Act, the penalty order should have been passed on or before 31.03. 2023. However, since the order has been passed on 28.08.2023 and therefore, the penalty order is found to have been passed beyond the date of limitation and thus the same cannot be sustained and due to this position, he directed that the penalty levied is to be....
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....against relevant assessment order. However, in this case the Hon'ble High Court categorically held that the extension period on account of pendency of appeal would not be available in the case of penalty levied u/s 271D/E and also held that the period of limitation reckoned from the date of assessment order. The relevant finding of Hon'ble High Court is reproduced hereunder: - 19. In the facts and circumstances noticed above, the Tribunal has held the penalty orders to be barred by time in terms of section 275(1)(c). 20. The revenue contends that the provisions of section 275(1)(a) are attracted so far as limitation in the present case is concerned and if section 275(1)(a) is applicable, the limitation for completing the penalty proceedings is extended up to six months from the date of expiry of the month in which the order has been passed in appeal or other proceedings arising out of the assessment in the course of which penalty proceedings have been initiated and the order imposing penalties under sections 271D and 271E had been passed within such extended period from the date of the appellate decision against the assessment order for the assessment year during ....
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....idering that there should not be any inordinate delay in imposing penalty and to streamline the levy of penalty within reasonable time in the Act of 1961, section 275 was enacted as a new provision for regularising imposition of penalty. It is pertinent to notice that if at the relevant time when the scheme for levy of penalty was enacted in the 1961 Act, the case in which the penalty was envisaged under Chapter XXI, the penalty proceedings were required to be initiated during the course of relevant assessment proceedings or its appellate proceedings by the appellate authority. Attention may be invited to the provisions contained in sections 271 and 273 which were the principal provisions for imposing penalty. The simple provision which was enacted was that no order in this chapter shall be passed after the expiration of two years from the completion of proceedings, in the course of which the proceedings for imposition of penalty have been commenced. Thus, the limitation for imposing penalty under section 275 as originally enacted was directly linked with the completion of proceedings in the course of which the penalty proceedings were initiated in terms of section 271 or section 2....
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....is the subject-matter of an appeal to the AAC or an appeal by the ITO to the Tribunal, the time-limit for completing the penalty proceedings will be either the two years' period as stated above or a period of six months from the end of the month in which the order of the AAC or, as the case may be, of the Tribunal is received by the CIT, whichever period expires later. It may be noted that the two years period will henceforth expire at the end of a financial year, instead of on different dates during the financial year, and the six months period will expire at the end of a calendar month. This facilitates the exercise of vigilance by the tax administration on the expiry of the limitation period and ensures that penalty proceedings are completed in all cases in time. 26. Secondly, the Direct Tax Laws (Amendment) Act, 1987, which came into effect from 1-4-1989, section 275 was amended. Vide amendment, the time-limit for completion of penalty proceedings which was generally two years from the end of financial year in which such proceedings were completed or six months from the end of the month in which action for imposition for penalty was initiated, whichever period expi....
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....enalty proceedings were initiated is not relevant. 31. To this effect, a Circular No. 551, dated 23-1-1990 [(1990) 82 CTR (St.) 325] and another Circular No. 554, dated 13-2-1990 [(1990) 82 CTR (St.) 280] were issued by the CBDT. 32. A close scrutiny of section 275 which is reproduced hereinabove shows that clause (1)(a) covers those cases where the penalty proceedings are in respect of a default related to principal assessment for a particular assessment year and the penalty proceedings are required to be initiated in the course of that proceedings only. In such cases where the relevant assessment order or other orders are the subject-matter of an appeal to the CIT(A) under section 246 or an appeal to the Tribunal under section 253, 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 the order of CIT(A) or, as the case may be, of the Tribunal is received by the Chief CIT or CIT, whichever period expires later. 33. Apparently, clause (a) governs the categories which are integrally related to the assess....
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....ation commensurating with completion of the appellate proceedings, if any, arising from the proceedings during the course of which such penalty proceedings are initiated as in the case where the penalty proceedings are linked with the assessment proceedings or the other relevant proceedings. 37. The expression 'other relevant thing' used in section 275(1)(a) and clause (b) of sub-section (1) of section 275 is significantly missing from clause (c) of section 275(1) to make out this distinction very clear. 38. We are, therefore, of the opinion that since penalty proceedings for default in not having transactions through the bank as required under sections 269SS and 269T are not related to the assessment proceedings but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings 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 secti....
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....d upon the findings of ld CIT(A). However, in addition to or in alternative to the findings of ld CIT(A), the assessee has raised certain grounds discussed hereunder. Since, the grounds taken by the assessee for appeal against penalty u/s 271D as well as 271E of the Act are similar, therefore the same are commonly dealt with. 6.1 Ground No. 1.1: - in this ground it is contended that in the assessment order no satisfaction was recorded for initiation of penalty u/s 271D/271E, hence the penalty imposed is not maintainable, bad in law and deserves to be annulled on this count also. 6.1.1 Ld. AO in the assessment order has not initiated penalty proceeding u/s 271D/271E and did not record any finding that there has been any violation of the provisions of section 269SS/269T by the assessee, nor was any satisfaction recorded to the effect that the alleged transaction of acceptance of loan would attract penal consequences u/s 271D/271E (Copy of Assessment Order at Page 1-405). Rather the satisfaction was recorded for levy of penalty for concealment of income or/and u/s 271(1)(c) /271AAB(1A) /270A. Therefore, the penalty under section 271D/271E, without satisfaction note i....
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....alty can not be imposed. In the case in hand the DCIT had only recorded satisfaction for proceedings u/s 271(1)(c) and no satisfaction was recorded to initiate penalty proceedings u/s 271D. The notice issued u/s 271E and the proceedings in pursuance thereto are quashed. Decided in favour of assessee. 2. Hon'ble ITAT Jaipur Bench in the case Sh. Anil Sharma Versus The ITO, Ward-1 (3), Jaipur 2025 (3) TMI 212 - ITAT Jaipur ITA No. 1480/JPR/2024 dated 16/01/2025 (Copy at Case laws PB Page No. 84-87) held as under:- Penalty imposed u/s 271E - violation of provisions of Section 269T by making repayment of a sum in cash - HELD THAT:- Assessing Officer nowhere recorded satisfaction that it was a case of violation of provisions of section 269T calling for initiation of penalty proceedings u/s 271E of the Act. In Jai Laxmi Rice Mills Ambala City's case [2015 (11) TMI 1453 - SUPREME COURT] while dealing with penalty order u/s 271E of the Act, observed that in the fresh assessment order, no satisfaction was recorded regarding penalty proceedings u/s 271E of the Act, and that the AO had expressed therein only for initiation of penalty proceedings u/....
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.... to levy penalty under section 271D. [Para 9] * In view of the aforesaid, the order passed under section 271D is set aside. [Para 10] 4. ITAT RAIPUR BENCH in the case of Bhowmick Raj Singh vs. Joint Commissioner of Income-tax [2025] 171 taxmann.com 575 (Raipur - Trib.)[02-01- 2024] (Copy at Case laws PB Page No. 106-115). 6.2 Ground No. 1.2: - in this ground of appeal it is contended that the Ld. A.O. assessed the alleged loans as business income of assessee, therefore it is out of purview of section 269SS/269T of the Act. Not pressed. 7. Prayer of Assessee In view of the submission made hereinabove, the humble assessee prays your honour kindly to dismiss the appeal filed by the revenue and allow the CO filed by assessee. 9. To support the contention so raised in the written submission reliance was placed on the following evidence / records / decisions by the ld. AR of the assessee : S. No. Particulars Page No. 1 Copy of Assessment order passed u/s 153A/143(3) for AY 2015-16 to 2021-22 1-405 2 Copy of Letter dated 21/07/2022 by ACIT to JCIT, Central Range for reference for the penalty u/s 271D r.w.s 26....
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....Rajasthan High Court CIT Vs. Krishi Tyre Retreading and Rubber Industries 360 ITR 580 (Raj.) 50-54 9 Hon'ble Andhra Pradesh High Court in the case of Grandhi Sri Venkata Amarendra vs. Joint Commissioner of Income-tax [2024] 167 taxmann.com 352 (Andhra Pradesh)/[2024] 301 Taxman 516 (Andhra Pradesh)[03-10-2024] 55-59 10 Hon'ble Madras High Court Director of Income Tax Exemptions, Chennai Vs M/s. Young Men Christian Association, Madras, ITA Nos.1661, 2002 & 2003/MDS/ 2012, 111 DTR 77 (Mad.) (HC) 60-66 11 Hon'ble Delhi High Court Diwan Enterprises Vs. CIT & Ors. (2000) 246 ITR 571 (Del) (HC) 67-74 12 Hon'ble Delhi High Court CIT Vs. Standard Brands Ltd. 285 ITR 295 (Del.) (HC) 75-76 13 Hon'ble Gujarat High Court Commissioner of Income Tax Vs. Shyam Corporation 218 Taxman 136 (Guj.), 77-78 14 Hon'ble Calcutta High Court Durga Kamal Rice Mills v/s. CIT (2004) 265 ITR 25 (Cal.). 79-83 15 Hon'ble ITAT Jaipur Bench Sh. Anil Sharma Versus The ITO, Ward-1 (3), Jaipur 2025 (3) TMI 212 - ITAT Jaipur ITA No. 1480/JPR/2024 dated 16/01/2025 84-87 16 Hon'ble ITAT Jaipur Bench in the case of Shri Ram Kis....
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....take it to dispose off together. The brief facts related to the dispute are that there was an action of search and seizure u/s 132 of the Act and/or survey u/s 133A of the Act which was carried out on 19-01-2021 by the revenue on M/s Gokul Kripa Colonizers & Developers Pvt. Ltd (for short GKCDPL or assessee). In that action various incriminating documents were found/seized including forensic data from premises covered in the "Gokul kripa group". These incriminating documents include information related to repayment of cash loans by the assessee company GKCDPL through its founders/promoters/owners/key person namely Shri Sumer Singh Saini, Shri Phool Chand Saini, Shri Rajesh Kumar and Shri Ganga Singh Tanwar & others and these cash loans were utilized for the purpose of business of assessee company i.e. in the business of real estate done by the assessee company. Further, while assessment proceedings, the assessee company was asked to explain these financial transactions done through its key persons for the purpose of business of real estate conducted by the assessee company, i.e. cash loans repayments by the assessee company through its key persons but the assessee was failed to pro....
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.... So based on that legal precedent let us examine that legal issue based on the facts as available on record. Before we deal with that aspect of the matter legally, we would like to reproduced the provision of section 271E read with section 275 of the Act. Penalty for failure to comply with the provisions of section 269T. 271E. (1) 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 or deposit or specified advance so repaid. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner: Bar of limitation for imposing penalties. 275. (1) No order imposing a penalty under this Chapter shall be passed after the expiry of six months from the end of the quarter in which,- a) the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, 59if the relevant assessment or other order is not the subject matter of an appeal under section 246 or section 246A or section 253; (b) t....
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....y of the order vacating the stay was received by the jurisdictional Principal Commissioner or Commissioner. ] When we read the provision of the law we note that the limitation period is governed by clause (c) of Section 275(1) in this case. As per this section, the penalty order is to be passed before the end of the F.Y. in which the proceeding in the cause of which the action for imposition of penalty has been initiated are completed or 6 months from the end of the month in which penalty is initiated, whichever expires later. Record reveals that in this case the assessment order was passed on 29.04.2022 and thereby the limitation for passing the penalty order u/s. 271E is 31.10.2022 or 31.03.2023 whichever is later. In this case the same is 31.03.2023 but the penalty order in this case was passed on 28.08.2023 which is beyond the limitation date and thereby the same is rightly quashed by the ld. CIT(A) as the order was not passed within the timeline as given in section 275 of the Act. This co-ordinate bench of Jaipur has taken a similar view of the matter while dealing with the case of revenue in DCIT vs. Kiran Fine Jewellers Private Limited in ITA no. 268/JP/2024 wherein the b....
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....see has contravened the provisions of Section 269T of the Income Tax Act, 1961. Further, the assessee has not cited any reasonable cause for violation of the provisions of section 269T of the Act. In view of these facts, it is a case where the assessee, without any reasonable cause, has contravened the provisions of section 269T of the Act. Therefore, ld. AO holds that the assessee has violated the provisions of section 269T of the Act, which puts an embargo on re-payment of loans except by the modes specified therein and, therefore, penalty u/s 271E is clearly exigible and consequently, he ordered to levy penalty of Rs. 9,36,57,733/- i.e., equal to the amount of repayment of loan other than account payee cheque, is imposed on the assessee in terms of section 271E of the Act. When the matter carried before the ld. CIT(A), considered the binding precedent of our Rajasthan High Court in the case of CIT Vs. Hissaria Bros 169 Taxman 262 (Rajasthan). The said decision has been affirmed by the Hon'ble Apex Court in the case of Hissaria Brothers [2016] 74 taxmann.com 22/243 Taxman 174/386 ITR 719 wherein our High Court held that ""Penalty under ss. 271D and 271E-Limitation un....
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....n authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply." Whereas in the case of the Commissioner of Income Tax Vs. Hissaria Bros [169 Taxman 262 (Rajasthan) ] has decided this issue thread bear and confirmed that the initiation of penalty has linked with the assessment proceeding and thereby the detailed finding of our Hon'ble High Court reads as under : 12. In the facts and circumstances noticed above, the Tribunal has held the penalty orders to be barred by time in terms of section 275(1)(c). 13. The revenue contends that the provisions of section 275(1)(a) are attracted so far as limitation in the present case is concerned and if section 275(1)(a) is applicable, the limitation for completing the penalty proceedings is extended up to six months from the date of expiry of the month in which the order has been passed in appeal or other proceedings arising out of the assessment in the course of which penalty proceedings have been in....
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.... provision in question for the present purposes. 16. Under the Income-tax Act, 1961, as originally enacted, no limitation was prescribed for completion of the penalty proceedings. However, considering that there should not be any inordinate delay in imposing penalty and to streamline the levy of penalty within reasonable time in the Act of 1961, section 275 was enacted as a new provision for regularising imposition of penalty. It is pertinent to notice that if at the relevant time when the scheme for levy of penalty was enacted in the 1961 Act, the case in which the penalty was envisaged under Chapter XXI, the penalty proceedings were required to be initiated during the course of relevant assessment proceedings or its appellate proceedings by the appellate authority. Attention may be invited to the provisions contained in sections 271 and 273 which were the principal provisions for imposing penalty. The simple provision which was enacted was that no order in this chapter shall be passed after the expiration of two years from the completion of proceedings, in the course of which the proceedings for imposition of penalty have been commenced. Thus, the limitation for imposing....
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.... the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed. However, in a case where the relevant assessment or other order is the subject-matter of an appeal to the AAC or an appeal by the ITO to the Tribunal, the time-limit for completing the penalty proceedings will be either the two years' period as stated above or a period of six months from the end of the month in which the order of the AAC or, as the case may be, of the Tribunal is received by the CIT, whichever period expires later. It may be noted that the two years period will henceforth expire at the end of a financial year, instead of on different dates during the financial year, and the six months period will expire at the end of a calendar month. This facilitates the exercise of vigilance by the tax administration on the expiry of the limitation period and ensures that penalty proceedings are completed in all cases in time. 19. Secondly, the Direct Tax Laws (Amendment) Act, 1987, which came into effect from 1-4-1989, section 275 was amended. Vide amendment, the time-limit for completion of penalty proceedings which was generally ....
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....e month in which action for imposition of penalty is initiated, whichever period expires later. In the last category, filing of appeal in respect of order passed in proceedings during which penalty proceedings were initiated is not relevant. To this effect, a Circular No. 551, dated 23-1-1990 [(1990) 82 CTR (St.) 325] and another Circular No. 554, dated 13-2-1990 [(1990) 82 CTR (St.) 280] were issued by the CBDT. 23. A close scrutiny of section 275 which is reproduced hereinabove shows that clause (1)(a) covers those cases where the penalty proceedings are in respect of a default related to principal assessment for a particular assessment year and the penalty proceedings are required to be initiated in the course of that proceedings only. In such cases where the relevant assessment order or other orders are the subject-matter of an appeal to the CIT(A) under section 246 or an appeal to the Tribunal under section 253, 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 the order of CIT(A) or, as the case may be,....
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....he end of the month in which action for imposition of penalty is initiated, whichever period expires later. There is no provision under clause (c) for the extended period of limitation commensurating with completion of the appellate proceedings, if any, arising from the proceedings during the course of which such penalty proceedings are initiated as in the case where the penalty proceedings are linked with the assessment proceedings or the other relevant proceedings. 26. The expression 'other relevant thing' used in section 275(1)(a) and clause (b) of sub-section (1) of section 275 is significantly missing from clause (c) of section 275(1) to make out this distinction very clear. 27. We are, therefore, of the opinion that since penalty proceedings for default in not having transactions through the bank as required under sections 269SS and 269T are not related to the assessment proceedings but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under sections 271D and 271E may have been initiated has no relevance for sustaining or no....
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....be imposed by the Assessing Officer.] Thus, the reading of the amended provision of the law and the view of our High Court in the case of Hissaria Bros supra we are of the considered view that there is no infirmity in the finding of the ld. CIT(A) and thereby ground no. 2 & 3 raised by the revenue stands dismissed. Since we have confirmed the view of the ld. CIT(A) on technical grounds we are of the considered view that the ld. CIT(A) has rightly not decided the merits of the dispute as the proceeding were barred by limitation and therefore, ground no. 1 raised by the revenue stands dismissed. On being consistent to the findings recorded herein above wherein all the contention of the revenue that has been raised has already been dealt with and therefore, we see no infirmity in the finding of the ld. CIT(A) in following the binding precedent of our Rajasthan High Court in the case of Hissaria Brothers 74 taxmann.com 22. In view of the finding so recorded herein above we see no infirmity in the finding of the ld. CIT(A) and thereby the appeal of the revenue in ITA no. 1168/JP/2025 is dismissed. 11. Now coming to the cross-objection ground no. 1.1 wherein the a....