TaxTMI 
TaxTMI 
2026 (3) TMI 1692
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....ted 19.10.2022, whereby penalty of Rs. 40,50,000/- was imposed upon the petitioner under Section 271D read with Section 274 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') is under challenge in the present writ petition. 4. The facts relevant for consideration of this issue are briefly stated as under: (i) The petitioner/assessee had filed its return of income for the assessment year 2017-18 on 04.11.2017 declaring total income of Rs. 8,60,800/-. The assessee had deposited Rs. 14,38,000/- in his bank accounts during the period of demonetization. Accordingly, proceedings under Section 147 of the Act were initiated. Notice under Section 148 of the Act was issued on 31.03.2021 after approval of the competent authority. The assessment was completed on 15.03.2022. (ii) The third respondent/Joint Commissioner of Income Tax issued notice under Section 274 read with Section 271D of the Act on 28.04.2022 on the basis of information available with the department that transactions carried out by the assessee were in contravention of provisions of Section 269SS of the Act. Accordingly, penalty of Rs. 40,50,00,000/- was levied on the a....
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.... of the Act, unless it is recorded in the assessment order, he cannot refer the file to superior officer, i.e., the Joint Commissioner for initiating levy of penalty. Unless the assessing officer during assessment proceedings, arrives at a finding that there has been a violation of the provisions, like Section 269SS of the Act, the Joint Commissioner cannot initiate the proceedings to levy penalty under Section 271D of the Act. Section 271D penalises taking or accepting any loan or deposit otherwise than by account payee cheque/draft/electronic clearance above Rs. 20,000/-. However, it is subject to exception of reasonable cause under Section 273B of the Act. Learned counsel for the petitioner has further argued that the appellate authority chose not to appreciate the detailed written contentions submitted in the Grounds of Appeal and proceeded to finalise the appeal stating that the authorised representative of the appellant had not filed any written submissions or appeared before him. This is against the principles of natural justice. The petitioner also relied upon the decision in respect of discharge of burden under Section 105 of the Evidence Act, 1872, such as in the cas....
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....ring to the judgment of the Jai Laxmi Rice Mills (supra) and observed that in the said case, the penalty proceedings were initiated by the assessing officer during the course of assessment proceedings and the assessment order was passed to the best of his judgment under Section 144 of the Act. The said ex parte order was set aside by the learned CIT (Appeals) and the assessing officer was directed to frame the assessment de novo. However, the assessing officer passed penalty order under Section 271D of the Act on the basis of the observations made in the original assessment order. The High Court took the view that the proceedings under Section 271D of the Act are not independent proceedings and the penalty order would practically submerge in view of the order passed by the Commissioner of Income Tax (Appeals). The original assessment order was set aside and the case was remanded for de novo assessment. Since the assessing officer did not refer to the violation of provisions of Section 269SS and 269T of the Act in the said proceedings, the Tribunal deleted the penalty. The High Court did not admit the appeal on the ground that no substantial questions of law arose. Hence, the limite....
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.... the genuineness of the transactions. The assessing officer did not initiate proceedings under Section 271D of the Act or any other penalty proceedings. The amounts were received against the sale of property and were part of amounts recorded in the registered documents. The income from the said transactions was also disclosed in the returns of income and was accepted by the assessing officer. The Joint Commissioner of Income Tax did not accept the explanation and levied penalty of Rs. 40,50,000/- under Section 271D of the Act. The order of the Joint Commissioner was upheld by the National Faceless Appeal Centre, Delhi observing that the appellant despite several opportunities had failed to make any submissions in support of the appeal. Therefore, it was not interested in prosecuting the appeal. The appellate authority quoted number of judgments on the point that if an assessee fails to participate in the proceedings and it has not adduced in evidence, the appeal is liable to be dismissed. The appeal was accordingly dismissed upholding the order of the Joint Commissioner. 9. As referred to in the opening paragraph of this judgment, the question posed to be answered is whethe....
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....pecified 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. Provided also that the provisions of this section shall have effect, as if for the words "twenty thousand rupees", the words "two lakh rupees" had been substituted in the case of any deposit or loan where,- (a) such deposit is accepted by a primary agricultural credit society or a primary co-operative agricultural and rural development bank from its member; or (b) such loan is taken from a primary agricultural credit society or a primary co-operative agricultural and rural development bank by its member. 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", "primary agricultural credit society" and "primary co-operative agricult....
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....on. The assessee is engaged to operate construction activities. During the FY 2016-17, source of income of the assessee was residential villas. The information, including the three sheets of cash book for the period 1.9.2016 to 31.2.2016, filed by the assessee was examined with reference to the reason re-opening the case and no adverse inference is drawn. Hence, returned income of the assessee is accepted." 12. The proceedings under Section 271D of the Act were initiated by the Joint Commissioner on the ground that during the assessment year, the assessee had accepted an amount of Rs. 40,00,000/- in cash from its customers on sale of plots/residential house as advance/initial payment. The details of cash received were enumerated in the form of a chart, which showed that such amounts were received from various persons exceeding Rs. 20,000/- during the assessment year in violation of Section 269SS of the Act. The assessee took the plea that the assessee had sold its land to various persons who are farmers. They were unable to make the payment in cheque and gave the money in cash. The accountant unknowingly collected cash and deposited in the bank. The amount collected fr....
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.... 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." 4. The above judgment reflects the "Departmental View". Accordingly, the Assessing Officers (below the rank of Joint Commissioner of Income Tax) may be advised to make a reference to the Range Head, regarding any violation of the provisions of Section 269SS and Section 269T of the Act, as the case may be, in the course of the assessment proceedings (or any other proceedings under the Act). The Assessing Officer, (below the rank of Joint Commissioner of Income Tax) shall not issue the notice in this regard. The Range Head will issue the penalty notice and shall dispose/complete the proceedings within the limitation prescribed u/s 275(1)(c) of the Act." 14. A perusal thereof would show that the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings should not be done by the assessing officer. The statement in the assessment order that the proceedings under Sections 271D and 271E of the Act initiated are inconsequential. On the other hand, i....