TaxTMI 
TaxTMI 
2025 (3) TMI 1896
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.... repayment of deposit in excess of Rs. 20,000/- to various persons as per Audit Report to the tune of Rs. 1,03,15,781/- otherwise than account payee cheque or account payee Bank Draft or through use of Electronic Clearing System through a bank account. 2.3 That in pursuance to this information a penalty notice was issued to the assessee on 08.04.2019 and date of hearing was fixed for 23.04.2019 requiring the assessee to show cause as to why penalty u/s 271E of the Act should not be imposed on them. 2.4 That the assessee in compliance to the aforesaid notice, furnished a written reply on 23.04.2019 (Reply copy not in PB nor in penalty order of Ld. A.O). 2.5 That in meanwhile because of change of the incumbent officer yet another penalty notice u/s 271E on 01.10.2019 date of hearing fixed on 11.10.2019 came to be issued to the assessee calling upon them to show cause as to why penalty u/s 271E of the Act should not be imposed upon them. 2.6 That the aforesaid notice dated 01.10.2019 was replied by the assessee vide their reply dated 17.10.2019 wherein it was contended by the assessee that by virtue of assessee being an agriculture credit cooperative society it is not cove....
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....l merited and speaking order where entire gamut of relevant sections of Act dealing with imposition of penalty u/s 271E for violation of Section 269T is well analysed and considered. It was respectfully contended that the "Impugned order" has totally disregarded the statutory provisions of law which are mandatory in nature. By passing the "impugned order" the Ld. CIT(A) has misinterpreted the law. The law is clear and express u/s 269T and 271E wherein there is a complete prohibition on repayment of deposit through modes other than prescribed banking channels. That the Ld. CIT(A) in the "impugned order" has erroneously placed reliance on judicial precedents that are distinguishable on the facts and that the same were totally in applicable to the facts and circumstances of the present case. The most peculiar feature of the present case is that the assessee did in fact repaid deposit contrary to the statutory scheme under the Act which are mandatory in nature and no leeway of any kind whatsoever is provided by the Act. Hence under these peculiar facts and circumstances there is perse violation of the Act in terms of Section 269T and hence imposition of penalty u/s 271E is justified. T....
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....f the assessee that repayment of deposit/ loans is an inherent business activity akin to a banking function is untenable. The statutory scheme of Section 269SS and 269T does not provide any blanket exemption to Credit Co-operative Societies. The legislative intend behind these provisions is to curb unaccounted cash transactions and the assessee's reliance on the banking analogy is legally unsustainable. The assessee's plea of a bonafide belief that Section 269SS/269T were in applicable lacks merit. The Tax Auditor's explicit mention of the violation negates any claim of bonafide ignorance. It is settled principle that ignorance of law is not an excuse. The Ld. DR contended that assessee arguments that no finding has been recorded in the assessment order for imposition of penalty u/s 271E of the Act is incorrect and law does not contemplate such a situation. Reliance on the judgment of Apex Court in case of CIT V/s Jain Laxmi Rice Mills (2015) 64 Taxmann.com 75 (SC) and decision of ITAT, Indore Bench in case of RVT Technologies Ltd No. 275 to 277/Ind/2023) are all wrong as statutory provisions of the Act are express and clear. There are no ambiguities in the relevant Section of the ....
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....1)(c) of the Act. It was next vehemently contended by the Ld. AR that in the instant case in so far as assessment order is concerned which is dated 28.07.2017 u/s 143(3) of the Act, the income tax authorities are not competent enough to initiate proceedings for penalty within the meaning of Section 269T and Section 271E of the Act as no satisfaction is recorded in course of any proceedings under the Act. Reliance was placed on the judgment of Hon'ble Supreme Court of India in case of CIT V/s Jain Laxmi Rice Mills case reported in (2015) 64 Taxmann.com 75 (SC) wherein it was held as follows:- "As pointed out above, insofar as, fresh assessment order is concerned there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, in so far as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied." (emphasis applied) The Ld. AR has also placed reliance on judgment of this Tribunal in case of RVT Technologies case ITA No. 275 to 277/Ind/2023 dated ....
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....edings are separately being initiated against the assessee, the very initiation of penalty proceeding vide Notice dated 08.04.2019 by JCIT/Addl.CIT becomes illegal and bad in law. Our view is fortified by the judgment of Hon'ble Supreme Court of India in case of CIT v/s Jain Laxmi Rice Mills reported in 64 Taxann.com 75 (SC) wherein in para 2 to 5 Hon'ble Supreme Court of India has held as follows:- "2. The assessee carried out this order in appeal. The Commissioner of Income Tax (Appeals) allowed the appeal and set aside the assessment order with a direction to frame the assessment de novo after affording adequate opportunity to the assessee. 3. After remand, the Assessing Officer passed fresh assessment order. In this assessment order, however, no satisfaction regarding initiation of penalty proceedings under Section 271E of the Act was recorded. It so happened that on the basis of the original assessment order dated 26.02.1996, show cause notice was given to the assessee and it resulted in passing the penalty order dated 23.09.1996. Thus, this penalty order was passed before the appeal of the assessee against the original assessment order was heard and allowed ....
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.... assessment proceedings or proceeding arising from assessment order are pending in the case of the assessee. Accordingly in the facts and circumstances of the case and following the judgment of Hon'ble Supreme Court as well as Coordinate Bench of the Tribunal in case of Vijayaben G. Zalavadia us. JCIT (supra), we hold that the penalty levied u/s 271D of the Act without any assessment proceedings in the case of the assessee is not valid and liable to be quashed. We order accordingly". 4.7 We have also gone through the latest judgment of Hon'ble Rajasthan High Court dated 30th January 2025 in DB Civil Writ Petition No. 1102/2025 in case titled Sunil Agrawal V/s Asst. Commissioner of Income Tax, CC-4, Jaipur wherein Hon'ble Division Bench wherein in Para 2,3,4,5,6,7,8,9,11&12 has observed and recorded as under:- "1. These writ petitions are being decided by this order as the facts and issues involved are same. Though in some of the cases penalty under Section 271D and in others under Section 271E of the Income Tax Act, 1961 (hereafter 'the Act of 1961') was imposed. The language of Section 2710 and Section 271E are analogous. For the sake of convenience, the fa....
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....01.08.2024 shall not enhance case of the department as the reference was after the conclusion of reassessment proceedings by the DCIT. 8. The satisfaction dated 24.09.2024 recorded by the ACIT cannot be equated with the satisfaction to be recorded in the reassessment proceedings by the concerned AO. 9. In Jai Laxmi Rice Mills (supra) the Supreme Court was dealing with the issue as to whether the penalty proceedings under section 271D are independent of the assessment proceedings. In that case, in the assessment order passed in pursuance to the remand no satisfaction was recorded for initiating the proceedings under section 271E. Though the AO stated for initiation of proceedings under section 271(1)(c). The penalty proceeding was quashed on the ground that in absence of satisfaction recorded by the AO the penalty can not be imposed. 10. x 11. In the case in hand the DCII had only recorded satisfaction for proceedings under Section 271(1)(c) of the Act of 1961 and no satisfaction was recorded to initiate penalty proceedings under Section 271D. 12. The issue involved in the present writ petition is squarely covered by the decision of the S....