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2023 (12) TMI 338 - AT - Income TaxPenalty u/s 271E - repayment of loan made by bearer cheque and not through crossed cheque - contravention of the provisions of Section 269T in the preceding assessment year - initiation of penalty proceedings before the Ld. CIT(A) for A.Y. 2014-15 while framing assessment for A.Y 2015-16 - HELD THAT:- It is an established fact that penalty under section 271E of Act for A.Y. 2014-15 in the case of the assessee has been initiated while completing assessment proceedings for A.Y. 2015-16. This, in our view, is not legally tenable. Penalty proceedings can be initiated at any time while the Ld. AO is in seisen of the assessment proceedings of the relevant A.Y. in which the default occurred and not afterwards. On facts similar to that of the assessee, as held in Mahonar Lal Thakral [2011 (1) TMI 538 - PUNJAB AND HARYANA HIGH COURT] that it being a case of processing the return of income, there is no finding in the assessing officer's order with regard to the applicability or otherwise of section 269T of the Act to the assessee’s case. It was within the purview of the AO to bring the assessee’s case to scrutiny and to make regular assessment under section 143(3) of the Act. It was also within the power of the AO at the appropriate stage to initiate proceedings under section 147 of the Act against the assessee. No such action was taken. It is not in dispute that there were no proceedings pending before the Ld. AO qua the assessee for A.Y. 2014-15. We, therefore hold that initiation of penalty proceedings under section 271E of the Act on the basis of assessment order for A.Y. 2015-16 is bad in law and imposition of impugned penalty by Ld. JCIT and confirmation thereof by the Ld. CIT(A) is not sustainable. The plea of Ld. Sr. DR that penalty under section 271D and 271E can be initiated dehors any pending proceedings for relevant A.Y. is devoid of merit. Appeal of the assessee is allowed.
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