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Issues involved: Two appeals filed by the Revenue against the order of CIT(A) quashing penalties imposed u/s 271D & 271E for the assessment year 2005-06.
Issue 1 - Penalty u/s 271D: The AO imposed a penalty u/s 271D for accepting cash loans in contravention of IT Act provisions. The CIT(A) found the penalty order erroneous and perverse as it related to transactions from different assessment years. The AO's action was deemed invalid as penalties for specific assessment years must be initiated within the prescribed time limits. The Tribunal upheld the CIT(A)'s decision, stating that penalties must be imposed based on facts of the relevant assessment year. Issue 2 - Penalty u/s 271E: Similarly, a penalty u/s 271E was imposed for repaying cash loans in contravention of IT Act provisions. The CIT(A) dismissed the penalty considering the same facts and arguments as in the previous case. The Tribunal upheld the dismissal, reiterating that penalties must align with the facts of the assessment year in question. The Tribunal dismissed both appeals by the Revenue, upholding the CIT(A)'s decisions to quash the penalties imposed u/s 271D & 271E for the assessment year 2005-06.
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