TMI Blog2008 (8) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 (c) Shri Trilok Chand Rs. 50,000 (d) Shri Bal Chand Rs. 55,000 ------------ Rs. 2,55,000 ------------ 3. The assessee having failed to give any explanation in support of contravention of provisions of s. 269SS, the AO held the assessee liable for penalty under s. 271D of the Act and there being no reasonable cause having been brought on record for violation of provisions of s. 269SS of the Act, the penalty of Rs. 2,55,000 on account of aforesaid deposits having been accepted in cash stood imposed by order dt. 13th Feb., 2001. 4. On careful consideration of the material facts on record, the learned CIT(A) being of the considered opinion that the penalty proceedings under s. 271D are independent of the assessment proceedings did not agree with the assessee's plea that the same are bad in law. For this purpose, he placed reliance on the judgment rendered by the Jaipur Bench of the Tribunal in the case of Manoj Lalwani vs. Jt. CIT 23 Tax World 434 and also on the judgment rendered by Amritsar Bench of the Tribunal in the case of Asstt. CIT vs. Madan Roller Flour Mills (2000) 66 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s stated that the AO before completing the block assessment on 24th May, 2000 (which ought to have been completed before 30th Nov., 1999 as held by the Hon'ble Tribunal and Hon'ble jurisdictional High Court) had initiated the penalty proceedings under s. 271D as is evident from the opening para of penalty order under s. 271D in which the Asstt. CIT had inter alia stated the following facts: "During the course of assessment proceedings, the AO has pointed out that the assessee has accepted the deposits other than by account payee cheques/drafts and the assessee has contravened the provisions of s. 269SS of the IT Act, 1961...." It is evident from the aforesaid finding of fact recorded by the Asstt. CIT in the penalty order under s. 271D that satisfaction for invoking the provisions of s. 271D was recorded by the AO before completion of the block assessment. The date of initiation of such penalty proceeding should therefore. be taken to be the last possible date for completion of the assessment proceedings, which was 30th Nov., 1999. The provisions of s. 275(1)(c) inter alia provides that no order imposing a penalty shall be passed after expiry of the financial year in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y requirement of initiation of proceedings under s. 271D cannot be treated as having been complied with by the AO. Reliance is placed on the following judgments : - Sharda Educational Trust vs. Asstt. CIT (2006) 99 7TJ (Agra) 212 at p. 218 para 12 the Tribunal has held as under: "Before coming to the findings, we first of all, consider it necessary to consider the provisions of s. 275(1)(c) and various decisions relied upon by the counsel for the assessee which are in the following terms: (1) No order imposing a penalty under this chapter shall be 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 been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later". From the aforesaid provisions, we are inclined to agree with the submissions of the counsel for the assessee that for applying the limitation provided under this clause, it is necessary that the penalty proceedings under the Act should have been initiated during the course of some proceedings, i.e., either during t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed within six months from the date of initiation of such penalty proceedings, which will be treated as having been initiated on the date on which the AO had recorded satisfaction before completion of the invalid and time-barred assessment on 25th May, 2000. The penalty order ought to have been passed within six months from that date i.e., from 25th May, 2000. The limitation for imposition of penalty accordingly expired on or before 30th Nov., 2000. The learned CIT(A) on page of the impugned order has misapplied the assessee thumb rule of law that any authority who is empowered to levy penalty alone is competent to issue a show-cause notice. No such requirement is prescribed in the relevant provisions of law. The learned C1T(A) has further erred in observing on the same page No. 5 that the time-limit of six months should be reckoned from the date on which the Addl. CIT issued show-cause notice for penalty and the time-limit cannot be reckoned from the date of show-cause notice issued by the Dy. CIT. Such findings given by the learned CIT(A) are clearly contrary to the decision of the Hon'ble Supreme Court, Hon'ble jurisdictional High Court and this Bench of Tribunal. - D.M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d issuing notices; and the initiation of these penalty proceedings cannot be said to have been on the dates when the Jt. CIT issued notices", 8. In respect of the penalty proceedings under ss. 271D and 271E the period of limitation prescribed under s. 275(1)(c) is applicable and not that prescribed under s. 275(1)(a); penalty order under ss. 271D and 271E passed after the period of limitation as prescribed under s. 275(1)(c) were barred by limitation. It will be imperative here to mention that this decision of the Tribunal, Jodhpur has been approved and confirmed by the Hon'ble jurisdictional High Court in the case of Hissaria Bros. In view of the aforesaid judgment of the Hon'ble jurisdictional High Court the decision of Tribunal, Special Bench in the case of Dewanchand Amrit Lal vs. Dy. CIT (2005) 98 TTJ (Chd)(SB) 947 : (2006) 98 ITD 200 (Chd)(SB) in which decision of Tribunal, Jodhpur in the case of Hissaria Bros. was disapproved, is of no significance. It is well settled law that judgment of Hon'ble jurisdictional High Court will prevail over the decision of Tribunal, Special Bench. - Shanbhag Restaurant vs. Dy. CIT (2004) 186 CTR (Kar) 318 : (2004) 134 Taxman 495 (Kar). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by limitation and is patently invalid in view of the aforesaid judgments of jurisdictional Bench of Tribunal, Hon'ble High Court and Hon'ble Supreme Court and also Hon'ble Delhi High Court referred to in paras 1 to 3 above. Without prejudice to the aforesaid submissions, the learned Authorised Representative further submitted that the penalty proceedings were initiated by the AO on the basis of alleged unexplained cash credits, added as income under s. 68 in the block assessment order. The initiation and levy of penalty under s. 271D in respect of cash credits, the genuineness of which was doubted by the AO by making addition under s. 68, is patently invalid and illegal. He further invited our attention to the following judgments. - Diwan Enterprises vs. CIT (2001) 167 CTR (Del) 324 : (2000) 246 ITR 571 (Del) "The AO cannot be permitted to treat the amount of loan as income for the purpose of assessing tax thereon while framing the assessment and at the same time to treat it as a loan for the purpose of s. 269SS r/w s. 271D and subject the transaction to penalty. Such proceedings would be self-contradictory". - CIT vs. Standard Brands Ltd. (2006) 204 CTR (Del) 48 : (2006) 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing Printing Mills (2003) 264 ITR 505 (Raj) "The Tribunal was held justified in directing the Dy. CIT to recalculate the penalty under s. 271D only on the amount accepted during the year and that too on the amount which exceeds Rs. 20,000 in contravention of the unambiguous provisions of s. 271D(1) and s. 269SS of the Act of 1961." - Asstt. Director of Inspection (Inv.) vs. Kum. A.B. Shanthi (2002) 174 CTR (SC) 513 : (2002) 255 ITR 258 (SC) at 266. "Sec. 269SS is neither violative of Art. 14 of the Constitution, nor it was enacted without legislative competence. Sec. 276DD was subsequently omitted and a new s. 271D was enacted. The penalty of imprisonment was deleted in the new section. The new s. 271D provides only for fine equal to the amount of loan or deposit taken or accepted. In the view of the matter. the Court does not think that s, 269SS or 271D or the earlier s. 276DD is unconstitutional on the ground that it was draconian or expropriatory in nature". - ITO vs. Maheshwari Nirman Udyog (2004) 86 TTJ (Jd) 410 "Tax auditor, in the tax audit report, had not reported any contravention of provisions of law. Therefore, we agree with the CIT(A) that the assessee cann ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isdiction which was complete only when the order of reference was received by the Addl. CIT, Bikaner. A reference to this principle is found laid in judgment rendered by the Bench of Kerala High Court in the case of CIT vs. Late S.M. Syed Mohamed (1995) 128 CTR (Ker)(FB) 172 : (1995) 216 ITR 331(Ker)(FB). In that view of the matter and penalty having not been initiated during the course of assessment proceedings, it is only the second limb of s. 275(1)(c) of the Act, which will govern limitation for imposition of penalty. Even the jurisdictional High Court in the case of CIT vs. Hissaria Bros. has held that completion of assessment proceedings had no relevance and limitation under s. 275(1)(c) of the Act applies. Quashing of assessment order, therefore, was of no consequence. The learned CIT(A), therefore, committed no error when he holds that counting of limitation period will run from the date when the show-cause notice was issued on 17th Aug., 2000. 12. As regards assessee's plea that penalty proceedings could not be initiated without there being any other pending proceedings during the course of which action for imposition of penalty has to be initiated does not go to oust th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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