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2016 (4) TMI 303 - ITAT AHMEDABAD

2016 (4) TMI 303 - ITAT AHMEDABAD - TMI - Penalty order u/s 271D - Held that:- The case of the assessee squarely falls under the provisions of section 269SS of the Act and a clear contravention has been made by the assessee of the provisions of section 269SS of the Act as the assessee has accepted loan and was deposited which exceeded ₹ 20,000/- i.e. ₹ 76,000/- otherwise by account payee cheque or draft or by electronic transfer through bank account during the year. It is pertinent t .....

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re of the view that penalty u/s 271D has been rightly imposed and confirmed by ld. CIT(A). - Decided against assessee - ITA No.316/Ahd/2013 - Dated:- 2-3-2016 - Shri Rajpal Yadav, JM, & Manish Borad, AM. For The Appellant by Shri M. K. Patel, AR For The Respondent by Shri Vilas V. Shinde, DR ORDER PER Manish Borad, Accountant Member. This appeal of the assessee is directed against the order of ld. CIT(A)-IV, Surat dated 7.11.2012. Penalty order u/s 271D of the IT Act, 1961 (in short the Act) .....

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sing the penalty order ought to have been signed by the Addl. CIT Range -3 Surat. [3] On the facts and in the circumstances of the case as well as law on the subject, the A.O. ought to have considered that the loan transaction in cash is with sister concerns (family members) only. [4] On the facts and circumstances of the case, the Learned CIT(A)-IV, Surat erred in confirming the penalty without appreciating the facts of the case as well as without considering the judgment of the Hon'ble Hig .....

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ly stated facts are that the assessee is an individual and he has filed his return of income for Asst. Year 2008-09 on 5.1.2009 declaring total income at ₹ 1,24,460/-. The case was selected for scrutiny assessment through CASS and notice u/s 143(2) of the Act was issued on 28.8.2009. During the assessment proceedings it was observed by the Assessing Officer from the details submitted by the assessee that cash loan of ₹ 19,000/- each on 11.4.2007, 26.4.2007, 14.5.2007 and 25.5.2007 we .....

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d u/s 271D of the Act by observing as under :- 4. I have gone through the penalty order and the submissions of the appellant. It is seen that the penalty proceedings u/s. 271D was initiated by the Addl. CIT, Range-3 on 26.04.2011. The penalty order u/s. 271D of the Act was passed on 25.08.2011. The •-appellant's contention that penalty u/s. 271D was initiated on 30.11.2010 and the order was passed on 25.08.2011 and thus the penalty order was barred by limitation is incorrect. The IT AT, .....

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Addl. CIT, Range-3 on 25.08.2011 was passed well within time as per the provisions of section 275(l)(c) of the IT Act and is in order. The penalty order u/s 271 D has been signed by the Addl CIT, Range -3 Surat while the demand notice and challan have been rightly signed by the ITO Ward 3(1), Surat as the jurisdiction over the appellant vests with the latter. Accordingly the first two grounds of appeal are dismissed. 4.2 As regards the third ground of appeal pertaining to loan accepted from M/s .....

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6 DTR (Guj.) 169. 4.3 I have gone through the penalty order, submissions of the appellant and the judicial decisions relied upon by the appellant. The fact of the case cited by the appellant is very different from the facts of his own case. In the case cited by the appellant there were business as well as gift transactions between the appellant and his sister concerns and there was a reasonable ground for carrying out the transaction in cash. However, in the case of the appellant there are loan .....

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,000/-. 4.4 Sec.269SS of the IT Act clearly stipulates that no person shall take or accept any loan or deposit otherwise than by an a/c payee cheque or a/c payee bank draft. In the provisos to Sec. 269SS the exhaustive list of exceptions or the list of persons with whom transactions in cash above the specified amount does not attract penalty under the Act is clearly specified. As the loan or deposit transactions in cash aggregating to more than ₹ 20,000/- in the FY between sister concerns .....

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sed. 4. Aggrieved, assessee is now in appeal before the Tribunal. 5. In the first fold of his contentions Ld. AR submitted that the assessee is engaged in the business of manufacturing of Grey Dupattas under the name and style of M/s Jay Ambe Textiles and the cash loan was taken from sister concern M/s Jay Mahalaxmi Textiles whose proprietor is assessee s brother. This transaction was required to be made as one of the purchase party of the assessee i.e. Doriwala Dyed Yarns insisted for the cash .....

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tiny assessment in both the cases and accepted the returned income filed by them. 6. As regards second fold of contentions of ld. AR, he submitted that the then learned A.O. vide para 4 of his assessment order dated 30-11-2010 initiated the penalty proceedings u/s.27lD of the I.T.Act by issuing separate penalty notice u/s.274 r.w.s. 271 of the Act dated 30-11-2010 vide penalty Reg.No.5/83/10-11. The copy of assessment order along with penalty notice issued by the learned A.O. is submitted along .....

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end of the month in which action for imposition of penalty is initiated whichever period expires later. In this case, the original assessment order was framed by the then A.O. on 30-11-2010 for the A.Y.2008-09 wherein he also initiated the penalty proceedings u/s.271D by issuing separate notice u/s.274 r.w.s. 271 of the Act dated 30-11-2010. On going through the relevant provisions of section 275(1) (c) of the Act/ it reveals the penalty order ought to have been passed by the Addl.CIT within the .....

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n. or before 31-05-2011 is bad-in-law and without jurisdiction and requires to be quashed. The assessee relies on the direct judgment of the Hon'ble High Court of Mumbai in the case of CIT v/s. Chhajer Packaging & Plastic (P) Ltd reported in (2008) 214 CTR (Bom) 389. The copy of judgment (Gist) is submitted for your kind perusal. 7. On the other hand, ld. DR supported the orders of lower authorities. 8. We have heard the rival contentions and perused the material on record. The issue in .....

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s purposes and (ii) penalty order has been passed after the expiry of statutory time limit mentioned in section 275C. 9. First we will decide the issue on the first contention of the assessee. During assessment proceedings it was observed that cash loan of ₹ 76,000/- was received from M/s Jay Mahalaxmi Textile in four instalment ₹ 19,000/- each on 11.4.2007, 26.4.2007, 14.5.2007 and 25.5.2007. The assessee has himself accepted that this cash loan was taken to repay the sundry debtors .....

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tion referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft 7a[or use of electronic clearing system through a bank account] if,- (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amou .....

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hed by a Central, State or Provincial Act ; (d) any Government company9 as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify10 in this behalf in the Official Gazette : 11[Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit .....

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ssigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; (iii) "loan or deposit" means loan or deposit of money.] [Penalty for failure to comply with the provisions of section 269SS. 271D. [(1)] If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.] [(2) Any penalty imposable under sub-section (1) shall be .....

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transfer through bank account during the year. It is pertinent to note that assessee is based at Surat and the sister concern from whom loan was taken is also based in Surat and there was no reason for taking loan in cash and as the assessee has made contravention of section 269SS of the Act then penalty proceedings u/s 271D has been rightly imposed because there was no reasonable cause put forward by the assessee before the lower authorities and before us which could have proved that there was .....

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ct let us first go through the provisions of section 275(1)(c) which reads as under :- Sec.275(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. 13. Going through the facts .....

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