TMI Blog2016 (5) TMI 416X X X X Extracts X X X X X X X X Extracts X X X X ..... AM : This is an appeal filed by the assessee against the order of CIT(A) dt. 28.2.2014 for A.Y 2009-10, in the matter of imposition of penalty u/s 271E of the Income Tax Act, 1961. The assessee has taken following grounds in the appeal : 1. BECAUSE, ld. CIT(A) has erred in law in upholding the order of the AO and ignoring the fact that the said order is barred by limitation. 2. BECAUSE, ld. CIT(A) has erred in law in upholding the order of the AO and ignoring the fact that the said order is invalid since no valid notice was issued u/s. 274 r.w.s. 269T of the Act for initiating penalty proceedings. 3. BECAUSE, ld. CIT(A) has erred in law in ignoring the fact that the order passed by the AO is invalid since there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- received from Sadhwanis, the amount of ₹ 41,00,000/- was appropriated towards the MoU. Later, the Sadhwanis ran into financial difficulty and were forced to cancel the MoU for extra amenities and facilities and simply buy the shell structure. Thus they entered into a Deed of Compromise on 30.8.2010 cancelling the earlier MoU dt. 11.12.2008 for extra amenities. The Sadhwanis had made a further payment of ₹ 3.78 crores for the flat and as part of compromise terms, an amount of ₹ 41,00,000/- collected on account of extra amenities forming part of the initial payment of ₹ 1,49,40,000/- was refunded to Sadhwanis in the form of bearer cheques. However, in the assessment order the AO recorded reasons for initiation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase the repayment of ₹ 41,00,000/- does not fall in the category of loans or deposits as mentioned u/s 269T of the I.T. Act, hence penalty u/s 271E shall not be applicable on the said transactions amounting to ₹ 41,00,000/- (Emphasis, supplied) 3. However, the AO did not accept assessee s contention and levied penalty u/s 269T r.w.s. 271E. 4. By the impugned order, CIT(A) affirmed the action of the AO against which the assessee is in further appeal before us. 5. It was argued by the ld. AR that limitation for imposition of penalty as per Sec. 275(1)(c) is 6 months from end of month in which action for imposition of penalty initiated. The assessee invited our attention to the fact that penalty proceeding was ini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s had cancelled the amenities in the said flat, an amount of ₹ 41,00,000/- was refunded on various dates by bearer cheques. She further placed reliance on the decision of the coordinate bench in the case of M/s. Lodha Builders Pvt. Ltd. and the decision of Hon'ble Rajasthan High Court in the case of Jitendra Singh Rathore and contended that judgment in the case of M/s. Lodha Builders Pvt. Ltd. read with judgment of Rajasthan High Court in the case of Jitendra Singh Rathore effectively over ruled the judgment in the case of Dewanchand Amrit Lal which has been relied upon by the revenue. Reference was invited to the judgment of ITAT, Mumbai in the case of Ranisati Paper Mills Pvt. Ltd. which expounding on the hierarchica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice for penalty on basis of information required from AO. The JCIT passed penalty order upon receipt of information from the AO. Preliminary acts by AO constitute initiation, which is anterior in time to imposition of penalty. Therefore, the ratio of Lodha Builders case is applicable on all fours and the penalty has been initiated by the AO vide his order dt. 30.12.2011. 9. In the case of Lodha Builders Pvt. Ltd., 106 DTR 226, the coordinate Bench observed as under :- . any case where AO made a reference in the assessment order, after discussing the same with the assessee during the regular assessment proceedings or made a referral to the Addl. CIT for imposition of the penalty. In our opinion, these preliminary acts const ..... X X X X Extracts X X X X X X X X Extracts X X X X
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