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2016 (6) TMI 970 - ITAT MUMBAI

2016 (6) TMI 970 - ITAT MUMBAI - TMI - Penalty levied u/s 271D - violation of the provisions of sec. 269SS - period of limitation - Held that:- We are of the view that the intimation given by the AO cannot be considered to be initiation of penalty proceeding u/s 271D of the Act. Further, as stated earlier, the penalty proceedings can be said to have been initiated only when the notice relating to the same are issued to the assessee. Accordingly we agree with the view of the tax authorities that .....

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ot be imposable if the assessee proves that there was reasonable cause for the said failure. Thus the penalty u/s 271D of the Act shall not be levieble, if the assessee shows that there was a reasonable cause for accepting the loan or deposit by way of cash. We notice that the assessee has only contended before the tax authorities that the impugned amount was received as advance towards sale of flat. Before us, the assessee has raised some more contentions, which were not examined by the tax aut .....

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t of natural justice, we are of the view that this issue requires fresh examination. Accordingly, we set aside the order of Ld CIT(A) and restore the same to the file of the Addl. Commissioner with the direction to examine this issue afresh by considering various contentions that may be raised by the assessee. - Decided partly in favour of assessee for statistical purposes. - I.T.A. No. 2007/Mum/2011 - Dated:- 1-6-2016 - Shri B.R. Baskaran (AM) & Ramlal Negi (JM) For The Assessee : Shri D.V. .....

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dings that the assessee has received a loan of ₹ 16.00 lakhs by way of cash and the same has violated the provisions of sec. 269SS of the Act. Accordingly he intimated the same to the Addl. Commissioner of Income tax on 31.12.2008. Subsequently, the Addl. CIT initiated penalty proceedings u/s 271D of the Act by issuing notice on 11.06.2009. Another notice was also issued on 17.08.2009. The penalty order was finally passed on 21.10.2009. 3. The assessee submitted that the amount of ₹ .....

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actions between a director and closely held company should not be treated as loan or deposit covered by sec. 269SS of the Act. The assessee also contended that the proceeding is barred by limitation also. 4. The Addl. CIT held that the proceedings are not barred by limitation. The Addl. CIT noticed that the above said amount of ₹ 16.00 lakhs was shown as Unsecured loans in its Balance Sheet. Further the alleged receipt of advance towards sale of flat was in respect of a project, for which .....

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gard to the contentions urged on merits, the Ld CIT(A) held that the Addl. CIT was justified in levying the penalty u/s 269SS of the Act. Aggrieved, the assessee has filed this appeal before us. 6. The first issue relates to the limitation. The contention of the assessee is that the assessing officer has intimated the Addl CIT about the violation of provisions of sec. 269SS of the Act on 31.12.2008 and hence the limitation period should be counted from that date. In this regard, the Ld A.R place .....

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nder the Act, the assessing officer is not entitled to initiate penalty proceedings u/s 271D of the Act. Hence the AO has intimated about the violation of the provisions of sec. 269SS of the Act on 31.12.2008. It is the only Addl. Commissioner, being a competent authority, has issued notice u/s 271D of the Act for the first time on 11-06-2009. The provisions of sec. 275(1)(c) of the Act prescribe the time limit for completion of the penalty proceedings u/s 271D of the Act and the same reads as u .....

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t the time limit should be computed from the date on which action for imposition of penalty has been initiated. 8. According to the assessee, the intimation given by the AO to the Addl. CIT about the impugned violation would amount to initiation of action for imposition of penalty. We are unable to agree with the same. The authority prescribed under the Act for imposition of penalty is not the assessing officer. Further the assessing officer has only intimated about the violation to the Addl CIT .....

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itiated in the instant case only on 11.06.2009. The time limit for completion of the penalty proceedings as per sec. 275(1)(c) shall be either 31.3.2010 or 31.12.2009, whichever expires later. Accordingly, in the instant case, the time limit shall expire on 31.3.2010. In the instant case, the penalty order has been passed on 21.10.2009 and hence we are of the view that the same is not barred by limitation. In the case relied upon by the assessee, we notice that the Hon ble High Court was referri .....

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ered as deposit, the amount received from director is not treated as deposit under Companies (Acceptance of Deposits) Rules, 1975. (c) Even though the amount received from Gautam PateL (director) as advance towards sale of flats as Unsecured loans in the Balance Sheet, the books of account would show that the assessee has accounted for ₹ 16.00 lakhs separately, i.e., in the Balance sheet, both the accounts were grouped together. (d) Gautam Patel has acted in dual capacity, i.e., in his per .....

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