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2016 (8) TMI 810 - ITAT HYDERABAD

2016 (8) TMI 810 - ITAT HYDERABAD - TMI - Penalty levied U/s 271D - Held that:- The revenue has accepted the explanation of cash deposit in the bank account , in the quantum proceedings , therefore no penalty proceeding were initiated in the quantum proceedings. Since the revenue has accepted the explanation of cash in the assessment proceedings, therefore, the same set of facts and documents cannot be made basis for imposition of penalty. The assessee, has submitted the reasons for accepting th .....

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e is not permitted to take contrary stand. The judgment in the case of Dimple Yadav [2015 (8) TMI 992 - ALLAHABAD HIGH COURT] was sought to be distinguished by the ld DR on the premise that the money after accepting from the creditor was not routed through the banking channel for the payment to the seller. In our view, this argument is not available to the revenue as the revenue has neither challenged the registration of the sale deed in favour of the assessee nor has challenged the cash conside .....

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-2016 - Shri B. Ramakotaiah, Accountant Member And Shri Laliet Kumar, Judicial Member For Assessee: Shri K.C. Devdas (AR) For Revenue: Shri A. Sitarama Rao (D.R.) ORDER Per Laliet Kumar, J. M. This is the appeal filed by the assessee arises against the order dated 29/09/2015 passed by the ld. CIT(A)-5, Hyderabad for the A.Y. 2007-08, whereby the order passed by the ld CIT(A) U/s 271D of the Income Tax Act, 1961 (in short the Act) was confirmed to the extent of imposition of penalty of ₹ 22 .....

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f the Hon ble CIT(A) is liable to be cancelled. 3. The Hon ble CIT(A) ought to have observed that the Addl. CIT without considering the relevant facts properly proceeded to levy penalty of ₹ 22,20,000/- and therefore ought to have deleted the penalty. 4. The Hon ble CIT(A) ought to have observed that the Assessing Officer without discussing any facts as to how he was not satisfied with the explanation of the assessee or without passing any speaking order proceeded to levy the penalty and t .....

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84,000/-. The case of the assessee was selected for scrutiny. During the course of scrutiny assessment, the assessee furnished confirmation letter from various cash creditors. Details of which, is as under:- Name of the party Amount (Rs) a. Smt. P. Puma Devi 4,50,000 b. Sri M.Ramachandra Reddy 2,50,000 c. Sri P.Venu Gopal Rao 6,00,000 d. Dr. D.Peera Reddy 1,70,000 e. Mr. R.Upender Rao 3,00,000 f. Mr. M.Jagadeeswara Rao 4,50,000 22,20,000 After the scrutiny, the ld A.O. finalized the assessment U .....

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he ld CIT(A) and the ld CIT(A) vide impugned order dated 29/09/2015 has upheld the order passed by the ld A.O. 4. Now the assessee is in appeal before us. The assessee has raised various grounds mentioned hereinabove and we shall be deciding the appeals ground wise. 4.1 Ground No. 2:- The ld AR of the assessee has submitted before us that the initiation of penalty proceedings by the Additional Commissioner after issuing the notice on 24/10/2012 was clearly barred by limitation as the proceedings .....

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mitation has not been provided under the Act for initiation of penalty but it should be reasonable and in any case, it cannot be beyond the period of four years. 5. On the other hand the ld. DR has drawn our attention to the order passed by the ld CIT(A) wherein the ld CIT(A) has elaborately dealt with the contention of the ld AR and thereafter has come to the conclusion that in the light of Special Bench judgment in the case of Diwan Chand Amritlal (2005) 98 TTJ 0947 has held that as the statut .....

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actions through the bank as required under ss. 269SS and 269T are not related to the assessment proceedings but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under ss. 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty ... (emphasis supplied). 5.5 Thus initiation of penalty proceedings for default under ss 269SS and 2 .....

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) 98 TTJ 0947 (SB): (2006) 98 ITD 0200 (SB) has considered the issue and held that: - "26. In the light of the above discussion, it appears that the legislature has not considered it necessary to provide for limitation for initiation of penalty proceedings under ss. 271D and 271E. It becomes more probable when we consider the intention of the legislature behind incorporation of provisions of ss. 269SS and 269T. We have referred to the legislative intent behind incorporation of ss. 269SS., 2 .....

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der s. 271D or 271E arises. If one were to compute the limitation with reference to the assessment proceedings, then in no case, penalty under ss. 271D and 271E could be initiated in the cases where the information is gathered in the course of search. That would defeat the very purpose of legislating the provisions of ss. 2710 and 271E. Looking from the background which gave rise to incorporation of ss. 269SS, 269T, 27lD and 27lE, we are of the considered view that the legislature has consciousl .....

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Nath Khanna & Ant. vs. CIT & Anr'. (2004) 187 CTR (SC) 97 : (2004) 266 ITR 1 (SC) at p. 9. their Lordships of the Supreme Court held. "It is a well settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the legislation mus .....

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reference to the context and other clauses thereof. In the present case, considering the context in which the provisions of ss. 269SS and 269T and consequentially incorporation of Ss. 271D and 271 E, we are of the considered view that non-prescribing the limit for initiation of penalty proceedings is conscious and there is neither any necessity nor are we empowered to prescribe any limitation for initiation of penalty proceedings under ss. 271D and 271E in interpreting the provisions.- 28. In t .....

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of show-cause notice by the competent authority, which in the present case, is the Dy. CIT (now Jt. CIT). Since the respective orders under s. 27lD have been passed within a period of six months from the date of initiation by the competent authority, the penalty orders passed in the cases of the appellants herein are not barred by limitation. 5.7 Further, in ITA No. 1836/Mum/2009 Assessment Year: 2003-04) Shri Parag A. Doshi, Hon ble ITAT held: "In view of the conflicting decisions of vari .....

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. So the Tribunal held that limitation would start from the date the authority competent to impose penalty issues the notice. It was argued before the Tribunal that this view would lead to uncertainty and ambiguity which is against the legislative intention. The Tribunal observed that the Legislature has consciously not prescribed any limitation for initiating penalty proceedings under Section 271 D and E. The Tribunal further observed that even assuming for argument sake that there has been an .....

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only by the Joint Commissioner and the limitation for levy of penalty, starts only after he has initiated the penalty proceedings. The upshot of the above analysis is that the initiation of proceedings for levy of penalty under section 271D can be made only by Joint Commissioner and the limitation for levy of penalty has to be reckoned as provided in section 275(1)(c) of the Act from the date of initiation by the joint Commissioner. As to your specific question "What is the time limit to i .....

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ns of both the parties, perused the material available on the record and the judgments cited by the LD CIT(A) more particularly the Special Bench decision in the case of Diwan Chand Amritlal (supra) is clearly applicable to the facts and circumstances of the present case and therefore no further deliberation on this issue is required and accordingly we decide the issue against the assessee by respectfully following the binding precedent of the Special Bench decision in the case of Diwan Chand Am .....

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rom the conjoint reading of Section 269 of the Act, it is clear that the A.O. is duty bound to record the satisfaction before initiation of the penalty U/s 271D of the Act and in the present case, no satisfaction was recorded by the ld A.O. in the assessment order dated 24/12/2009. It was further contended that as per Section 275( I )(c) of the Act, though the period of initiation of the penalty has not been given but period of initiation of penalty cannot be more than the period of initiation o .....

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the assessee during the penalty proceedings before the officer has given a reasonable cause in terms of Section 273B of the Act for accepting the cash other than the banking channels in contravention of Section 269SS of the Act. It was contended that once the reason given by the assessee has been accepted during the assessment proceedings by the ld A.O. the assessee cannot be asked to explain the same in the penalty proceedings. It was contended that the explanation given by the assessee during .....

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dav in ITA No. 174 of 2015 order dated 21/08/2015 and it was submitted that the facts in the said case were similar to the facts in the present case and despite that the Hon ble Allahabad High Court has restricted the explanation given by the assessee and have deleted the penalty order issued U/s 271D of the Act. The ld AR also relied on the various other judgments including the judgment of the Hon ble Hyderabad Bench in the case of The Citizen Co-operative Society Limited, Hyderabad Vs Addl.CIT .....

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are reasonable cause or the said failure clearly indicates these provisions give a discretion to the authority to impose the penalty or not to impose the penalty. Such a discretion has to be exercised in a just and fair manner having regard to the entire facts and materials existing on record. Ordinarily, a plea as to be ignorance of law cannot support the breach of a statutory provision but the fact of such an technical break due to ignorance of the relevant provisions of law or on account of b .....

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of the ld CIT(A) to show that the assessee during the course of penalty proceedings have failed to justify the introduction of cash in his account and has further failed to prove the business exigency or dire need of cash for the purposes of same transaction of the property. 9. We have heard the rival contentions of both the parties and perused the material available on the record. The argument of the ld AR for initiation of penalty within the reasonable time and in any case not beyond for the .....

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