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2017 (6) TMI 136 - ITAT CHENNAI

2017 (6) TMI 136 - ITAT CHENNAI - TMI - Levy of penalty u/s.271D - Period of limitation - Held that:- Admittedly, the Hon’ble Rajasthan High Court decision in the case of Hissaria Bros. [2006 (7) TMI 163 - RAJASTHAN High Court] wherein the Hon’ble High Court of Rajasthan has held that once show cause notice is issued by the AO then the time limit would run from that show cause notice. This view has also be confirmed by the Apex Court in [2016 (8) TMI 1044 - SUPREME COURT ] - Penalty Order p .....

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.Sumathi Venkatraman ORDER PER GEORGE MATHAN, JUDICIAL MEMBER: ITA Nos.3132, 3133, 3134, 3135 & 3136/Mds/2016 are the appeals filed by the assessee against the Order of Commissioner of Income Tax (Appeals), Salem, in ITA No.258/2009-10 dated 24.10.2016 for the AY 1997-98, ITA No.259/2009-10 dated 24.10.2016 for the AY 1998-99, ITA No.260/2009-10 dated 24.10.2016 for the AY 1999-2000, ITA No.261/2009-10 dated 24.10.2016 for the AY 2001-02 & No.262/2009-10 dated 24.10.2016 for the AY 2002- .....

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on that the show cause notice for levy of penalty u/s.271D was issued by the Dy. Commissioner of Income Tax, Central Circle, Salem on 26.03.2006 for all the assessment years under appeal. It was a submission that consequently under the provisions of Sec.275(i)(c), the limitation for completion of the penalty proceedings was 30.09.2006. It was a submission that however on 26.07.2006 fresh show cause notice was issued by the Addl. Commissioner of Income Tax, Central Range, Coimbatore and the asses .....

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ovisions of Sec.271D penalty was imposed under sub-section 1 only by the Joint Commissioner and as per the definition clause of 2(28C), Joint Commissioner included the Addl.CIT. It was a submission that the Hon ble Rajasthan High Court in the case of Hissaria Bros. reported in 291 ITR 244 has held that if the show cause notice is issued by the AO then the period of six months is to be reckoned from such show cause notice. He placed before us the copy of the decision of the Hon ble Rajasthan High .....

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down the procedure for imposition of penalty. Sub-s. (1) of s.274 provides for affording a reasonable opportunity of hearing to the assessee before an order imposing penalty is passed. Though s. 271D vests the jurisdiction of imposing penalty solely in the Jt. CIT, it is silent as regards initiation of the proceedings. The question is, can such initiation of proceedings be made by the AO? The AO is the person, who is likely to come across the cases of concealment or violation of the provisions o .....

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y exceeds ten thousand rupees; (b) by the Asstt. CIT or Dy. CIT, where the penalty exceeds twenty thousand rupees, except with the prior approval of the Jt. CIT . 13. Prior to introduction of Tax Laws (Amendment) Act, 1975, Sub-s. (2) of s. 274 was as follows: (2) Notwithstanding anything contained in cl. (iii) of sub-s. (1) of s. 271, if in a case falling under cl. (c) of that sub-section, the minimum penalty imposable exceeds a sum of rupees one thousand, the ITO shall refer the case to the IA .....

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stion arose whether in a case involving penalty imposable exceeding a sum of ₹ 1000, the AO could initiate the proceedings by issuing a notice. That question was answered by the Supreme Court in the affirmative. Their Lordships in the case of D.M. Manasvi vs. CIT 1972 CTR (SC) 437: (1972) 86 ITR 557 (SC), held as follows: We are also not impressed by the argument advanced on behalf of the appellant that the proceedings for the imposition of penalty were initiated not by the ITO but by the .....

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an event can refer the case to the IAC after initiating the proceedings. It would, indeed, be the satisfaction of the ITO in the course of the assessment proceedings regarding the concealment of income which would constitute the basis and foundation of the proceedings for levy of penalty. 15. Applying the views expressed by the apex Court it can be said that in a case falling under s. 271D the AO is not precluded from initiating the proceedings by issuing a notice. 4. It was a submission that th .....

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