TMI Blog2012 (2) TMI 650X X X X Extracts X X X X X X X X Extracts X X X X ..... ove ground of appeals, it is submitted that no penalty is otherwise levy able since the amount has already been surrender as income and tax already paid on the same and the CIT(A) has failed to consider that aspect. 5. That the appellant craves leave to add or amend any ground of appeal before the appeal is finally heard or disposed off. 3. The issue raised in the present appeals is against the levy of penalty u/s 271-D and 271-E of the Income-tax Act, 1961. Both the appeals of the assessee were heard together and are being disposed off by this consolidated order for the sake of convenience. 4. Brief facts of the case are that survey u/s 133A of the Act was conducted at the business premises of the assessee on 10.12.2007. During the course of survey, copies of certain documents were impounded and original documents were returned to the assessee. Page 228 of the aforesaid documents revealed that the assessee had received payment of ₹ 2.00 lakhs on 3.1.2005 from Shri Babu Singh. The said amount of ₹ 2.00 lakhs was repaid in cash of ₹ 75,000/- on 24.1.2005, ₹ 25,000/- on 3.2.2005, ₹ 50,000/- on 3.3.2005, ₹ 5,000/- on 9.3.2005 and S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd plea of the ld. AR for the assessee was that the transaction in question was genuine as the loan was taken and was repaid in cash and the said loan was for agricultural purposes. The ld. AR for the assessee further stressed that because of reasonable cause, no penalty u/s 271 D and 271-E could be levied, in view of the ratio laid by the Hon'ble Gauhati High Court in the case of CIT v. Bhagwati Prasad Bajoria (HUF), 263 ITR 487 (Gau). 7. The ld. DR for the revenue pointed out that the ratio laid down by Hon'ble Punjab Haryana High Court is not applicable as the facts were distinguishable. It was pointed out by the ld. DR for the revenue that during the course of survey, certain documents were found which necessitated the levy of penalty u/s 271-D and 271-E of the Act. Our attention was drawn to the language of said section in which it was pointed out that where in the course of any proceedings and the proceedings in the present case are the assessment proceedings relating to Assessment Year 2007-08. Further it was pointed out by the ld. DR for the revenue that the explanation of the assessee in respect of purpose of cash loan taken is varying. 8. The ld. AR for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit exceeding ₹ 20000/- otherwise than by crossed cheque or demand draft. Penalty u/s 271D of the Act is leviable equal to the amount of such cash loan accepted. 12. Further penalty u/s 271E of the Act is leviable for violation of provisions of section 269T of the Act, which inter alia provide that no loan or deposit shall be repaid, except by way of crossed cheque or demand draft, where such loan or deposit exceeds ₹ 20000/-. Penalty u/s 271E of the Act is leviable equivalent to the amount of cash loan or deposit repaid. 13. The issue arising in the present appeals is whether where no proceedings were initiated or pending in respect of the captioned assessment year i.e. assessment year 2005-06, penalty proceedings u/s 271D or 271E of the Act could be initiated, while completing the assessment proceedings relating to assessment year 2007-08. Admittedly the documents evidencing the loan transaction were found during the course of survey proceedings on the business premises of the assessee on 10/01/2007. The assessee had offered additional income of ₹ 30 lacs, which was included in his return of income. During the course of assessment proceedings relating t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alty. Imposition of penalty in the given set of circumstances is not mandatory but discretionary and in order to exercise its power on levy of penalty under the respective section/s, primary conditions is that the proceedings in respect of the said assessee for the captioned assessment year should be pending before the Assessing Officer to come to the conclusion that the given set of facts and circumstances merits the initiation of penalty proceedings in the case. In the facts of the present case before us, no proceedings were initiated for the financial year 2004-05 i.e. assessment year 2005-06, which is the year to which the aforesaid transaction of accepting and payment of the cash loan relates. The show cause notice was issued to the assessee by the Assessing Officer, however, in the proceedings relating to assessment year 2007-08 and even penalty proceedings were in initiated under sections 271D and 271E of the Act while completing assessment order relating to assessment year 2007-08. We find no merit in the said initiation of penalty proceedings under sections 271D and 271E of the Act relating to assessment year 2005-06, while completing assessment proceedings relating to ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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