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TMI Blog2023 (5) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... sing the impugned order in a haste without affording adequate and reasonable opportunity of being heard. The impugned order having been framed in gross breach of natural justice, hence the same kindly be quashed or alternatively be restored to the file of the ld. CIT (A). 4. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing. 2. The brief facts of the case are that the assessee filed his return declaring income of Rs.3,12,060/- and agriculture income of Rs. 75,200/- on 29.10.2015 through E-filing which was processed u/s 143(1) at the returned income. The case of the assessee was selected for limited scrutiny through CASS and hence notice u/s 143(2) and 142 were issued on different dates. In response Sh. Ravi Kumar Jain and Sh. Mukesh Kumar Jain, Advocates & A/R attended and furnished details as required from time to time. Various aspects of the case were discussed with them. During the relevant period the assessee was engaged in trading of Tudi i.e. wastage of Sarson plant which is used as a fuel by the bio-bricks manufacturing units. The assessee had shown sales of Tudi amounting to Rs. 12,5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 (SC) prayed admission of the same : Additional Ground : "That the impugned penalty order dated 28.05.2019 passed by the ld. JCIT Range-7 Jaipur is clearly barred by limitation u/s 275(1)(c) of the Act and therefore the same deserves to be quashed." 4. After hearing both the parties, I am convinced that this is purely a legal ground objecting to the imposition of the penalty as barred by limitation. Since the facts relating to this ground are available on the record, requiring no fresh investigation of facts hence, relying upon the judgment of Hon'ble Supreme Court in the case of National Thermal Power Corporation Ltd. 229 ITR 383 (SC), the additional ground is hereby admitted. 5. Before me, the ld. A/R of the assessee submitted his submissions as under :- "At the outset, it is submitted that based on the undisputed facts available on record, imposition of penalty vide the impugned order u/s 271D passed by the ld. JCIT, Jaipur on 28.05.2019, is clearly barred by the limitation in as much as, the law u/s 275(1)(c) reads as under: 275. (1) No order imposing a penalty under this Chapter shall be passed x---------------x-----------------------x-------------------x--------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ". 1.2.2.CIT Vs. Hissaria Brothers [2016] 386 ITR 719 (SC)(DPB 5-6): "Penalty under ss. 271D and 271E-Limitation under s. 275- Computation-Penalty orders under ss. 271D and 271E passed beyond six months from the end of the month in which the assessments were completed were barred by limitation- CIT vs. Hissaria Bros. (2007) 211 CTR (Raj) 156 affirmed." 1.3 Application over the Facts of Present case: No penalty u/s 271D could be imposed after the expiry of limitation prescribed being the later of (a) expiry of the related financial year or (b) within a period of 6 months from the end of the month in which action for imposition of penalty was taken by the Assessing Officer. The ld. JCIT in the impugned penalty order has observed that the assessment (part of appeal set) for AY 2015-16 was completed by the ACIT, Tonk u/s 147/143(3) of the Act on 28.12.2017 (wrongly typed as 27.12.2017) stating as under: "The AO observed that the assessee had received cash payment of Rs.47,50,000/- from various persons as per details given, which are in contravention of S.269SS of the IT Act." This is followed by the details of 8 persons from whom total Rs.47,50,000 was received in cash. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of being heard. The impugned order having been framed in gross breach of natural justice, kindly be quashed or alternatively be restored to the file of the ld. CIT(A), as would appear from the following date chart: Chart Showing Different notices and compliances: S.No. Date of Issue of Notice Last Date As per CIT (A) notice served upon/on Compliance Made by assessee Remarks 1. 23.01.2021 29.01.2021 Income Tax Portal Adjournment Sought Compliance duly made 2. 13.10.2021 20.10.2021 Income Tax Portal No Compliance made 3. 30.07.2022 12.08.2022 Income Tax Portal No Compliance made A bare perusal of the above chart shows that the so-called many opportunities granted by the CIT(A) to the appellant, is illusionary and shall reveal an interesting fact that the first notice was given in January 2021 which was duly complied with. However, there was a long silence and after a long gap of almost 10 months the ld. CIT(A) woke up and issued a notice on 13.10.2021 giving a week's time only. Again thereafter there was complete silence for around 10 months before issuing another notice on 30.07.2022 providing a short period of 11 days only. Immediately the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT(A). 3.2 CIT(A) did not act as per Law: The CIT(A) has not decided the appeal on merits which is contradictory to the mandate of Section 250(6). The same is reproduced here under for your ready reference: "(6) The order of the Commissioner (Appeals) disposing of the appeal shall be in writing and shall state the points for determination, the decision thereon and the reason for the decision." A bare perusal of above provision makes it clear that the CIT(A) is bound to dispose of the appeal before him on merits. Merely because the assessee didn't turn up, he cannot dismiss the appeal in Limine. The law contained u/s 250(6) & 251 do not at all contemplates the CIT(A) passing an appellate order in this manner. There are judicial guidelines to support this contention. 3.3 Supporting Case Laws: 3.3.1 Corporate International Financial Services V ITO ITA No. 2147/Del/2017 held as: "Further, it is well-settled that powers of Ld. CIT(A) are coterminus with powers of the Assessing Officer. Useful reference may be made to order of Apex Court decision in CIT vs. Kanpur Coal Syndicate 53 ITR 225 (SC) in which it was held that the first appellate authority, the Ld. CIT(A) in the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd further, that CIT(A) is obliged to dispose of the appeal on merits. X XX In view of the foregoing, we hold that the Ld. CIT(A) erred in dismissing the appeal of the Assessee in limine for non prosecution of appeal by assessee. We set aside the impugned order of the Ld. CIT(A) and we direct the Ld. CIT(A) to pass denovo order as per law, in accordance with Sections 250 and 251 of I.T. Act." 3.3.2 CIT vs. PremkumarArjundasLuthra (HUF) [2016] 240 taxman 133 it was held that: "8............It is very clear once an appeal is preferred before the CIT(A), then in disposing of the appeal, he is obliged to make such further inquiry that he thinks fit or direct the Assessing Officer to make further inquiry and report the result of the same to him as found in Section 250(4) of the Act. Further Section 250(6) of the Act obliges the CIT(A) to dispose of an appeal in writing after stating the points for determination and then render a decision on each of the points which arise for consideration with reasons in support. Section 251(l)(a) and (b) of the Act provide that while disposing of appeal the CIT(A) would have the power to confirm, reduce, enhance or annul an assessment and/or pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the assessee, the ld. CIT(A) is at liberty to pass order after considering the material placed on record." Thus, not only in the ground of the inadequate opportunity but also on the ground of limitation, the impugned penalty order deserves to be quashed or alternatively the order of the CIT(A) be set aside and appeal may kindly be restored to the CIT(A)." In addition to the above submissions made by the assessee, the ld. A/R further submitted as under :- 1. Additional Ground: Impugned Penalty Barred by Limitation: In addition, and continuation to our earlier Written Submission dt. 04.01.2023 available on records, it is further submitted/ clarified as to why the provisions of S. 275(1)(a) are not applicable in the present case. In this connection we draw your kind attention towards pg no. 4&5 para 1.4 wherein this aspect has already been dealt with. The same is being reproduced here under: - "Further it may be clarified that the provisions contained u/s 275(1)(c) have got no relevance and are not applicable on the facts of this case because the completion of the appellate proceedings whether arising from assessment or any other proceedings during which penalty proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee's assessment order in the instant case is dated 5th Dec., 2011, 6 months from the end of the month in which the action of levy of penalty was initiated as per the provisions of cl. (c) of s. 275(i) expired on 30th June, 2012, and the extended limitation under Explanation to s. 275 r/w s. 129 expired on 30th July, 2012-Therefore, the penalty order passed by the Addl. CIT on 28th Sept., 2012 is barred by limitation." 1.3 The decision by DR- not applicable: What has been held in the case of Dewan Chand Amrit Lal vs DCIT (2005) 98 TTJ (Chd)(SB) 947taking a contrary view doesn't hold water in view of binding decision of Hon'ble Judiciary High Court in Jitendra Singh (supra). Therefore, the same has to be ignored. 2. GOA-2: A)On Merits Impugned penalty without jurisdiction as the disputed amount is not in the nature of loan or deposit: Facts: Kindly refer the impugned order Submission: 1. The facts are not disputed that the assessee was running an AOP for obtaining liquor license and for that purpose assessee along with 10-12 other members have constituted a group and filed the application for tender. He obtained cash deposits from these members to issue DD for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r of the excise department for participating in the tender of liquor shops was accepted by the assessing officer then it will not fall in the ambit of loan or deposit as contemplated in the provisions of section 269SS and 269T of the act and in absence of any fresh material or contrary record to show that the amount was taken as a loan by the assessee for the assessee's requirement, the penalty levied u/s 271D or section 271E are not justified." 2.2 Commissioner of Income-tax v. Panchsheel Owners Associations [2015] 55 taxmann.com 202 (Guj)(DPB20-22) wherein the court said, "it cannot be held that capital contribution by a member of an AOP in the account of AOP can be treated as a deposit or loan in its true sense." 2.3 Shrepak Enterprises V. Dy. CIT 60 TTJ (Ahd) 199 (DPB 23- 28) also held that "amount paid by firm to partners and vice-versa is payment to self and does not partake the character of loan or deposit in general law. Therefore, provision of section 269SS are not applicable to such facts. In this case there is deposit from a member of AOP in the account of AOP, therefore, this case is squarely covered by the decision of I.T.A.T. Ahmedabad. Following the decision of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Notice served hence Compliance not possible It is further submitted thus, on two occasions compliance was made however, for last occasion no notice was received by Shri Mukesh Jain advocate as evident from screen shots of his Gmail from 28.07.2022 to 01.08.2022 (copy enclosed). Hence, the impugned penalty may be quashed in toto or alternatively be restored to the CIT(A)." 6. On the other hand, the ld. D/R supported the orders of the revenue authorities. The ld. D/R relied on the decision of Chandigarh Bench of the Tribunal in the case of Dewan Chand Amrit Lal vs. DCIT (2006)(AT) 2003 Chandigarh (SB) wherein the Bench observed as under :- " 27. In the final analysis, we hold that the authority competent to impose penalty under sections 271D and 271E is vested with the Dy. CIT (now Joint CIT) and the Assessing Officer does not have the power either to initiate the penalty proceedings or impose the same. There is no procedure for reference by the Assessing Officer to the competent authority for imposition of penalty under section 271D or 271E. Therefore, the limitation for completion of penalty proceedings as provided under section 275(1)(c) has got to be computed from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e month in which such order of revision is passed; (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later......xxx" At the very beginning it is observed that the provisions contained u/s 275(1)(a)are not applicable on the facts of present case for the reason that undisputedly no appeal has been filed against the assessment order passed on 28.12.2017. Therefore, it cannot be said that the relevant assessment or other order was subjected to some appellate proceeding. Consequently, the extended period of limitation of 6 months from the availability of the appellate order, will not be available to the revenue. But otherwise also, the computation of the income has no bearing over the imposition or otherwise of the penalty provided u/s 271D and 271E of the Act. This has been so held by the Hon'ble Jurisdictional High Court in the case of CIT Vs. Hissaria Brothers(2007) 211 CTR (Raj) 156/ [2008] 169 Taxman 262 (Rajasthan) wherein i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d after the expiry of the larger period of limitation. In this case, we find that the ld. JCIT in the impugned penalty order has clearly observed that the assessment for A.Y 2015-16 was completed by the AO (ACIT Tonk) vide assessment order dated 28.12.2017 u/s 147/143(3) of the Act. The ld. JCIT also referred to the observation made by the AO that the assessee had received cash payment of Rs.47,50,000/- from various persons as per details given, which are in contravention of Sec.269SS of the IT Act. Thus, the relevant proceedings were the assessment proceedings during the course of which, the default of accepting cash over the prescribed limit was noted by the AO and since the assessment proceedings were completed on 28.12.2017, the related financial year ended on 31.03.2018. Accordingly, the first time limit thus expired on 31.03.2018. For the second time limit, an action for imposition of penalty was taken on 28.12.2017 by the AO, when the assessment was completed and six months from end of that month expired on 30.06.2018 which time limit clearly expires later. Hence, the penalty u/s 271D could have been validly imposed only on before 30.06.2018 as against which, in this case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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