TMI Blog2024 (1) TMI 603X X X X Extracts X X X X X X X X Extracts X X X X ..... ting from the records made available. Therefore, bench feels that the ld. AO in the interest of justice bring necessary evidence as to whether the transaction are on account of sales or on account of loan recorded will decide the applicability of the provision of section 269SS of the Act. It is also not clear as to whether the provision of section 269T is initiated at the other hand or not. Thus, fasting the liability on the assessee without bringing all the relevant facts on record is not correct and therefore, we are of the considered view that let the ld. JCIT should after giving proper opportunity to the assessee to decide the issue afresh but by providing adequate opportunity of being heard. The assessee is also directed not to take unnecessary adjournment on frivolous ground and submit the documents concerning the issue in question. Thus the appeal of the assessee is allowed for statistical purposes. Validity of penalty order on limitation - On being consistent to the view so taken in Seetharama Lakshmi Rice Groundnut Oil Mill Contractors [ 1977 (3) TMI 20 - ANDHRA PRADESH HIGH COURT] we are of the considered view that looking to the present set of facts and circum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mal H. Jatt. This was done to avoid cash transaction charges. To support this fact, copy of bank passbook and ledger account of assessee in the books of M/s Choudhary Bhooramal H. Jatt was filed. This fact was also confirmed by M/s Choudhary Bhooramal H. Jatt vide letter dt. Nil filed in response to notice issued u/s 133(6) dt. 18.07.2017. The ld. AO noted that the submission of the assessee is not found acceptable for the reasons that as per record the assessee had accepted deposits in his bank account. The assessee has not furnished any reasonable cause for making such exercise. The ld. AO also noted that the assessee has not filed any documentary evidence showing necessity of such type of unlawful transactions. In the absence of evidence of undertaking such transaction the ld. AO noted that it is violation of provision of section 269SS of the Income Tax Act, 1961. The contention of the assessee that the same has been done on account of ignorance of law and the genuineness of the transaction is not under dispute. Considering the facts and circumstances of the case the ld. AO noted that the assessee has accepted / obtained cash loan amount of Rs. 31,78,000/- from M/s. Chaudhary Bh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sec 269SS and hence penalty u/s 271D attracts and as such the appellant shall be liable to pay by way of penalty a sum equal to the amount of specified sum accepted or taken and hence sum of Rs. 17,00,000/- is levied as penalty u/s 271D on 18.03.2019 and penalty proceedings were completed. 7.5 As per section 269 SS Any loan or deposit or specified sum taken or accepted from or taken or accepted by the following entities - The government Any banking company, post office savings bank or co-operative bank Any corporation established by a Central, State or Provincial Act Any government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013) Any institution, association or body or class of institutions, associations or bodies notified in Official Gazette. 7.6 Thus, if any person accepts any loan or deposit or specified sum from the above-mentioned entities, or the entities accept any loan or deposit or specified sum from any person, provisions of 269SS will not apply. 7.7 Penalty on contravention of Section 269SS: 100% of the loan or deposit amount will be the quantum of penalty that can be levied by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by multiple people or by a single person over an extended period of time. Also, even larger amounts are deposited in the banks with PAN numbers of individuals who are mostly illiterate and work for these entry operators for small salary or commission. 1. The transactions were in accommodation nature. The reason behind the said transactions was to avoid bank charges (Expenses) as levied by employer's banker on depositing cash in exceeding to certain limit. The employer doing business of running retail outlet of Bharat Petroleum Corporation Ltd., and cash collected from sale of petroleum products. 2. The appellant has not accepted/received/hold any loan or advances from employer. The appellant has immediately issued cheques for the same amount in favour the employer on the same date. 7.10 The appellant has done another law violation as trying to evade banking charges-which is not admissible as violation of any other law. Trying to evade bank charges is a frivolous reason as to when his employer who is giving him salary, it is beyond reason to gather as to why he should deposit in appellants account. Violation of any other law is no excuse. 1. According to above mentio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsactions in their books of account. The accommodation entry is itself an illegal act to aid tax evaders. 7.17 As observed by the Supreme Court in the case of Sumati Dayal v. CIT (1995) 80 Taxman 89/214 ITR 801 (SC), apparent must be considered as real until it is shown that there are reasons to believe that apparent is not real, and that the Taxing Officers are entitled to look into the surrounding circumstances to find out the reality. and the matter has to be considered by applying the test of human probabilities. The explanation given by the assessee does not constitute a reasonable cause as contemplated in section 273B of the Act. 7.18 If it is the case with employer, he should declare this in his return and submit evidences that this accommodation entry is not akin to any mischief to evade tax. A mere statement is not enough in absence of cogent evidences in the form of books of account of employer, his ledger account etc. A mere statement fails to justify the act and attempts to hid more than reveal the transparency. 7.19 It is not clear as to what was such exigency of business that the employee or appellant resorted to this method and his replies are not satisfa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atements were recorded during investigation, impugned additions made on basis of such investigation which was not privy to assessee were to be deleted[2022] 143 taxmann.com 371 (SC)/[2022] 289 Taxman 625 (SC)[0.... INCOME TAX SLP dismissed against High Court ruling that where director of assessee-company obtained cash in excess of Rs. 20,000 as loan from a financier and deposited same in cash in bank account of company, merely because director took cash loans from financier and deposited it in current account of assessee- company on very same day and assessee utilized it to pay salaries, rent and EMI commitments, same could not be a ground to be taken as a mitigating factor to escape from rigour of levy of penalty under section 271D. [2021] 125 taxmann.com 266 (SC)/[2021] 278 Taxman 273 (SC) INCOME TAX: SLP dismissed as withdrawn against High Court s ruling that where assessee failed to discharge its burden in proving there was a reasonable cause in accepting cash deposits from staff members in its bank account penalty order passed under section 271D was to be confirmed. [2021] 131 taxmann.com 127 (SC)/[2021] 283 Taxman 285 (SC) 8.0 In result, the appeal of the appellant i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the course of some proceedings. In such a situation, the period of limitation prescribed is up to the end and including the financial year in which such proceedings are completed. 12. The second part of s. 275(1)(c) pertains to all cases falling under clause (c). This is so because the action for imposition of penalty is contemplated in both parts. Penalty can only be imposed under Chapter XXI by following the procedure prescribed in s. 274 of the said Act which stipulates that no order imposing a penalty can be made unless the assessee has been heard or has been given a reasonable opportunity of being heard. Thus, in any eventuality, before an order imposing a penalty can be passed, the assessee has to be heard or has to be given a reasonable opportunity of being heard. This can only happen when action for imposition of penalty is initiated and the assessee is put to notice with regard to such action so that he may present his point of view in opposition to such action. The only difference between the first part and the second part is that while in the first part, the action for imposition of penalty is initiated in the course of some other proceedings, under the sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ond part of s. 275(1)(c) the end point of the period of limitation would be 30th Sept., 2007. This would be so because the action for imposition of penalty was initiated on 15th March, 2007 implying thereby that the end of the month would be on 31st March, 2007. The period of six months from such date would end on 30th Sept., 2007. Thus, in this example, we are faced with two dates on which limitation would end. But, because of the expression whichever period expires later , the period of limitation would have to be taken as 30th Sept., 2007 which is relatable to the date on which action for imposition of penalty was initiated and not to the date on which the proceedings, in the course of which such action was initiated, are completed. Example 2: Let us assume that action for imposition of penalty is initiated on 15th April, 2007 in the course of proceedings which are completed on 25th May, 2007. Under the first part of s. 275(1)(c), the period of limitation for passing an order imposing penalty would end on 31st March, 2008 being the end of the financial year in which the proceedings, in the course of which action for imposition of the penalty had been initiated, are co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould take us to 31st Jan., 2004. Thus, the penalty order could have been passed on any date up to and including 31st Jan., 2004. The penalty order came to be passed on 17th Feb., 2004, which would be hit by the bar of limitation. The ratio laid down in this decision is squarely applicable to the facts of assessee and therefore, order imposing penalty u/s 271D is barred by limitation and be quashed. This has been accepted by Hon ble ITAT, Jaipur Bench in ITA No.205/JP/2021 for AY 2010-11 order dt. 25.05.2022 in case of Late Sh. Om Prakash Choudhary who was also employed with M/s Choudhary Bhooramal H. Jatt where also penalty imposed u/s 271D was deleted by giving following findings at Para 7 7.1 of the order (PB 50-51):- 7. The Ld. DR, on the other hand strongly supporting the order of CIT(A) submitted that there is no merit in arguments taken by the LD AR of the assessee and further the LD DR submitted that the assessee has not raised this ground before the CIT(A) and but fairly and finally accepted the view of the bench that this ground is legal ground and it can be raised at any stage and LD DR raised no objection and dispute the facts relating to time bar. 7.1 W ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... generally on interest but such interest in case of loan is decided by the lender of amount and not by the recipient of the amount whereas in case of deposit it is decided by the depositee and not by the depositor. Therefore, unless a transaction is in the nature of loan or deposit, section 269SS would not be attracted. Hence amount received in trust , in fiduciary capacity , in amanat , current account transaction , etc. are neither loan nor deposit. For this purpose reliance is placed on the decision of Hon ble ITAT, Jaipur Bench in case of Sunil Kumar Vs. Addl. CIT ITA No.203 204/JP/2018 order dated 09.01.2019. The relevant finding of ITAT at Para 5 is as under:- Even otherwise the initiation of penalty proceedings U/s 271D and 271E of the Act is based on the premises that the assessee has taken this amount of Rs. 3,36,000/- from one Shri Shreeram and it was also repaid by the assessee to the said person but since the receipt and payment was in cash, therefore, it was held to be in violation of provisions of Section 269SS and 269T of the Act. It is pertinent to note that when the explanation of the assessee that the said amount was deposited by the said person in the b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd taxpayers are also able to get confirmatory letters from such persons in support of their explanation. 32.2 With a view to countering this device, which enables taxpayers to explain away unaccounted cash or unaccounted deposits, the Finance Act has inserted a new section 269SS in the Income-tax Act debarring persons from taking or accepting, after 30th June, 1984, from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if the amount of such loan or deposit or the aggregate amount of such loan and deposit is Rs. 10,000 or more. This prohibition will also apply in cases where on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), and the amount or the aggregate amount remaining unpaid is Rs. 10,000 or more. The prohibition will also apply in cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on the date on which such loan or deposit is proposed to be taken, is Rs. 10,000 or more Hon ble Supreme Court in 255 ITR 258, 263 has also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve been made either by way of cheque or by way of bank draft. However, so far as question about imposition of penalty is concerned, s. 271D of the Act deals with the same. Sec. 273B provides that if the assessee proves that there was reasonable cause for any failure, no penalty shall be imposable on the person or the assessee as provided under s. 271D of the Act. Sec. 273B of the Act provides as under: Notwithstanding anything contained in the provision of s. 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure, referred to in the said provision if he proves that there was reasonable cause for the said failure. 7. The question requires consideration is that whether the transaction in question can be said to be a genuine transaction or not. In this behalf, the first appellate authority after appreciating the evidence on record has observed in para 3 of its judgment as under: After careful consideration of the matter, I find that the appellant is a contractor doing business in a remote area of Nokha Tehsil. The appellant had to make spot payments to the labour, etc. and for that the appellant needed cash. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taken various sites at remote area at a time where no banking facilities are available and money was urgently required and there were no banks at the sites. This is considered to be a reasonable cause. 9. Accordingly, both the fact-finding authorities found that the transaction in question is a genuine transaction and the explanation given by the respondent-assessee has been accepted by the CIT(A)-I, Jodhpur, as well as by the Tribunal, Jodhpur Bench, Jodhpur. Though learned counsel Mr. K.K. Bissa submitted that the finding of fact given by the authorities below is not correct finding of fact as other view is possible. We are afraid, we cannot go into the aspect whether the finding of fact arrived at by the authorities below is proper or not. It is required to be noted that the powers of this Court are limited as to correct substantial error of law, if any. Whether a particular transaction is genuine or otherwise is a question of fact and if it has been found by the appellate authority that the assessee had shown reasonable cause for accepting the money in cash, the finding of fact given by the appellate authority, which is affirmed by the Tribunal is not required to be inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payments in cash on the specific dates, explanation offered by her was to be accepted. Therefore, impugned penalty was liable to be quashed. PCIT Vs. Akash Infra-com-Projects (P.) Ltd. (2022) 289 Taxman 300 (Orissa) (HC) Where assessee had taken loan of Rs.1.25 crores in cash from its sister concerns and offered explanation that amounts were taken in cash for making labour payments at far off places and there was an urgency to do so, explanation offered by assessee was a reasonable explanation and therefore, penalty imposed u/s 271D r.w.s. 269SS was not justified. Meera Devi Kumawat Vs. JCIT (2022) 193 ITD 250 (Jaipur) (Trib.) Assessee received substantial amount from her husband out of which Rs.3 lakhs were received in cash. Assessee claimed that Rs.3 lakhs were received in cash for purchase of plot and construction of residential house on it and same cannot be treated as loan in case of husband and wife as repayment was not mandatory and there was no element of interest. However, AO rejected assessee s explanation and imposed penalty u/s 271D for contravention of section 269SS. It was held that assessee offered explanation that payment towards construction expenses l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xercised within a period of three years having regard to the purport in terms of the said Act. In any event, the same should not exceed the period of five years. The view of the High Court, thus, cannot be said to be unreasonable. Reasonable period, keeping in view the discussions made hereinbefore, must be found out from the statutory scheme. As indicated hereinbefore, maximum period of limitation provided for in sub-section (6) of Section 11 of the Act is five years. The Hon ble Delhi High Court in case of CIT Vs. NHK Japan Broadcasting Corporation (2008) 305 ITR 137 after considering the said decision of Hon ble Supreme Court with reference to the proceedings initiated u/s 201 where no time limit for initiation of proceedings is prescribed at para 19 to 22 of its order held as under:- 19. Even though the period of three years would be a reasonable period as prescribed by s. 153 of the Act for completion of proceedings, we have been told that the Tribunal has, in a series of decisions, some of which have been mentioned in the order which is under challenge before us, taken the view that four years would be a reasonable period of time for initiating action, in a case where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urts in such situations, in the absence of a statutory provision. In this case, the initial return qua the assessment year in issue i.e., AY 2007-08 was filed on 31st March, 2007, revised return was filed on 31st March, 2009 and scrutiny assessment u/s 143(3) was framed on 28th Oct., 2011. Show-cause notice dt. 9th Nov., 2017 is woefully delayed and hence deserves to be quashed. In the present case also, the transaction which is alleged to be in violation of section 269SS of the Act took place in the month of November and December 2009. Thereafter AO issued u/s 148 dated 31.03.2017 and completed the assessment on 23.08.2017 where he stated to refer the matter for imposition of penalty u/s 271D. Even then the notice for imposition of penalty u/s 271D was issued on 07.08.2019 i.e. after about 2 years when the AO took the view that matter should be referred for levy of penalty u/s 271D. Hence when the penalty proceedings are initiated after 9 years of the date of transaction, the penalty so levied is bad in law. In view of above, penalty of Rs.31,78,000/- confirmed by Ld. CIT(A) is uncalled for and be directed to be deleted. 6. In this appeal the ld. AR of the assessee submi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s. 148 and completed the assessment on 23.08.2017. Considering the facts of the case the penalty proceedings initiated is barred by limitations. He further submitted that when the transaction are reflected in the account of both the parties the same are not in violation of provision of section 269SS of the Act. 8. Per contra, the ld. DR is heard who relied on the findings of the lower authorities and more particularly advanced the similar contentions as stated in the order of the ld. CIT(A). Considering the provision of section 275 of the Act the ground of limitation is required to be dismissed. As regards the merits of the case the assessee has not placed on record the complete details the finding of the lower authority be confirmed as the assessee has violated the provision of specific section of acceptance of cash and there is no such excuse in the law and therefore, the penalty levied should be sustained. 9. We have heard the rival contentions, perused the material placed on record and gone through the various judicial precedents cited by both the parties to drive home to their respective contentions. The case law cited by the ld. AR of the assessee have been persuaded b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dence that the assessee has not violated the provisions of section 269SS of the Act and therefore, there is no factual error on the part of the lower authority. But as regards the contention of the ld. AR of the assessee that these transactions are not loan and accommodative transactions between the assessee and his employer. But the bench noted that on issue there is not material evidence made available by the ld. AR of the assessee. The ld. AR of the assessee has placed on record only the ledger account at page 26-27 of his paper book. From that it is not clear whether the said transactions are considered as loan or the accommodative transactions or sales. It is also not clear whether the employer has received the cheque amount as sales consideration or as the amount as loan to employee in the books of the employer. This basic finding of the fact is not emanating from the records made available. Therefore, bench feels that the ld. AO in the interest of justice bring necessary evidence as to whether the transaction are on account of sales or on account of loan recorded will decide the applicability of the provision of section 269SS of the Act. It is also not clear as to whether th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssioner (Appeals) or ] the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of 60 [the Joint Commissioner (Appeals) or] the Commissioner (Appeals) is received by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner, whichever is later; ( b ) in a case where the relevant assessment or other order is the subject-matter of revision under section 263 or section 264, after the expiry of six months from the end of the 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. (1A) In a case where the relevant as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. In computing the period of limitation for the purposes of this section, ( i ) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129; ( ii ) any period during which the immunity granted under section 245H remained in force; and ( iii ) any period during which a proceeding under this Chapter for the levy of penalty is stayed by an order or injunction of any court, shall be excluded. Thus, now on the rival contention that based on that set of facts the provision of section 275(1)(c) will apply or 275(1)(a) will apply. On this issue we note that there is judgment of HIGH COURT OF ANDHRA PRADESH in the case of Seetharama Lakshmi Rice Groundnut Oil Mill Contractors Co. Vs. Income-tax Officer reported at 111 ITR 212 (AP) where in on the similar issue the court observed as under : Section 275 was substituted by the Taxation Laws (Amendment) Act, 1970, with effect from April 1, 1971. Earlier it was not so elaborate as the present provision; it contained only one provision which is practically the same as the present clause ( b ) excepting the words from the end of the financial year . Under the old section two years ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t or other order, the period of limitation for imposing penalty under clause ( i ) is two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed. Since this condition is satisfied and there was an appeal to the Appellate Assistant Commissioner who remanded the matter back to the Income-tax Officer, it was contended for the department that the present case comes within clause ( i ). On the other hand, learned counsel for the assessee asserted that the relevant assessment order postulated by clause ( a ) is the original assessment and not the later assessment order passed by the Income-tax Officer after remand. Since the original assessment order was made on 27th of December, 1969, the imposition of penalty on 23rd of December, 1972, is clearly barred by limitation. He further pointed out that clause ( i ) has no application because there was no further appeal against the remand order. That is why, he argued, clause ( ii ) would apply to the case. He placed reliance on Sarangpur Cotton Manufacturing Co. Ltd. v. Commissioner of Income-tax [1957] 31 ITR 698 (Bom), K. Gopalaswami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt order has been the subject-matter of an appeal, action for imposition of penalty has been initiated in the course of the assessment proceedings and those proceedings have been completed by the Income-tax Officer. In such a case, the imposition can be levied within a period of two years from the end of the financial year in which the proceedings are completed. It is important to note that sub-clause ( i ) uses the words the proceedings.........are completed . The contrast between these words and the words assessment or other order should be particularly noted. Clause ( a ) and sub-clause ( ii ) use the word order while sub-clause ( i ) keeps the position in a broad manner by what we feel the deliberate use of the words the proceedings ..are completed It is reasonable to gather the intention of Parliament from this that not merely passing an order but the completion of the proceeding as such is the crucial aspect, and the period of limitation under sub-clause ( i ) starts from the end of the financial year in which these proceedings reached the stage of completion. Thus, sub-clauses ( i ) and ( ii ) provided for two classes of cases where there has been an appeal. It is al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter is covered by sub-clause ( i ) and not by sub-clause ( ii ). Subclause ( ii ) would have applied had the matter ended with the Appellate Assistant Commissioner finally disposing of the case. Even supposing for argument's sake that the expression the relevant assessment order occurring in clause ( a ) refers to the second and fresh assessment made by the Income-tax Officer after remand, since there was no appeal thereagainst, the case must then walk into the realm of clause ( b ), in which eventuality also the imposition of penalty would be within the limitation because that was done after the expiration of two years from the end of the financial year in which the proceedings are completed. In such a case, the proceedings are completed with the fresh assessment order. Either way, we are satisfied that there is no bar of limitation for the imposition of penalty. On being consistent to the view so taken we are of the considered view that looking to the present set of facts and circumstances the provision of section 275(1)(a) will apply so we see no merits in the arguments advanced by the ld. AR of the assessee and therefore, the ground no. 2 raised by the assessee st ..... X X X X Extracts X X X X X X X X Extracts X X X X
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