TMI Blog2024 (2) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... . CIT Vs. Parivar Television, Tax [ 2023 (10) TMI 707 - GUJARAT HIGH COURT ] , wherein the Hon ble High Court had approved the view taken by the Tribunal and observed that as no satisfaction regarding initiation of penalty proceedings u/s. 271E of the Act was recorded in the assessment order, therefore, no penalty under the said statutory provision could be levied. Considering the fact that the issue before us is no more resintegra in light of the judgment of the Hon ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills Ambala City (supra), therefore, in the backdrop of our aforesaid deliberations, the penalty imposed by the Jt.CIT u/s. 271D of the Act cannot be sustained and is liable to be struck down for want of valid assumption of jurisdiction. Appeal of assessee allowed. - SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI ARUN KHODPIA, ACCOUNTANT MEMBER For the Assessee : Shri Sunil Kumar Agrawal, CA For the Revenue : Shri Satya Prakash Sharma, Sr. DR ORDER PER RAVISH SOOD, JM: The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals)-II, Raipur, dated 26.02.2016, which in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3,630/-. 3. After the culmination of the assessment proceedings, the Jt. CIT, Range-Bhilai observed that the assessee had received cash deposits from prospective buyers, against which amounts sales were carried out to them over the year. The details of the aforesaid cash deposits received by the assessee during the year against which subsequent sales were carried out are culled out as under: Sr. No. Name of the Buyers Date of cash deposit Amount i) Bansilal and Sons Starts 01.12.2009 Rs.5,00,000/- ii) Choudhari Enterprises Starts 01.12.2009 Rs.7,00,000/- iii) Dhapriya Trading Co. Starts 21.12.2009 Rs.5,00,000/- iv) Hariom Traders Starts 01.12.2009 Rs.5,00,000/- v) H.P Sons Starts 01.04.2009 Rs.5,00,000/- Total ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods to the aforementioned five parties. Accordingly, the Jt. CIT holding a conviction that the assessee had received the aforesaid amount of Rs.27 lacs (supra), i.e., over Rs.20,000/- from the aforementioned five parties in violation of Section 269SS of the Act thus, vide his order passed u/s. 271D of the Act dated 31.10.2013 imposed a penalty of Rs. 27 lacs upon him. 5. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the relevant observations of the CIT(Appeals) are culled out as under: 1.6. I have considered the grounds of appeal, the written submissions of the appellant and have gone through the observations of the assessing officer in the penalty order. I observe that the deposits have been accepted by the appellant in cash amounting to Rs. 27,00,000. It was submitted that the deposits were taken on the directions of the principals who were in urgent need of funds and hence the deposits were accepted in cash towards making payments to them. The appellant has clearly admitted to have taken the deposits in cash and the facts of the case also reveal that there was no urgent necessity to accept the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. Such receipt of advances and sale of material after a huge gap of more than two months is unusual. Although there is no time frame laid down but the surrounding circumstances and the facts of the case are clearly against the submissions offered by the appellant. Moreover neither during the assessment proceedings nor during the appellate proceedings the appellant has furnished copies of bills and vouchers evidencing itemwise details of material sold to the parties on different dates against the cash deposits received from them. The copies of accounts of parties furnished as proof of sales against cash is cryptic and does not contain basic information such as PAN, complete address, and details of sale of material. It is fruitful to peruse some of the important judicial pronouncements on this issue. In the case of Hindalco Employees Cooperative Credit Society limited vs. Addl. CIT Range -4, Kochi reported in 49 taxman.com 309 the hon'ble Tribunal held that where reasonable cause for receiving deposits was not established by the assessee levy of penalty u/s. 271D is to be upheld. In the case of R.K. Singhal vs. CIT reported in 221 CTR 412(Raj), the hon'ble high Court o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n by the Hon ble Apex Court in the case of CIT Vs. Jai Laxmi Rice Mills, Ambala City (supra), and had concluded that the Jt. CIT in the absence of any mention in the assessment order regarding initiation of penalty proceedings u/s. 271D of the Act cannot assume jurisdiction and impose penalty u/s.271D of the Act: (i) Pr. CIT Vs. Parivar Television P. Ltd., ITA No.674/2023 dated 09.10.2023 (ii) Srinivasa Reddy Reddeppagari Vs. JCIT (2023), WP No.44285 of 2022 dated 26.12.2022 (iii) ACIT Vs. Bapu Reddy Jala Nizamabad (2023) ITA No.606/Hyd/2022 dated 15.06.2023 (iv) Raja Reddy Nala Vs. Addl. CIT (2023) ITA No.520/Hyd/2022 dated 31.05.2023 (v) Parivar Television P. Ltd. Vs. DCIT (2023) ITA No.1738/Ahd/2016 dated 03.01.2023 (vi) Ram Lybhaya Jassal Vs. Addl. CIT (2021), ITA No.747/Asr/2017 dated 24.09.2021. 8. Alternatively, the Ld. AR submitted that the penalty imposed by the Jt. CIT u/s. 271D of the Act dated 31.10.2013 was even otherwise barred by limitation. Elaborating on his aforesaid contention, the Ld. AR submitted that as the A.O. could have imposed the impugned penalty within the stipulated time period contemplated in Section 275(1)(c) of the Act, which, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions. 11. Before proceeding any further, it would be relevant to cull out the provisions of Section 269SS of the Act, i.e., the mandate of law which contemplates that no loan/deposit in excess of a specified amount is to be received by an assessee otherwise than as per the prescribed modes, which reads as under: 269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account 11[or through such other electronic mode as may be prescribed], if, (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or (b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 12. Controversy involved in the present appeal lies in a narrow compass, i.e., as to whether or not penalty imposed by the JCIT u/s. 271D of the Act de-hors recording of satisfaction by the A.O for initiating the said penalty proceedings in the body of the assessment order passed u/s. 143(3) dated 25.03.2013 is sustainable in the eyes of law? As is discernible from the assessment order, the A.O in the body of the said order had only initiated penalty u/s. 271(1)(c) of the Act. The issue involved in the present appeal, i.e., sustainability of the penalty imposed u/s. 271D of the Act in absence of any satisfaction for initiating the said penalty proceedings by the A.O in the body of the assessment order is no more res-integra pursuant to the judgment of the Hon ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills Ambala City, (2015) 379 ITR 521 (SC). The A.O in the case before the Hon ble Apex Court had framed the original assessment vide an ex-parte order dated 26.02.1996, determining the income of the assessee at Rs.18.34 lacs (approx.). The A.O while framing the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Reddy Reddeppagari Vs. JCIT, WP No.44285 of 2022 dated 26.12.2022 wherein the question, for which, indulgence of the Hon ble High Court was sought, read as under: 14. Issue raised in the writ petition is whether without satisfaction being recorded in the assessment order, penalty can be levied by the Jt. CIT under S. 271D of the Act? Answering the aforesaid question, the Hon ble High Court after drawing support from the judgment of the Hon ble Apex Court in the case of CIT Vs. Jai Laxmi Rice Mills Ambala City (supra), had held as under: 15. Insofar the present case is concerned, we find that in the assessment order dated 24.03.2022 passed under Section 153A of the Act, return of income filed by the petitioner was accepted by the assessing officer and accordingly, the total income was assessed. In the return of income, petitioner had admitted receiving total income of Rs.80,84,180.00 which was also accepted by the assessing officer. 16. Subsequently, respondent No.1 took the view that petitioner had sold immovable properties for a total sale consideration of Rs.92,13,000.00 out of which he had accepted cash to the tune of Rs.87,80,000.00 which was in violatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and no firm or other person shall repay any loan or deposit made with it or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who had made the loan or deposit or who had paid the specified advance or by use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed, if such an amount is twenty thousand rupees or more. As in the case of Section 269SS, Section 269T of the Act also does not apply to the Government, banking company, post office savings bank etc. Section 271E of the Act reads as under: Penalty for failure to comply with the provisions of section 269T. 271E. [(1)] If a person repays any [loan or] deposit [or specified advance] referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the [loan or] deposit [or specified advance] so repaid.] [(2) Any penalty imposable under sub-section (1) shall be imposed by the [Joint] Commissioner.] 21. Thus, sub-section (1) of Section 271E of the Act provides that if a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. Thus, insofar as penalty under Section 271E is concerned, it was without any satisfaction and, therefore, no such penalty could be levied. These appeals are, accordingly, dismissed. 24. Reverting back to the facts of the present case, we find that petitioner had submitted reply to the show cause notice on 02.06.2022. In his reply, petitioner mentioned that no satisfaction was recorded by the assessing officer in the assessment order as to infraction of Section 269SS of the Act. Therefore, no penalty could be levied under Section 271D of the Act without recorded satisfaction. In this connection, reference was made to the decision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (1 supra) wherein it was clarified that provisions of Section 271E are in pari materia with the provisions of Section 271D of the Act. However, this aspect of the matter was not considered by respondent No.1 while passing the impugned order. Respondent No.1 relying upon the Kerala High Court decision in Grihalaxmi Vision (2 supra) noted that competent authority to levy penalty is the Joint Commissioner. He has also referred to an earlier decision of the Supreme Court in CIT V. Mac Data ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings u/s. 271E of the Act was recorded in the assessment order, therefore, no penalty under the said statutory provision could be levied. Apart from that, we find that similar view had been taken by the ITAT, Hyderabad in the case of ACIT Vs. Bapu Reddy Jala Nizamabad, ITA No.606/Hyd/2022 dated 15.06.2023 and Raja Reddy Nalla Vs. Addl. CIT, ITA No.520/Hyd/2022 dated 31.05.2023 and also by the ITAT, Surat in the case of Parivar Television P. Ltd. Vs. DCIT, ITA No.1738/Ahd/2016 dated 03.01.2023 and by the ITAT, Amritsar in the case of Ram Lubhaya Jassal Vs. Addl. CIT, ITA No.747/Asr/2017 dated 24.09.2021. 15. Considering the fact that the issue before us is no more resintegra in light of the judgment of the Hon ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills Ambala City (supra), therefore, in the backdrop of our aforesaid deliberations, the penalty imposed by the Jt.CIT u/s. 271D of the Act cannot be sustained and is liable to be struck down for want of valid assumption of jurisdiction. 16. As we have quashed the penalty imposed by the Jt.CIT u/s. 271D of the Act in terms of our aforesaid observations; therefore, we refrain from adverting to and dealing wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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