TMI Blog2024 (2) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Shri Satya Prakash Sharma, Sr. DR ORDER Per Arun Khodpia, AM: The captioned appeals are filed by the Department against the orders of Ld. Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi u/s 250 of the Income Tax Act, 1961 (In short 'The Act'), both dated 17.05.2023 for the assessment year 2015-16, which in turn has arisen from the orders u/s 271D 271E of the Act, both dated 23.09.2022. 2. The Grounds of Appeal raised by the department in ITA no. 242/RPR/2023, are as under: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) NFAC has erred in deleting the penalty of Rs. 63,58,383/- imposed u/s 271D of the Income Tax Act, 1961. 2. On the facts and in the circumstances of the case, the Ld. CIT(A), NFAC has deleted the penalty imposed 271D whereas the Hon'ble Kerala High Court in the case of Grihlakshmi Vision v/s Addl. CIT (2015) 63 taxmann.com 196 has held that penalty proceedings under the provision of section 271D are not initiated by AO but only with the issuance of notice by the JCIT. 3. On the facts and in the circumstances of the case, the Ld. CIT(A), NFAC has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tly, the case of the assessee was reopened u/s 147, on account of delayed payment of EPF (Employees contributions) as emanating from the 3CD report of the assessee. The assessment u/s 147 r.w.s. 144 r.w.s. 144B of the I.T. Act, 1961 was completed on 29.03.2022. Subsequently, the penalty proceeding u/s 271D and u/s 271E were initiated by issuing a show cause notice dated 18.04.2022 and 09.09.2022, alleging that the assessee had failed to comply with the provisions of section 269SS and 269T. The orders of penalty were issued after imposing the penalty of Rs. 63,58,383/- u/s 271B and Rs. 1,53,97,819/- u/s 271E. 4. Aggrieved by the aforesaid penalty orders dated 23.09.2022, the assessee preferred an appeal before the Ld. CIT(A), NFAC, wherein the contention of the assessee have been accepted by the Ld. CIT(A) thereby the appeal of the assessee is partly allowed, but the penalty imposed on assessee u/s 271D 271E are vacated in toto. 5. To challenge the findings of Ld. CIT(A) now the department is in appeal before us in the present case. 6. Since the issue involved in the present appeal are identical, interconnected and inextricably interwoven, therefore, we are adjudicating b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 271 of the IT Act, 1961 which on appeal was reduced to Rs. 13,50,000/- by the learned CIT(A). These penalties were levied for violation of Sec. 269SS and 269T of the IT Act, viz. for accepting unsecured loans/hand loans in cash and repaying such loans in cash. The loans taken by the assessee were from h husband Shri B.R. Patil and the repayment were also to very same person Assessee was engaged in dairy farming business and her husband was helping her in such business. Copy of the assessment for the impugned assessment year which is placed on record by the learned AR does not have even a whisper regarding the acceptance of loan in cash or re-payment of loans in cash. The assessment order dated 28-09-2009 for the impugned assessment year does not mention anything regarding any initiation of penalty proceedings for violation of sec. 269SS and 269T of the IT Act, 1961. In the case of Jai Laxmi Rice Mills decided by the Hon'ble Apex Court the question was whether a satisfaction has to be recorded in the assessment order for initiation of penalty u/s 27 IE of the Act. In the said case, after the levy of penalty u/s 27 IE of the Act, the original assessment wherein satisfaction reg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IE of the IT Act, similar satisfaction has to 5 ITA Nos. 1053 1054(B)/14 be recorded for the proceedings u/s 27 ID of the IT Act, 1961 also. These have not been done in the case before us. Accordingly, by virtue of judgment of the Hon'ble Apex Court in the case of CIT Vs Jai Laxmi Rice Mills (Supra), we are of the opinion, that the levy of penalty u/s 27 ID 27 IE of the IT Act, 1961 cannot survive. Such orders are set aside and the appeals of the assessee are allowed. 8. In the result, the appeals filed by the assessee are allowed. 5.7.2 Further, Hon'ble ITAT C Bench Kolkata in the case of Binod Kumar Aggarwal vs. JCIT Jalpaiguri in ITA No. 237 238/K01/2013 dated 04.02.2016 have held as under: 4. We have heard the rival submissions and perused the material available on record. Though the assessee has raised several grounds in respect of aforesaid appeals, we find that the central ground revolves only on levy of penalty u/s. 27 ID and 27 IE of the Act. We find from the facts that the assessee has merely collected advances in cash from various dealers for supply of rice and wheat during the course of business. Hence, it can safely be concluded that th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s it is held that the assessing officer erred in not recording the satisfaction of initiation of penalty proceedings in the reassessment order u/s 147 r.w.s 144B dated 29.03.2022. Therefore, the appellant succeeds on this ground as well. The ground No.2 is allowed as a result. 11. Backed by aforesaid submissions, Ld. AR of the assessee further submitted that the case of the assessee is squarely covered by the judgment of Hon ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills Ambala City, (2015) 371 ITR 571 (SC) and the findings of Hon ble High Court of Telangana in the case of Shrinivasa Reddy Reddepppagari vs. JCIT, WP No. 44285 of 2022 dated 26.12.2022, the principle of law laid down in the said decisions have been recently adopted by the coordinate bench of the ITAT, Raipur in the case of Shri Bhowmik Raj Singh in ITA no. 128/RPR/2016 dated 02.01.2024 wherein a penalty u/s 271D imposed on the assessee have been quashed on account of no satisfaction regarding initiation of penalties in the assessment order based on which the penalty proceedings have been initiated and the penalty was imposed. The relevant findings of the ITAT, Raipur in the case of Bhowmik Raj Sin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation. For the purposes of this section, (i) banking company means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; (ii) co-operative bank shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; (iii) loan or deposit means loan or deposit of money; (iv) specified sum means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. As the failure to comply with the provisions of Section 269SS of the Act results in saddling the assessee with penalty u/s. 271D of the Act; therefore, it would be relevant to cull out the same as under: 14 Shri B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he aforesaid facts that the sustainability of the penalty-imposed u/s. 271D of the Act based on the original assessment order which did no more survive therein surfaced. On being tested on the touchstone of the fact that the 16 Shri Bhowmick Raj Singh Vs. Jt. CIT, Bhilai-Range, Bhilai ITA No. 128/RPR/2016 original assessment order wherein, satisfaction for initiating proceedings u/s. 271D of the Act was recorded, having been set-aside, thus, did no more survive, the Tribunal and the High Court concluded that the penalty imposed u/s. 271D of the Act could not be sustained. 13. On further appeal, the Hon ble Apex Court concluded that as the A.O in the fresh assessment order had not recorded his satisfaction regarding penalty u/s. 271D of the Act, therefore, de-hors recording of requisite satisfaction the penalty imposed u/s. 271D of the Act could not be sustained and was liable to be quashed. For the sake of clarity, the relevant observation of the Hon ble Apex Court is culled out as under: 6. As pointed out above, insofar as, fresh assessment order is concerned, there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... econd proviso, this provision would also not be applicable where both the depositor and the receiver are having agricultural income and neither of them has any income chargeable to tax under the Act. 18. Section 271D of the Act deals with penalty for failure to comply with the provisions of Section 269SS of the Act. Section 271D of the Act being relevant is extracted hereunder: Penalty for failure to comply with the provisions of section 269SS. 271D. (1) If a person takes or accepts any loan or deposit [or specified sum] in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit [or specified sum] so taken or accepted.] [(2) Any penalty imposable under sub- section (1) shall be imposed by the [Joint] Commissioner.] 19. Thus, what sub-section (1) of Section 271D provides for is that if a person takes or accepts any loan or deposit or specified amount in contravention of the provisions of Section 269SS, he shall be liable to pay by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. Sub-section (2) clarifies that any pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontravention of Section 269T. Therefore, in a way, the two provisions are complimentary to each other. 23. In Jai Laxmi Rice Mills Ambala City (supra), Supreme Court considered the question as to whether penalty proceedings under Section 271D of the Act is independent of the assessment proceeding ? In the facts of that case, it was found that the penalty order was issued following the assessment order. 20 Shri Bhowmick Raj Singh Vs. Jt. CIT, Bhilai-Range, Bhilai ITA No. 128/RPR/2016 However in appeal, Commissioner of Income Tax (Appeals) had set aside the original assessment order with a direction to frame assessment de novo. In the fresh assessment order, no satisfaction was recorded by the assessing officer regarding initiation of penalty proceedings under Section 271E of the Act. It was noticed that the penalty order was passed before the appeal of the assessee was allowed by the Commissioner of Income Tax (Appeals). It was in that context that Supreme Court held as follows: The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t order for the purpose of initiation of penalty proceedings under Section 271E of the Act. We have already discussed above that provisions of Section 271E and 271D of the Act are in pari materia. When there is a decision of the Supreme Court, it is the bounden duty of an adjudicating authority, be it an income tax authority or any other civil authority or for that matter any court in the country, to comply with the decision of the Supreme Court. 26. Article 141 of the Constitution of India is clear that law declared by the Supreme Court shall be binding on all courts within the territory of India. This is further clarified in Article 144, which says that all authorities, civil and judicial, in the territory of India shall act in aid of the Supreme Court. We are therefore, of the unhesitant view that respondent No.1 overlooked the relevant considerations while passing the impugned order dated.29.11.2022. 27. Further, issue in the present writ petition is not the competence of the Joint Commissioner in issuing the order of penalty. Therefore, reference to Grihalaxmi Vision (2 supra) was wholly unnecessary. 28. Consequently, we set aside the impugned order dated 29. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h of ITAT, Raipur, in the case of Bhowmik Raj Singh (supra), wherein the findings from the orders of Hon ble Apex Court, Hon ble High Courts referred to supra are followed, respectfully following the same, considering the fact that the issue before us is no more res-integra in light of the judgment in the case of CIT vs. Jai Laxmi Rice Mills, Ambala City (supra), therefore, the penalty imposed by Ld. JCIT u/s 271D of the Act, dehors any satisfaction recorded in the reassessment u/s 147 r.w.s 144 r.w.s. 144B dated 29.03.2022 by the concerned AO, is not sustainable, thus, we concur with the findings of Ld. CIT(A) which is on the same line as discussed hereinabove, therefore, we do not find any infirmity in the order of Ld. CIT(A) to be interfered with. In the result, appeal of the revenue stands dismissed. 15. As we have dismissed the appeal of the revenue in ITA No. 242/RPR/2023 in terms of our aforesaid observations by confirming the order of Ld. CIT(A) in vacating the penalty-imposed u/s 271D, having similar facts and issue regarding penalty imposed u/s 271E in ITA No. 243/RPR/2023, the same will also be govern by the aforesaid analogy supported by the judgment of Hon ble Apex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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