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2022 (8) TMI 33 - AT - Income TaxLevy of penalty u/s 271D V/S 271E - alleged violation of section 269SS having received Rs.15.50 lacs, in cash from his wife - allegation of default specified u/s. 269-T - wrong mention of a section (provision of law) - HELD THAT - Penalty as levied is unsustainable in law in the absence of the jurisdictional fact, i.e., the acceptance of money in the sum of Rs. 15.50 lacs (or for that matter in any sum) in cash by the assessee from his wife Sangeeta Rawat on 25/08/2009 (or at any time during the relevant year), which could be said to be violative of s. 269SS, for which the law provides for levy of penalty u/s. 271D in absence of a reasonable cause being proved. As the ledger accounts of the assessee and his wife, forming part of the assessment order as annexures thereto, reveal, the assessee has in fact paid Rs. 15.50 lacs in cash to his wife and, further, is the only cash transaction between the two. We are conscious that a mere wrong mention of a section (provision of law), as long as the authority has the power in exercise of which the relevant judicial action has been taken, would not defeat the same. This, however, is not the case here. That, for instance, would be the case where the assessee had indeed received cash from or on behalf of his wife, attracting a penalty u/s. 271D, while the authority had, stating the facts constituting the default correctly, mentioned s. 271E instead. Order - Though the penalty u/s. 271D, though not time barred, is not maintainable in the absence of the necessary jurisdiction (see Pr. CIT v. Maruti Suzuki Ltd. 2019 (7) TMI 1449 - SUPREME COURT ; Deep Chand Kothari 1987 (9) TMI 27 - RAJASTHAN HIGH COURT The penalty levied is for the default specified u/s. 269-T, and though merited on the whole sum and, in any case, part thereof, is not sustainable in the absence of any penalty having been initiated or levied u/s. 271-E.
Issues Involved:
1. Levy of penalty under section 271D of the Income Tax Act, 1961. 2. Alleged violation of section 269SS. 3. Adjudication by the Commissioner of Income Tax (Appeals) [CIT(A)]. 4. Time limitation for penalty proceedings under section 275. 5. Nature of transaction between the assessee and his wife. 6. Jurisdictional validity of penalty under section 271D. 7. Potential initiation of penalty under section 271E. Detailed Analysis: 1. Levy of Penalty under Section 271D: The Revenue appealed against the CIT(A)'s order canceling the penalty under section 271D for the assessment year 2010-11. The penalty was initially levied for an alleged violation of section 269SS, where the assessee was accused of receiving Rs. 15.50 lacs in cash from his wife, Sangeeta Rawat, on 25/08/2009. The CIT(A) held that the transaction did not constitute a loan or deposit, thus not attracting section 269SS, and therefore canceled the penalty. 2. Alleged Violation of Section 269SS: The assessee claimed that the amount received was not a loan or deposit but a return of money received on behalf of his wife from the sale of a property. The CIT(A) accepted this explanation, stating that there was no restriction on receiving cash for immovable property transactions before 01/06/2015. The Tribunal, however, found that there was no material evidence to support the claim that the transaction was not a loan or deposit. 3. Adjudication by CIT(A): The CIT(A) allowed the appeal based on the explanation that the money received was on behalf of the wife and was subsequently returned to her. However, the Tribunal noted that the CIT(A) did not address whether the transaction was a loan or deposit under section 269SS/T. The Tribunal found the CIT(A)'s decision to be unsupported by material evidence and therefore untenable. 4. Time Limitation for Penalty Proceedings under Section 275: The assessee argued that the penalty proceedings were time-barred under section 275. The Tribunal clarified that the time limitation runs from the date of initiation of proceedings by the competent authority (10/02/2017), not from the date of the AO's proposal (12/04/2016). Therefore, the penalty proceedings were not time-barred. 5. Nature of Transaction Between the Assessee and His Wife: The Tribunal examined the ledger accounts and found that the assessee had paid Rs. 15.50 lacs in cash to his wife, which was not supported by any substantial evidence. The Tribunal noted that the transaction could attract penalty under section 271E for repayment in cash, but not under section 271D for acceptance of cash. 6. Jurisdictional Validity of Penalty under Section 271D: The Tribunal held that the penalty under section 271D was not maintainable due to the lack of jurisdictional fact—there was no evidence of the assessee receiving Rs. 15.50 lacs in cash from his wife. The Tribunal emphasized that a wrong mention of the section would not defeat the penalty if the facts supported a different provision. However, in this case, the facts did not support a penalty under section 271D. 7. Potential Initiation of Penalty under Section 271E: The Tribunal noted that while the transaction could attract penalty under section 271E for repayment in cash, no such penalty was initiated or levied. The Tribunal vacated the findings of the CIT(A) and annulled the penalty under section 271D, granting the Revenue the liberty to initiate penalty proceedings under section 271E if deemed appropriate. Conclusion: The Tribunal dismissed the Revenue's appeal and partly allowed the assessee's cross-objection. It held that the initiation and levy of penalty under section 271D were without jurisdiction and annulled the same, while allowing the Revenue to initiate penalty under section 271E if necessary.
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