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2022 (8) TMI 938 - AT - Income TaxPenalty u/s 271D - period of limitation - as argued penalty orders barred by limitation - contravention to the provisions of section 269SS of the Act in view of accepting cash loan more than prescribed limit - HELD THAT - As only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under sections 271D and 271E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply . Therefore, in our considered view, the 271D order is not barred by limitation and as validly pointed out by the Ld. CIT(A) in his order, the Joint Commissioner, who is the prescribed authority to initiate 271D proceedings, has passed order within the period of limitation prescribed i.e. within 6 months from the end of the month from the date of initiation of 271D proceedings on 15.07.2015. In view of the above discussion, we are of the considered view that Ld. CIT(A) has not erred in law and on facts in holding that the order u/s 271D of the Act is not barred by limitation. Amount received by the assessee from his wife and his father - As in view of the decision of the jurisdictional Gujarat High Court in the case of Dr. Rajaram L. Akhani 2016 (6) TMI 1051 - GUJARAT HIGH COURT and other case laws cited above, as applicable to the facts of the case, in our view so far as receipt of Rs.22,50,000/- by the assessee from his wife and father is concerned, in our view the provisions of section 269SS do not stand attracted. There is nothing on record to show that the amount was taken as a loan or deposit by the assessee from his father/wife and also there is nothing on record to establish that the assessee was under an obligation to repay that the same (with our without interest) and therefore in view of the judicial precedents cited above, in our view provisions of section 269SS cannot be invoked so far as the amount of Rs.22,50,000/- is concerned. Receipts from Mr. Mahispatsinh assessee has failed to discharge its burden proving that there was a reasonable cause for accepting the sum of Rs.15 lakhs in cash from Mr. Mahispatsinh. The Ld. CIT(A) in in his order has specifically noted that further, it is also seen that during the assessment proceedings the assessee, well knowing that he had also taken cash loans of Rs.15 lakhs did not deem it necessary to make submissions regarding the same before the AO in spite of the fact that the issue of applicability of section 269SS was being discussed in his case . In light of the above discussion, we are of the considered view that the Ld. CIT(A) has not erred in facts or in law in confirming penalty in respect of the sum of Rs.15 lakh received in cash from Mr. Mahispatsinh in violation of the provisions of section 269SS . Assessee appeal is partly allowed.
Issues Involved:
1. Levy of penalty under Section 271D of the Income Tax Act. 2. Barred by limitation argument. 3. Satisfaction of the Assessing Officer regarding the penalty amount. 4. Consideration of the case on merits by CIT(A). 5. Interpretation of the spirit of the law and relevant circulars. 6. Distinguishing various decisions cited by the appellant. Issue-wise Detailed Analysis: 1. Levy of Penalty under Section 271D: The assessee was penalized for accepting cash loans totaling Rs. 37.50 Lakhs in contravention of Section 269SS of the Income Tax Act. The loans were taken from his wife (Rs. 12.50 Lakhs), father (Rs. 10 Lakhs), and Mr. Mahispatsinh (Rs. 15 Lakhs). The Joint Commissioner of Income Tax (JCIT) imposed the penalty, which was upheld by the CIT(A). 2. Barred by Limitation Argument: The assessee argued that the penalty order was barred by limitation under Section 275(1)(c) of the Act. However, the tribunal held that the JCIT, being the competent authority, initiated the proceedings within the prescribed time limit. The assessment order referred the case to the JCIT, and the penalty order was passed within six months from the initiation date, thus not barred by limitation. 3. Satisfaction of the Assessing Officer: The assessee contended that the Assessing Officer did not record satisfaction regarding the Rs. 15 Lakhs loan from Mr. Mahispatsinh. The tribunal noted that the JCIT discovered this loan during the 271D proceedings and added it to the penalty. The tribunal upheld the penalty, stating that the assessee deliberately concealed this information during the assessment proceedings. 4. Consideration of the Case on Merits by CIT(A): The CIT(A) considered the merits of the case and found that the assessee failed to establish an immediate contingency for taking loans in cash. The tribunal agreed with the CIT(A), noting that the assessee, being a branch manager of a cooperative bank, could not claim ignorance of the law. 5. Interpretation of the Spirit of the Law and Relevant Circulars: The assessee argued that the spirit of the law, as explained by the Finance Minister during the introduction of Section 269SS and the CBDT Circular No. 387, was not followed. The tribunal found this argument unconvincing, emphasizing that the legal provisions were correctly applied by the authorities. 6. Distinguishing Various Decisions Cited by the Appellant: The assessee cited several case laws to support his contention that genuine transactions should not attract penalties under Section 271D. The tribunal distinguished these cases on facts, noting that the cited cases involved different circumstances where the Assessing Officer had initiated penalty proceedings during the assessment itself. In the instant case, the JCIT initiated the proceedings based on a referral. Conclusion: The tribunal dismissed the assessee's appeal regarding the limitation and upheld the penalty for the Rs. 15 Lakhs loan from Mr. Mahispatsinh. However, it allowed the appeal concerning the Rs. 22.50 Lakhs received from the wife and father, citing judicial precedents that such transactions do not attract Section 269SS provisions. Grounds 3 to 6 were deemed general and did not require specific adjudication. The appeal was partly allowed.
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