9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (5) TMI 63 - AT - Income TaxPenalty u/s 271E and 271D - cash deposits and repayment of deposits were found to be in contravention of section 269SS and 269T - penalty after the expiry of limitation period - whether or not penalty is barred by limitation within the meaning of section 275(1)(c) - HELD THAT - We hold that the initial first SCN dated 04.05.2016 and other notices issued before 29.11.2016 by the Ld. JCITs were legally valid and penalty order should have been passed within the specified date upto which the period of limitation as per the provisions of section 275(1)(c) subsisted. This has not been done. Initiation of penalty proceedings by issuing fresh SCN dated 29.11.2016 and consequent levy of impugned penalty under section 271D and 271E are not in accordance with law having been passed beyond the time limit described under section 275(1)(c) of the Act. We, therefore, hold that the impugned penalty imposed under section 271D and 271E of the Act is not sustainable and both the impugned penalty orders passed under section 271D and 271E of the Act on 24.04.2017 are liable to be quashed. Reasonable cause for violation of the provision of section 269SS and 269T - As assessee has discharged the onus which lay upon it to establish the existence of reasonable cause for violation of the provision of section 269SS and 269T of the Act. In our opinion, the explanation offered by the assessee before the Ld. JCIT/CIT(A) was reasonable but was discarded merely because they proceeded on the premise that breach of condition provided under section 269SS and 269T shall necessarily lead to penal consequences which understanding in our humble opinion is not in accordance with law. We, therefore, cancel the penalty levied under section 271D and 271E. Appeals filed by the assessee are allowed.
Issues Involved:
1. Validity of Penalty Orders under Section 271D and 271E. 2. Barred by Limitation under Section 275(1)(c). 3. Reasonable Cause under Section 273B. 4. Genuineness of Transactions and Rule of Consistency. Summary: 1. Validity of Penalty Orders under Section 271D and 271E: The assessee challenged the penalty orders dated 24.04.2017 imposed by the JCIT for contravening sections 269SS and 269T of the Income Tax Act, 1961. The penalty was upheld by the CIT(A) despite the assessee's arguments that the penalties were imposed without proper jurisdiction and satisfaction recorded by the AO. 2. Barred by Limitation under Section 275(1)(c): The assessee contended that the penalty orders were barred by limitation as per Section 275(1)(c). The first show cause notice (SCN) was issued on 04.05.2016, and the penalty orders were passed on 24.04.2017. The Tribunal observed that the initial SCN dated 04.05.2016 and subsequent notices were valid, and the penalty orders should have been passed within the specified date. The Tribunal held that the initiation of penalty proceedings by issuing a fresh SCN on 29.11.2016 and consequent levy of penalty were not in accordance with law, making the penalty orders unsustainable. 3. Reasonable Cause under Section 273B: The assessee argued that there was a reasonable cause for the failure to comply with sections 269SS and 269T. The Tribunal noted that the assessee, a co-operative society, had a bonafide belief that it could accept and repay deposits in cash from its members. The Tribunal observed that the Department had never raised this issue in earlier years, implying acceptance of the assessee's practice. The Tribunal found the explanation offered by the assessee reasonable and held that the penalties should be canceled under Section 273B. 4. Genuineness of Transactions and Rule of Consistency: The Tribunal noted that the legislative intent behind sections 269SS and 269T was to curb the circulation of black money. In the assessee's case, there was no allegation of unaccounted money or false entries. The Tribunal emphasized the rule of consistency, noting that the Department had accepted the assessee's practices in earlier years. The Tribunal concluded that the transactions were genuine and the penalties were not justified. Conclusion: The Tribunal quashed the penalty orders under sections 271D and 271E, holding that they were barred by limitation and that the assessee had a reasonable cause for its actions. The appeals filed by the assessee were allowed.
|
