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Issues Involved:
1. Validity and jurisdiction of the penalty order. 2. Satisfaction for initiation of penalty proceedings. 3. Pendency of proceedings on the date of initiation. 4. Timeliness of the penalty notice. 5. Double jeopardy in penalty imposition. 6. Authority to initiate fresh penalty for the same transactions. 7. Reasonable cause for non-compliance. Summary: Issue 1: Validity and Jurisdiction of the Penalty Order The assessee challenged the penalty orders dated 14-12-1999 as wholly invalid, illegal, and without jurisdiction due to violation of section 275 of the Income-tax Act. The Tribunal found that the penalties were imposed beyond the limitation period prescribed u/s 275(1)(c). The penalty proceedings were initiated on 14-12-1998, and the penalties should have been imposed by 30-6-1999. Consequently, the penalties imposed in December 1999 were time-barred. Issue 2: Satisfaction for Initiation of Penalty Proceedings The assessee contended that the Assessing Officer did not record satisfaction for initiation of penalty proceedings during the assessment proceedings. The Tribunal observed that the Assessing Officer must record satisfaction prior to initiating penalty proceedings, which was not done in this case. Issue 3: Pendency of Proceedings on the Date of Initiation The assessee argued that on 28-10-1999, the date of initiation of penalty proceedings, no 'proceeding' was pending for the assessment year in question. The Tribunal held that penalty proceedings could be initiated independently of assessment proceedings, as penalties under sections 271D and 271E are not necessarily linked to the pendency of assessment proceedings. Issue 4: Timeliness of the Penalty Notice The assessee claimed that the penalty notice was barred by time. The Tribunal found that the penalties were imposed beyond the limitation period as prescribed u/s 275(1)(c), making the penalty orders invalid due to being time-barred. Issue 5: Double Jeopardy in Penalty Imposition The assessee argued that the impugned order was based on transactions and amounts for which they had already been penalized. The Tribunal agreed, stating that penalties for the same transactions had already been imposed, and initiating fresh penalties for the same transactions was not justified. Issue 6: Authority to Initiate Fresh Penalty for the Same Transactions The Tribunal held that the respondent had no jurisdiction or authority to initiate fresh penalty proceedings for the same transactions covered by the previous order dated 28-6-1999, especially during the pendency of the appeal before the Commissioner (Appeals). Issue 7: Reasonable Cause for Non-Compliance The assessee argued that there was a reasonable cause for the violations and that the penalties were excessive. The Tribunal considered that the transactions were genuine, and there was no intention to evade tax. The Tribunal held that the penalties under sections 271D and 271E were not mandatory if there was a reasonable cause, as provided u/s 273B. The Tribunal found that the assessee had a reasonable cause for the violations due to the complexity of the law and the professional advice they received. Conclusion: The Tribunal deleted the penalties under sections 271D and 271E sustained by the CIT(A) for all the years under appeal, allowing the appeals directed by the assessee.
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