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Issues Involved:
1. Penalties u/s 271D and 271E for the assessment years 1993-94, 1994-95, and 1995-96. 2. Limitation period for imposing penalties u/s 275(1)(c). Summary: Issue 1: Penalties u/s 271D and 271E (i) Facts as per Assessee: The assessee, a firm acting as Kachha Arhatiya, managed cash transactions with farmer constituents for selling crops and supplying goods. The transactions were frequent, current, and in cash due to farmers' hesitance to use banks. (ii) Assessment Year 1993-94: The AO held certain transactions as deposits violating s. 269SS and liable for penalty u/s 271D, and cash repayments violating s. 269T liable for penalty u/s 271E. CIT(A) cancelled penalties for 'balancing of accounts' but sustained penalties for Rs. 1,89,000 from three individuals. (iii) Assessment Year 1994-95: The AO levied penalties for instances in Annexures A, B, C, and D. CIT(A) cancelled penalties for Annexures A and D due to reasonable cause but sustained penalties for Annexures B and C, directing some relief after verification. (iv) Assessment Year 1995-96: The AO levied penalties for instances in Annexures A, B, and C. CIT(A) cancelled penalties for Annexures A and C due to reasonable cause but sustained penalties for Annexure B. (v) Time-Barred Penalty Proceedings: The assessee's plea that penalty proceedings were time-barred u/s 275(1)(c) was rejected by authorities below. Issue 2: Limitation Period for Imposing Penalties u/s 275(1)(c) (i) Assessee's Argument: The penalties were initiated by the AO during assessment proceedings, and the period of six months from the end of the month in which the penalty notice was issued expired on 30th Sept. 1996. The penalties should be independent of assessment proceedings and governed by s. 275(1)(c). (ii) Revenue's Argument: The penalties are relevant to assessment proceedings, and the time limit is governed by s. 275(1)(a). The penalties were levied within six months from the date of receipt of the Tribunal's appellate order by CIT. (iii) Tribunal's Finding: Penalties u/s 271D and 271E are independent of assessment proceedings and governed by s. 275(1)(c). The penalties were initiated by the AO during assessment proceedings, and the orders were passed beyond the prescribed period of limitation, making them time-barred and not tenable in law. Conclusion: The Tribunal held that the penalties u/s 271D and 271E for the assessment years 1993-94, 1994-95, and 1995-96 were barred by limitation u/s 275(1)(c) and not sustainable due to reasonable and sufficient cause. All six appeals of the assessee were allowed, and all six appeals of the Revenue were dismissed.
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