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2017 (6) TMI 136 - AT - Income TaxLevy of penalty u/s.271D - Period of limitation - Held that - Admittedly, the Hon ble Rajasthan High Court decision in the case of Hissaria Bros. 2006 (7) TMI 163 - RAJASTHAN High Court wherein the Hon ble High Court of Rajasthan has held that once show cause notice is issued by the AO then the time limit would run from that show cause notice. This view has also be confirmed by the Apex Court in 2016 (8) TMI 1044 - SUPREME COURT Penalty Order passed by the Addl. Commissioner of Income Tax, Central Range, Coimbatore on 31.01.2007 was barred by limitation in so far as the show cause notice had already been issued on 26.03.2006 by the Dy. Commissioner of Income Tax, Central Circle, Salem. - Decided in favour of assessee.
Issues:
Appeals filed by the assessee against the Order of Commissioner of Income Tax (Appeals) for multiple assessment years regarding penalty imposed under Sec.271D for accepting cash loans exceeding ?20,000, and the issue of limitation for completion of penalty proceedings. Analysis: 1. The appeals were filed by the assessee against the Order of Commissioner of Income Tax (Appeals) for various assessment years concerning the penalty imposed under Sec.271D for accepting cash loans exceeding ?20,000, violating Sec.269 SS of the Act. The penalty proceedings were initiated by the Dy. Commissioner of Income Tax, Central Circle, Salem, and a show cause notice for penalty u/s.271D was issued. However, a fresh show cause notice was later issued by the Addl. Commissioner of Income Tax, Central Range, Coimbatore, leading to the imposition of penalty by the latter. The main contention was that the penalty order was barred by limitation as the initial show cause notice had already been issued within the prescribed time limit. 2. The assessee argued that as per Sec.271D, penalty could only be imposed by the Joint Commissioner, which included the Addl.CIT. Reference was made to judicial precedents, including the decision of the Hon’ble Rajasthan High Court in the case of Hissaria Bros., upheld by the Supreme Court, which emphasized that the time limit for penalty proceedings should be reckoned from the date of the show cause notice issued by the AO. The Hon’ble Calcutta High Court's decision in Narayani & Sons Pvt. Ltd. further supported this view. 3. The Revenue, represented by the Ld.DR, supported the order of the AO and Ld.CIT(A), citing a Circular issued by the CBDT clarifying the departmental view on the issue. The contention was that the show cause notice issued by the AO should be disregarded, and the limitation period should be considered from the date of the notice issued by the ACIT, Central Range, Coimbatore, justifying the imposition of the penalty. 4. After considering the submissions, the Tribunal referred to the decisions of the Hon’ble Rajasthan High Court, the Apex Court, and the Hon’ble Calcutta High Court, which emphasized that the time limit for penalty proceedings should start from the show cause notice issued by the AO. The Circular issued by the CBDT, relying on a decision of the Hon’ble Kerala High Court, was found to be outdated as subsequent judgments had confirmed the earlier views. Consequently, the Penalty Order passed by the Addl.CIT, Central Range, Coimbatore, was deemed to be barred by limitation and was quashed. As a result, the appeals filed by the assessee were allowed. This detailed analysis of the judgment provides a comprehensive understanding of the issues involved, the arguments presented by both parties, and the legal reasoning behind the Tribunal's decision to quash the penalty order based on the interpretation of relevant legal provisions and precedents.
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