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TMI Blog2001 (8) TMI 295X X X X Extracts X X X X X X X X Extracts X X X X ..... 1994-95 and 1995-96 in respect of penalties under s. 271E cancelled by the learned CIT(A), Udaipur. 3.(i) The facts, in brief, as per the assessee, are that the assessee is a firm doing the business of Kachha Arhatiya, acting as agent for its farmer-constituents, who used to bring their crops to the assessee for sale, and the assessee in this relationship used to sell their crops and keep/retain the sale proceeds of crops so as to be adjusted against their time to time withdrawals and buying of goods. The assessee was catering to their needs like payment in cash, supply of goods like fertilizer (Khad) seeds, pesticides, etc. retaining sale proceeds of crops accepting amounts given by farmers for the purpose of meeting on their time to time needs. The nature of dealings between Kachha Arhatiya and the farmer were fast, frequent and of current nature. No stipulation ever existed in regard to amounts, if any, given by the fanner to the assessee for keeping it for the purpose of making out their time to time needs. The farmer-constituents were hesitant in having dealings through banks, due to time constraints, tedious formalities, etc., etc. The dealings between the assessee and the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , being receipts in cash exceeding Rs. 20,000 as also withdrawals therefrom being in excess of Rs. 20,000, held to be repayments, and thus liable for penalties on both the counts under ss. 271D and 271E. However, the learned CIT(A) directed the AO/Jt. CIT for allowing some relief after verification regarding the facts of extent of receipt. The learned CIT(A) did not accept the assessee's plea regarding the above receipts being not deposits, nor did he accept the assessee's plea regarding bona fide belief coupled with genuineness of transactions. (iv) In asst. yr. 1995-96, involved in assessee's appeals Nos. 432/Jdpr/2000 and 431/Jdpr/2000 and Revenue's appeals Nos. 502/Ju/2000 and 501/Ju/2000, the AO/Jt. CIT levied penalties for the instances mentioned in Annexure A, Annexure B and Annexure C to the penalty orders. However, the learned CIT(A) cancelled the penalties in respect of instances specified in Annexure A and Annexure C, accepting the assessee's plea of there being reasonable cause and bona fide belief. But the learned CIT(A) did not accept the assessee's contention regarding the receipts of instances mentioned in Annexure A not being in the nature of deposits. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the penalties under ss. 271D and 271E (levied by the AO) and reflected above under the head of deletion of penalty by CIT(A), and so the Revenue has preferred its appeals bearing ITA Nos. 499 to 504/JU/2000. 6. First we take up assessee's ground relating to limitation, wherein the penalty orders under ss. 271D and 271E passed by Jt. CIT are stated to be barred by limitation under s. 275(1)(c). This issue is contained in ground No. 2 of assessee's appeals. The learned authorised representative of assessee has referred to p. 30 of his common w/s for asst. yrs. 1993-94 to 1995-96 being in respect of assessee's appeals (for short CW/s), being Annexure 1 therein and has contended that in the column third from last in the said chart, the last dates of limitation for imposing penalties as per assessee under s. 275(1)(c) have been given and that in the column last but one, the dates on which the penalty orders were passed by Jt. CIT have been mentioned which clearly show that the said penalty orders under ss. 271D and 271E are barred by limitation as prescribed under s. 275(1)(c). It has been contended orally as also in writing on behalf of the assessee that the relevant finding of Jt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly discussed the violation of provisions of s. 269SS and initiated penalty proceedings under s. 271D along with assessment order forming part of assessment proceedings; and that the Asstt. CIT issued penalty notice under s. 271D vide letter dt. 15th March 1996, served on 16th March, 1996. A copy of notice is placed on p. 2 of PB for asst. yr. 1993-94. It has been contended by the learned authorised representative of assessee that the penalty proceedings having been initiated on 15th March, 1996, by issuing specific notice for the purpose, as provided in law by AO, the period of six months from the end of the month in which the penalty notice was issued for initiation of penalty proceedings expired on 30th Sept., 1996. It has also been the contention of the authorised representative of assessee that these penalty proceedings are independent of the assessment proceedings and are accordingly covered by s. 275(1)(c). It has also been contended that the initiation of penalty proceedings for all the assessment years involved in appeals under consideration is identical and identical findings were given by AO and Jt. CIT in respective orders in all the cases. It has also been contended tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provided that no such penalty shall be levied unless an opportunity of being heard in the matter has been provided by such authority. He has contended that wherever the legislature deemed it proper to provide for issuing of notice by such other competent authority, they have made a specific provision in this Chapter itself as has been made in s. 272A(4), but no such provision has been made in ss. 271D(2) and 271E(2). He has contended that accordingly, the penalty proceedings in the appeals under consideration will have to be held as having been initiated during the course of assessment proceedings by the AO when he completed the assessment and took cognisance of the fact of violation and issued notices as prescribed under the relevant provisions. He has cited Mansinghka Brothers (P) Ltd. vs. CIT (1983) 37 CTR (Raj) 19 : (1984) 147 ITR 361 (Raj) and contended that it has been held in the said case that while considering the applicability of any beneficial provision, if two views are possible, then that view should be taken which is beneficial to the assessee. 9. He has contended that the impugned orders of imposition of penalty were barred by limitation and deserve to be cancelled. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngs which have relevance with assessment proceedings, as quantum of such penalties is determinable only on the final outcome of assessment are governed by s. 275(1)(a). He has contended that the citation referred to by the learned authorised representative of assessee are distinguishable on facts and do not apply in the matter. 11. We have considered the rival contentions, the relevant material on record, as also the cited decisions. From the perusal of record, we find the fact-situation for all the three assessment years in respect of the date of issuance of notice for the levy of penalty by AO and by the Jt. CIT and last date for levy of penalty as per Department and as per the assessee as under: ----------------------------------------------------------------------- Asst. yr. Notice by AO Notice by Jt. CIT under s. 271D under s. 271E under s. 271D under s. 271E ----------------------------------------------------------------------- 93-94 15-3-1996/P2 PB 15-3-1996/P3 PB 21-1-2000 21-1-2000 94-95 12-9-1996/P3 PB 12-9-1996/P4 PB 21-1-2000 21-1-2000 95-96 20-12-1996/P1 20-12-1996/P3 21-1-2000/P2 21-1-2000/P4 ----------------------------------------------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 37 CTR (Raj) 19 : (1984) 147 ITR 361 (Raj) the Hon'ble Rajasthan High Court has held as under: "While considering the accessibility or applicability of any beneficial provision or any interpretation of facts or inferences to be drawn from facts, if two views are possible, then, that view should be taken which may be beneficial to the assessee." 14. In our considered opinion, the matter is squarely covered by the decision of Tribunal, Jaipur, rendered in the case of Manoharlal vs. Dy. CIT (1995) 53 TTJ (Jp) 105 discussed above which is further supported by the decision of Tribunal, Jaipur, rendered in the case of Manoj Lalwani vs. Jt. CIT as also by the above referred decision of the Hon'ble jurisdictional High Court in the case of Mansinghka Bros. (P) Ltd. vs. CIT. As mentioned above, it has been held by the Tribunal, Jaipur, in the case of Manoharlal vs. Dy. CIT that the penalties under ss. 271D and 271E are quite independent of assessment proceedings and initiation of these penalty proceedings can be independent of the assessment proceedings and that in respect of the penalties under ss. 271D and 271E the period of limitation prescribed under cl. (c) of sub-s. (1) of s. 275 wou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve of assessee in para. 1.9 on p. 6 of his w/s, that s. 275(1)(a) is applicable to the penalty proceedings initiated under Chapter XXI cannot be accepted as correct as rightly pointed out by the learned authorised representative of assessee in his w/s. If that were the situation, and the provision of s. 275(1)(a) were to apply to all the penalty proceedings initiated under Chapter XXI then the provisions of cls. (b) and (c) of s. 275(1) will be rendered redundant and inapplicable in any case. As such, considering all the facts and circumstances of the case, we respectfully follow the decision of Tribunal, Jaipur, in the case of Manoharlal vs. Dy. CIT and accordingly hold that in respect of the penalty proceedings under ss. 271D and 271E, the period of limitation prescribed under s. 275(1)(c) is applicable and not that prescribed under s. 275(1)(a). 15. As regards the factum of initiation of these penalty proceedings, it is revealed from record that the AO while completing assessment, took cognizance of the default under ss. 269SS and 269T, and in turn, of penalties under ss. 271D and 271E, and issued notices for the said penalties. The discussion/finding is contained specifically ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ss the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter by such authority" But no such corresponding provision is found in ss. 271D(2) and 271E(2). In such a situation, we find substance in the contention of the learned authorised representative of assessee, as made on p. 11 of his w/s that these penalty proceedings will have to be held as having been initiated during the course of assessment proceedings by the AO when he completed the assessment proceedings, took cognizance of the fact of violation and issued the notices prescribed under the relevant sections. In the circumstances, these penalty proceedings are found to have been initiated by AO while completing assessment and issuing notices; and the initiation of these penalty proceedings cannot be said to have been on the dates when the Jt. CIT issued notices, In that view of the matter, the AO having initiated these penalty proceedings and issued notices under ss. 271D and 271E in respect of asst. yrs. 1993-94, 1994-95 and 1995-96 on 15th March, 1996 12th Sept., 1996, and 20th Dec, 1996, respectively, the last day for the levy of penalty as per the period of limitation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------------------------------------------------- 19. As has been contended by the learned authorised representative of assessee, the object and intention, with which the provisions of s. 269SS and 269T were brought on statute are also relevant/important to be kept in view. The object and intention behind introducing the above provisions have been clarified and explained in CBDT's Circular No. 387, dt. 6th July, 1984 as being to stop circulation of black money by countering the acts of taxpayers in explaining away the unaccounted money found during search as representing loans or deposits etc. In the instant case, however, the credits in asst. yr. 1993-94 on enquiry, were found to be genuine as has been contended by learned authorised representative of assessee. Besides, the returns for asst. yrs. 1993-94 and 1994-95 were filed much earlier to the date of search, based on books of accounts which were complete and closed, as has been pleaded by assessee in para 2.3 to 2.5 en pp. 15 to 17 of common w/s. The CBDT's circular No. 556, dt. 23rd Feb., 1990 has also been referred to by the learned authorised representative of assessee and the following extract, quoted in his common w/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it is revealed from the record that all the transactions, involved in the penalties levied by Jt. CIT under ss. 271D and 271E in the three asst. yrs. 1993-94, 1994-95 & 1995-96, are of assessee-Arhatiya with farmer agriculturist constituents, and there has been no dispute by the Department on this point. 21. The contentions of the learned authorised representative of assessee, in this regard, has been as under: (i) That the assessee a Kachha Arhatiya (K.A.) has to deal with the agriculturists of nearby villages who bring their agricultural produce to K.A. for its sale. These agriculturists do not take to their homes, the money of sale proceeds of their produce at once after the sale and keep the money with K.A. and use it afterwards for their personal or agricultural purposes like purchasing seeds, fertilizers, pesticides, medicines, clothes and may at times also take or receive cash in piecemeal, as per their needs. They generally do not keep the entire money at their homes for the fear of its wasteful spending in avoidable purposes or due to fear of theft, etc. This has been the practice prevalent since long even before coming into force of the provisions of ss. 269SS and 269T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld not be at all appropriate to allow the position to be changed in a subsequent year. In (1991) 92 CTR (Raj) 88 : (1992) 195 ITR 769 (Raj) the Hon'ble Rajasthan High Court has held that a finding reached in assessment proceedings for an earlier year after due enquiry would not be reopened in a subsequent year, if no fresh facts are found in the subsequent assessment year. (ii) In (1996) 51 TTJ (Asr) 383 the assessee Kachha Arhatiya was having dealings with agriculturists and was keeping their money in safe custody. Transactions was not bogus and assessee was also under bona fide belief that dealing with agriculturists could not be held guilty of violation of s. 269SS. (iii) In 23 TW 223, Tribunal, Jodhpur, has held that a mistaken belief can be treated as bona fide belief and reasonable cause. It was a matter of penalty under s. 271D. (iv) In (1993) 47 TTJ (Coch) 434 it has been held that bona fide belief coupled with the genuineness of transactions will constitute reasonable cause for not invoking provisions of ss. 271D and 271E. It has also been held that the above provisions are directory and not mandatory. (v) In (1994) 50 TTJ (And) 30 the penalties under ss. 271D and 271E ..... X X X X Extracts X X X X X X X X Extracts X X X X
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