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TMI Blog2014 (6) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... ajasthan High Court in the case of Commissioner of Income-Tax v. Hissaria Bros. [2006 (7) TMI 163 - RAJASTHAN High Court] - Decided against Revenue. - ITA 232/2014 - - - Dated:- 21-5-2014 - S. Ravindra Bhat And Vibhu Bakhru,JJ. For the Appellant : Mr. Rohit Madan, Mr. P. Roy Choudhary and Mr. Akash Vajpai For the Respondent : None. JUDGMENT Vibhu Bakhru, J (Oral) 1. This is an appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the Act ). The appellant impugns the order dated 31.10.2013 passed by the Income Tax Appellate Tribunal (ITAT), whereby the ITAT had held that the penalty order passed by the Assessing Officer under Section 271D of the Act was unsustainable, as it was passed beyond the period of six months as prescribed under Section 275(1)(c) of the Act. 2. The learned counsel for the Revenue contends that the ITAT erred in holding that Section 275(1)(c) of the Act was applicable in the present case. According to the Revenue, Section 275(1)(a) of the Act would be applicable in respect of the penalty imposed in the facts and circumstances of the case and not Section 275(1)(c) of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be adjudicated. 3.3 Thereafter, the Assessing Officer passed a penalty order dated 10.03.2012 under Section 271D of the Act whereby the Assessing Officer held that the assessee had violated the provisions of Section 269SS of the Act as sums aggregating Rs.14,25,74,302/- were transferred to the loan account in the form of book entries, otherwise than through an account payee cheque or a account payee draft. This according to the Assessing Officer contravened the provisions of Section 269SS of the Act and, accordingly, a penalty of Rs.14,25,74,302/- was imposed. 3.4 This order was also carried in appeal before the CIT (Appeals). The assessee impugned the penalty order on the grounds that it was barred by limitation as well as on merits. The CIT (Appeals) rejected the contentions of the assessee that penalty order was beyond the prescribed period of limitation and held that the order fell within the purview of Section 271(1)(a) and not Section 275(1)(c) of the Act. However, on merits the CIT (Appeals) referred to the decision of this Court in CIT v. Noida Toll Bridge Co. Ltd.: 262 ITR 260 and negated the finding of the Assessing Officer that Section 269SS of the Act was violated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order is beyond the prescribed period. In the present case, the penalty sought to be imposed on the assessee is for alleged violation of Section 269SS of the Act. It is well settled that a penalty under this provision is independent of the assessment. The action inviting imposition of penalty is granting of loans above the prescribed limit otherwise than through banking channels and as such infringement of Section 269SS of the Act is not related to the income that may be assessed or finally adjudicated. In this view Section 275(1)(a) of the Act would not be applicable and the provisions of Section 275(1)(c) would be attracted. The Rajasthan High Court in the case of Commissioner of Income-Tax v. Hissaria Bros.: (2007) 291 ITR 244 (Raj.) after examining a case which was factually similar to the present one, expressed similar view and held as under:- The expression other relevant thing used in Section 275(1)(a) and clause (b) of Sub-section (1) of section 275 is significantly missing from clause (c) of section 275(1) to make out this distinction very clear. We are, therefore, of the opinion that since penalty proceedings for default in not having transactions through the bank ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e amount referred to in clause (b), is twenty thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,- (a) Government; (b) any banking company, post office savings bank or cooperative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing notify in this behalf in the Official Gazette: Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation.-For the purposes of this section,- (i) banking company means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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