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TMI Blog2014 (6) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... on of penalty proceedings also expired on 30.6.2012 - The penalty order has been passed on 14.9.2012 which was certainly after the period of limitation prescribed u/s. 275(1)(c) - CIT(A) rightly held that the penalty order to be barred by limitation. U/s 269T no person shall repay the loan otherwise, than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan - the assessee has transferred the loan by way of journal entry to his wife - When the assessee has transferred the loan from himself to his wife by way of journal entry, it is only the substitution of one debtor by another debtor - creditors has not received any amount and since the creditors has not received any amount, it cannot be said that there is a repayment of loan - Section 269 would come into play only when there is actual repayment of loan - Merely because loan is assigned by the assessee to his wife by way of journal entry, it cannot be said that there is a repayment of loan, otherwise, than by account payee cheque or account payee bank draft, so as to penalize the assessee u/s 271E – CIT(A) was of the view that the assessee is not liable to be penalised u/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 269T prohibits repayment of loan, otherwise than account payee cheque or account payee bank draft. Admittedly, the repayment of loan was otherwise, than by account payee cheque or by account payee bank draft and therefore, there is a violation of section 269T and penalty u/s. 271E was rightly levied. She, therefore, submitted that the order of the Ld. CIT(A) should be reversed and that of AO may be restored. 2.1 Ld. Counsel of the assessee on the other hand relied upon the order of the Ld. CIT(A) and he referred to section 275 which provides the time limit for levy of penalty. He referred to section 275(1)(c) and submitted that time limit prescribed is upto the expiry of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated or six months from the end of the month in which action for imposition of penalty is initiated whichever expires later. He submitted from the assessment order dated 5.12.2011, it is evident that the penalty proceedings was initiated. Thus, the financial year expired on 31.3.2012 and six months from the end of the month in which penalty proceedings were initiated expired on 30.6.2012. While t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice and not from the date when the AO issued the notice, because the Assessing Officer who is of the rank of Income Tax Officer has no power to levy the penalty u/s. 271E. 3.2 Let us examine the facts of the assessee s case. The AO has discussed these facts at Page 6 vide Para 5 of the assessment order which is reproduced below for ready reference:- During the course of assessment proceedings, the assessee filed loan confirmations. On perusal of the same, it is seen that the assessee has transferred loans through journal entries. Accordingly, vide questionnaire dated 5.9.2011, the assessee was asked to explain: It is seen from the details of loans that the same has been transferred through journal entry. Your attention is required to relevant provisions of section 269SS/269T which prohibits squaring up of loan through general entries. Please explain as to how the provisions of section 269SS/269T are not attracted in your case. No reply to this specific query, was filed by the assessee. Similarly, another opportunity was afforded to the assessee vide this office letter dated 8.11.2011, which was more specific and which read as under:- As per confirmation of MGF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .T. Act. It is true that u/s. 271E as per sub-section (2) the penalty imposable u/s. 271E is to be imposed by the Joint Commissioner of Income Tax. Now the question remains whether the AO if he is otherthan Joint Commissioner has a right to initiate the penalty proceedings u/s. 271E or not. In our opinion, there is no bar on the Assessing Officer otherthan the Joint Commissioner to initiate the penalty proceedings u/s. 271E. Because it is the AO who can only notice the repayment of loan or acceptance of loan in violation of section 269SS/269T. When there is any acceptance/ repayment of loan in violation of section 269SS/269T, it is the AO who has to prima facie satisfy himself whether there is a violation of section 269SS/269T and if there is a violation then he may initiate the penalty proceedings u/s. 271D/271E and thereafter should refer the matter to the Joint Commissioner of Income Tax who will finally decide and if satisfied, will levy the penalty u/s. 271D/271E. From the perusal of the assessment order it is clear that the same procedure has been followed. The AO when noticed the transfer of loan by journal entry, he prima facie formed an opinion of violation of section 269T ..... X X X X Extracts X X X X X X X X Extracts X X X X
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