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TMI Blog2016 (9) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... he following question of law was formulated on 20th April, 2010. "Whether on the facts and in the circumstances of the case the learned Tribunal has erred in law in dismissing the Appeal of the revenue by disregarding that the initiation of penalty proceeding under Section 271D of the Income Tax Act, 1961, is not related to the Assessment proceedings and it can be initiated at any time?" Md. Nizamuddin, learned advocate appearing in support of the appeal, however, submitted that the question no.(ii) originally suggested is more on point. He, therefore, prayed for the question no.(ii) being substituted and for hearing of the appeal on that question. Mr. Khaitan did not object. Therefore, the above question of law is substituted by the fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t you. Your reply must reach this office 19th February, 2007." The assessee replied stating, inter alia that there was no violation of section 269SS because the assessee had neither accepted any loan nor did the assessee accept any deposit of money. The assessing officer thereafter by a letter dated 27th February, 2007 referred the matter to the Additional Commissioner of Income Tax for necessary action. The Additional Commissioner of Income Tax issued a fresh notice dated 26th July, 2007 to the assessee, the contents whereof are as follows:- "It is noticed that during the previous year 2003-04 pertaining to the Asstt. Year- 2004-05 you have received share application money amounting to Rs. 30,00,000/- received from 22 persons, each of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From the statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under section 271D and section 271E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings therea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty was initiated. The order as passed by the Joint Commissioner of Income-tax for the penalty under section 271D on May 28, 2004 was clearly hit by the bar of limitation and has rightly been set aside in the orders impugned. In view of the above, our answer to the formulated question of law is that even when the authority competent to impose penalty under section 271D was the Joint Commissioner, the period of limitation for the purpose of such penalty proceedings was not to be reckoned from the issue of the first show cause by the Joint Commissioner; but the period of limitation was to be reckoned from the date of issue of the first show cause for initiation of such penalty proceedings. For the purpose of present case, as observed hereina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns of law attracting penal provisions. Can the Assessing Officer, having come across a case of violation of law attracting penal provisions, issue a notice and in case he does so, would that be an act without jurisdiction ? This question has been answered by the Kerala High Court in the affirmative. A somewhat similar situation is contemplated or is bound to arise under Sub-Section 2 of Section 274 which provides as follows:- "[(2)No order imposing the penalty under this Chapter shall be made - (a)by the Income-tax Officer, where the penalty exceeds ten thousand rupees; (b) by the Assistant Commissioner [or Deputy Commissioner], where the penalty exceeds twenty thousand rupees, except with the prior approval of the [Joint] Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assistant Commissioner when the matter had been referred to him under section 274(2) of the Act. The proceedings for the imposition of penalty in terms of sub-section (1) of section 271 have necessarily to be initiated either by the Income-tax Officer or by the Appellate Assistant Commissioner. The fact that the Income-tax Officer has to refer the case to the Inspecting Assistant Commissioner if the minimum imposable penalty exceeds the sum of rupees on thousand in a case falling under clause (c) of sub-section (1) of section 271 would not show that the proceedings in such a case cannot be initiated by the Income-tax Officer. The Income-tax Officer in such an event can refer the case to the Inspecting Assistant Commissioner after initiatin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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