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TMI Blog2003 (10) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... ne lakh nine thousand three hundred ten only). The said assessment was taken up for scrutiny by the Assessing Officer and during the course of the scrutiny it was found that there were certain credit balances in the names of certain persons as seen from the balance-sheet. The Assessing Officer on verification of the accounts, by means of his assessment order dated February 25, 1994, held that the assessee had received loans and deposits in cash in contravention of the provisions of section 26955 of the Act, and also he had made repayment of the loans and deposits received otherwise than by an account payee cheque or account payee bank draft drawn on the names of the persons who had advanced the loan or made the deposits with the assessee; and therefore a penalty is required to be levied on the assessee under sections 2710 and 271E of the Act for failure to comply with the provisions of sections 26955 and 269T of the Act. However, he observed that action for contravention of sections 26955 and 269T of the Act would be taken up separately. Thereafter, the Deputy Commissioner of Income-tax, Hubli Range, Hubli, issued two notices dated June 8, 1994, the copies of which have been produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings. Aggrieved by the said order, the Revenue had preferred appeals in Nos. 941 and 943 of 1995 before the Tribunal. However, the Tribunal, in the impugned order set aside the order passed by the Commissioner (Appeals) on the ground that the conclusion reached by the Commissioner (Appeals) that the order was required to be passed within six months from the end of the month in which the action for imposition of penalty initiated, is erroneous in law. The Tribunal, further took the view that the order imposing penalty having been passed on March 28, 1995, and the financial year having expired on March 31, 1995; the conclusion reached by the Commissioner (Appeals) that the penalty levied both under sections 271D and 271E is barred by time, is unsustainable in law. Shri G. Sarangan, learned senior counsel, challenging the correctness of the impugned order passed by the Tribunal made three submissions. Firstly, he submitted that the reasons assigned by the Tribunal to take the view that the conclusion reached by the Commissioner (Appeals) that the order was required to be passed within six months from the end of month in which the action for imposition of penalty initiated, is e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ported the impugned order passed by the Tribunal. It is his submission that the conclusion reached by the Commissioner (Appeals) being totally erroneous in law, the Tribunal was justified in interfering against the said order. The substantial question of law raised for decision which was formulated by this court at the time of admission of this appeal, reads as follows: "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the penalty orders under sections 271D and 271E had been passed within the period of limitation and whether the Tribunal was right in reversing the order of the Commissioner of Income-tax (Appeals), who held that the penalty orders were passed after the expiry of the period of limitation specified in section 275(1)(c) of the Income-tax Act, 1961?" Section 275 of the Act provides for a bar for imposing penalty as provided under Chapter XXI of the Act. In other words the said provision prescribes the period by which the order imposing the penalty is required to be passed. The said section reads as follows: "275. (1)(c) in any other case, after the expiry of the financial year in which the proceedings, in the cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment order is made in the course of which proceedings for penalty could be initiated. In the present case, the assessment order was made on February 25, 1994. The financial year in respect of the assessment order, as rightly found by the Commissioner (Appeals), had expired on March 31, 1994. Therefore, if the first part of section 275(1)(c) is not applicable, the only question is whether the order imposing penalty was passed within the period prescribed in the later portion of section 275(1)(c), i.e., within six months from the end of the month in which action for imposition of penalty is initiated? The Commissioner (Appeals), at paragraph 9 of the order has observed thus: "The instant case falls under Category-III. Thus, in accordance with the provisions of section 275(1)(c) of the Income-tax Act, 1961, the period of limitation for the instant case was six months from the end of the month in which the action for imposition of penalty was initiated. The Deputy Commissioner of Income-tax initiated the action for imposition of penalty by issue of a show cause notice under section 271D on June 8, 1994. Thus, the penalty order under section 271D should have been passed by December ..... X X X X Extracts X X X X X X X X Extracts X X X X
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