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TMI Blog2022 (8) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... t judicial action has been taken, would not defeat the same. This, however, is not the case here. That, for instance, would be the case where the assessee had indeed received cash from or on behalf of his wife, attracting a penalty u/s. 271D, while the authority had, stating the facts constituting the default correctly, mentioned s. 271E instead. Order - Though the penalty u/s. 271D, though not time barred, is not maintainable in the absence of the necessary jurisdiction (see: Pr. CIT v. Maruti Suzuki Ltd. [ 2019 (7) TMI 1449 - SUPREME COURT] ; Deep Chand Kothari [ 1987 (9) TMI 27 - RAJASTHAN HIGH COURT] The penalty levied is for the default specified u/s. 269-T, and though merited on the whole sum and, in any case, part thereof, is not sustainable in the absence of any penalty having been initiated or levied u/s. 271-E. - I.T.A. No. 63/JAB/2019 And C.O.No. 02/JAB/2022 (arising out of I.T.A. No. 63/JAB/2019) - - - Dated:- 29-7-2022 - Shri Sanjay Arora, Hon ble Accountant Member And Shri Manomohan Das, Hon'ble Judicial Member For the Assessee : Shri Sapan Usrethe, Advocate And CA Apoorva Agrawal For the Respondent : Shri Ravi Mehrotra, Sr. DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to levy penalty u/s. 271D/E, i.e. for violation of provisions of s.269SS/T, levied penalty u/s. 271D (for violation of provisions of s.269SS). Section 269-SS and 269-T of the Act proscribe acceptance and repayment of any loan or deposit of money, beyond a threshold limit, other than by way of account payee cheque or account payee bank draft by the payer/depositee to the payee/depositor, for which default penalty, in the sum so received or paid, is liable to be levied u/s. 271D and s. 271E respectively in case reasonable cause is not proved (s. 273B). In his view, Annexures A B to the assessment order, being the ledger accounts of the assessee and his wife (in each other s books), clearly reflected the assessee to have received cash on 25/08/2009 from his wife, SR, who had withdrawn money from her bank account, and for which no explanation had been offered. In appeal, the assessee reiterated both the grounds before the first appellate authority, i.e., of the penalty being levied on wrong facts; there being no violation of s.269SS, for which penalty u/s. 271D is initiated, inasmuch as he had not received any money in cash from his wife and, without prejudice, that he had in fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure , will have its full operation. As per sec 2731B a penalty provided under s.271D cannot be imposed if the assessee or the person proves before the assessing authority that there was a reasonable cause for not accepting the amount of loan or deposit by way of account payee cheque or account payee bank draft. So, it is to be seen that whether there existed reasonable cause for entering into the said transactions. In present case, the funds have been received by the husband and same is handed over to his wife. The above explanation is bona fide explanation and constitutes a reasonable cause under section 273B of the Act. 7.1.6 . Therefore, the penalty imposed by the AO under section 271D amounting to Rs. 15,50,000/- is not sustainable and is cancelled. Therefore, the appeal on these grounds is allowed. Aggrieved, both the parties are in appeal before us, with the assessee raising several grounds per his CO. 3. We have heard the parties, and perused the material on record. 3.1 It is clear, therefore, that the ld. CIT(A) allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y a return back to his wife the money received by him from another on her behalf. Though the ld. CIT(A) states so at para 7.1.5 of his order, the same, is de hors any material on record. As afore- noted, no reason stands advanced for repayment in cash. That apart, as aforestated, the penalty thus cancelled by him is u/s. 271E, while the penalty levied is u/s. 271D. 3.3 The assessee s claim of the penalty proceedings being out of time u/s. 275 is again without basis, as the time limitation, as per clear provision of s. 275(1), would run from the date of the initiation of the proceedings by the competent authority, which is on 10/02/2017. The letter dated 12/04/2016 by the AO intimating the assessee the proposal for initiating penalty proceedings u/s. 271D is a process anterior to the initiation of the penalty proceedings and, thus, the argument of the time limitation running therefrom cannot be accepted. Initiation of proceedings, it may be appreciated, can only be by the competent authority, i.e., Jt. CIT, Range-1, Jabalpur in the instant case and, thus, is the initiation contemplated u/s. 275(1). The letter dated 12/04/2016 is at best to elicit a response from assessee whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (correct) of SR as on 10/6/2009: Rs. 15,17,500 - Credit balance (correct) of SR as on 24/8/2009: Rs. 20,17,500 - Credit balance (correct) of SR as on 25/8/2009: Rs. 4,67,500 The credit balance of SR in the assessee s account at the close of 24/8/2009, i.e., immediately prior to the cash payment of Rs. 15.50 lacs to her on 25/8/2009, is thus rs. 20.175 lacs, of which rs. 8 lacs represents part sale consideration received from RV. The entire of this payment (Rs. 15.50 lacs) is therefore only in satisfaction of the amount standing to the credit of SR, who is thus only receiving back her money from the assessee. The same could, if at all, attract penalty u/s. 271E for violation of s. 269T, and there is no question of contravention of s. 269SS, i.e., for acceptance of money other than per the prescribed mode/s, which attracts s. 271D. The assessee s explanation of the amount repaid being not a loan or deposit, but only a return back of funds received on behalf of SR, is, even accepting the argument, valid only for Rs. 8 lacs . So however, in our view, the penalty as levied is unsustainable in law in the absence of the jurisdictional fact, i.e., the acceptance of money in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... forthwith, albeit in cash. It was, on that basis, contended to be not a case of repayment of a loan or deposit. The plea, impressive at first blush, is full of gaping holes and, in fact, misleading. Even ignoring the fact that the second cheque (the first being for Rs. 8 lacs) is for Rs. 8.40 lacs, as against it s mention in the sale deed as for Rs. 8.50 lacs, the question is why would a buyer pay the sale consideration to the assessee, a third person as far as this transaction is concerned ? This becomes even more striking when considered in the context of the fact that both the assessee and his wife are Advocates, well aware of the legal implications. Further, there is no reference to the payment being made to the seller s spouse in the sale deed. Further still, the assessee receives the amount only to repay it back to his wife, again making both the transactions, i.e., the receipt of his wife s money by him (in bank) and returning to her (in cash), incomprehensible. Be that as it may, it is then, on that basis, said that the money belonged to SR, and having been received by the assessee on her behalf by the assessee, credited in his books to her account, so that it is not a lo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was repaid in cash, retaining a part (rs. 0.9 lac). This is apart from the fact that the transaction is unexplained as to its rationale. That the assessee should hold cash in that sum and, further, choose to repay his wife therefrom, is again most surprising. No urgency has been shown, much less contended, in which case, rather, the money ought to have been received by SR, the seller, herself, rather than being routed through her husband. And there being no bar in law for receipt of sale consideration in cash, as the ld. CIT(A) observes, could have also been insisted to be in cash, in whole or in part. Further, if the money was required by the assessee, all that was required was to obtain a loan/ deposit from his wife, SR, per the prescribed modes, upon her first receiving the money from the payer (RV) directly; she having in fact already given loan/deposit to the assessee. The whole transaction, besides raising several questions, which remain unanswered, rings untrue. This also explains the non-mention of the date (26/8/2009) and amount (Rs. 16.50 lacs) of sale in the assessee s explanation before the AO or the competent authority, besides not furnishing any evidence in subs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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