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TMI Blog2023 (12) TMI 338X X X X Extracts X X X X X X X X Extracts X X X X ..... to the applicability or otherwise of section 269T of the Act to the assessee s case. It was within the purview of the AO to bring the assessee s case to scrutiny and to make regular assessment under section 143(3) of the Act. It was also within the power of the AO at the appropriate stage to initiate proceedings under section 147 of the Act against the assessee. No such action was taken. It is not in dispute that there were no proceedings pending before the Ld. AO qua the assessee for A.Y. 2014-15. We, therefore hold that initiation of penalty proceedings under section 271E of the Act on the basis of assessment order for A.Y. 2015-16 is bad in law and imposition of impugned penalty by Ld. JCIT and confirmation thereof by the Ld. CIT(A) is not sustainable. The plea of Ld. Sr. DR that penalty under section 271D and 271E can be initiated dehors any pending proceedings for relevant A.Y. is devoid of merit. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... response to show cause notice, the assessee submitted as under: "1. That the case of the assessee was not final under section 143(3) for A.Y. 2014-15 and no proceedings for the relevant assessment year were pending at any point of time, so initiation of penalty proceedings u/s 271E for A.Y. 2014-15 is illegal and invalid. The assessee relied on the following case judgments:- Baldev Singh Vs ACIT No: 1125 & 1126/CHD/2011 (ITAT Chandigarh). Annexure-1) Kirti Kumar Vs ACIT, Lucknow ITA No.:81/L/KW/2014 (ITAT Lucknow) Annexure-2. CIT Vs Manohar Lal Thakral ITA No: 812 of 2010 (Punjab & Haryana HC) Since no proceedings were pending for A.Y. 2014-15, therefore initiation of penalty 271E of the I.T. Act is bad in law and illegal. 2. That no cause of action arose to initiate the penalty proceedings as the assessment order for A.Y. 2014-15 which was the foundation of penalty proceedings was not in existence at the time of issue penalty notice i.e no proceedings for relevant year (AY 2014-15) were pending at the relevant point of time. 3. That issue of penalty notice /s 271E for above assessment year is beyond jurisdiction and untenable in low. 4. That the assessee filed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rs. 1,40,000/- was made by bearer cheque and not through crossed cheque, for violation of the provision of Section 269T, the assessee is liable to be penalized under section 271E of the Act for the said default. The Ld. JCIT, therefore, imposed the impugned penalty. 6. The assessee appealed before the Ld. CIT(A) but without success. The Ld. CIT(A) citing certain decisions dismissed the appeal of the assessee by observing in para 5.9 of his appellate order as under: "5.9 In view of the above discussed decisions of the Hon'ble Courts, it can be held that for escaping the rigours of the provisions only essential to show that the transaction is genuine and bonafide but also to of section 271D/271E, it is not show that for some bonafide reasons, the assessee could not carry out the transaction by way of account payee cheque or demand draft or other specified modes. In other words, the liability for penalty u/s, 271E is to be examined within the 4 corners of Sec. 273B of the Act ie, on the touch stone of reasonable cause or its absence. The onus to establish the same with the aid of impeccable evidence is squarely upon the defaulter and would be de-hors other provisions of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The undisputed fact on record is that the Ld. AO during the course of assessment proceedings for A.Y. 2015-16 had collected information from Allahabad Bank which revealed that the amount of Rs. 1,40,000/- was repaid by the assessee vide cheque No.- 042133 on 21.03.2014 (relevant to A.Y. 2014- 15) to Shri S.C. Jain. The same information from the bank revealed that the assessee had repaid an amount of Rs. 50,000/- vide bearer cheque No. 042137 on 12.04.2014 (relevant to A.Y. 2015-16) to Smt. Nirmal Jain in respect of which too the Ld. AO observed at page 8 of the assessment order that penalty proceedings u/s 271E shall be separately initiated. It may be mentioned that the Ld. CIT(A) has deleted the penalty of Rs. 50,000/- levied under section 271E for A.Y. 2015-16 by recording the finding that repayment of loans by the assessee is by bank transfer and not by bearer cheque (page nos. 37 to 41 of the Paper Book.) 11. It is an established fact that penalty under section 271E of Act for A.Y. 2014-15 in the case of the assessee has been initiated while completing assessment proceedings for A.Y. 2015-16. This, in our view, is not legally tenable. Penalty proceedings can be initiated at ..... X X X X Extracts X X X X X X X X Extracts X X X X
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