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TMI Blog2017 (11) TMI 2047X X X X Extracts X X X X X X X X Extracts X X X X ..... MI 87 - ALLAHABAD HIGH COURT] we find merit in the plea of assessee and proceed to decide the issue raised by the assessee by way of his arguments under Rule 27 of the ITAT Rules. Period of limitation for initiating penalty proceedings - Initiation of penalty proceedings u/s 271E wherein penalty proceedings were initiated by the Addl.CIT after completion of assessment order - The issue raised in the present appeal is squarely covered by the decision of Hissaria Bros [ 2001 (8) TMI 295 - ITAT JODHPUR] Even the CBDT Circular issued on 26.04.2016 has clarified the position that regarding any violation of provisions of sections 269SS and 269T of the Act, as the case may be, the Assessing Officers below the rank of Joint Commissioner of Income Tax were advised to make a reference to the Range Head, in the course of assessment proceedings. It was also clarified that the Range Head will issue penalty notice and shall dispose / complete the proceedings within limitation prescribed under section 275(1)(c) of the Act. The said Circular issued by the CBDT is advisory and has only clarified the position and cannot be said to be prospective in application. Before parting, we may also refer to c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kulkarni Vs. JCIT in ITA No.444/PN/2013, relating to assessment year 2009-10, order dated 29.07.2016 and also by the Circular No.09/DV/2016, dated 26.04.2016 passed by the CBDT. 5. The learned Departmental Representative for the Revenue on the other hand, filed written submissions and pointed out that the issue stands covered against the assessee by earlier order of Pune Bench of Tribunal and placed reliance on different decisions which we shall refer to while deciding the issue. He also pointed out that the CBDT's Circular which was issued on 26.04.2016 is only advisory in nature and such advisory could not be interpreted to mean that if the Assessing Officer does not make reference to the DCIT with regard to violation of provisions of section 269SS and 269T of the Act, before the close of assessment proceedings, then the Assessing Officer cannot pass on the information regarding the said violations to the JCIT / Addl.CIT and he loses his power to initiate penalty proceedings. Since the power to initiate penalty under section 271D and 271E of the Act has been given under the Statute, the same is not dependent on the assessment proceedings. 6. We have heard the rival contentions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d by limitation under section 275(1)(c) of the Act. The CIT(A) however, deleted addition on merits holding that the transaction was of daily running current account and not of a loan or deposit and outside the purview of section 269SS and 269T of the Act. Consequently, penalty levied under section 271E of the Act was cancelled. 8. The assessee before us has raised technical issue of non-maintainability of penalty proceedings since the information to levy penalty was not passed on by the Assessing Officer, who is below the rank of Addl. CIT before the completion of assessment proceedings as in the present case the penalty proceedings had to be initiated and completed by the Range Head and not by the Assessing Officer. 9. The learned Authorized Representative for the assessee filed written submissions and pointed out that though the assessee had not filed any Cross Objections, but as provided in Rule 27 of the ITAT Rules, in defense, he was entitled to argue on question of law involved in the matter. Reference was made to the decision of the Hon'ble High Court of Allahabad in CIT and Another Vs. Jindal Polyster Ltd. (2017) 397 ITR 282 (All). 10. The learned Departmental Representa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pune Bench of Tribunal in Shri Devidas Ramchandra Kulkarni Vs. JCIT (supra), wherein it was held as under:- "10. Under the provisions of section 272A(3)(c) of the Act, it is provided that any penalty imposable under sub-section (1) or (2) of the said section shall be imposed by the Joint Director or Joint Commissioner in respect of cases other than the cases covered in clauses (a) & (b) of sub-section (3). The issue which arises before the Tribunal is that where the assessments have been completed by a person other than Joint Commissioner, then at what juncture, the Assessing Officer making a reference to the JCIT, for initiating penalty proceedings under section 271D of the Act should send the intimation in this regard. The information that the assessee had accepted the cash loan from his wife had admittedly come to the knowledge of Assessing Officer, Ward 1(3), Nashik during the course of assessment proceedings itself, which is clearly mentioned in the order passed under section 271D of the Act. Once such information had come to his knowledge, then it was incumbent upon the Assessing Officer to have forwarded the said information to the JCIT i.e. Range Head before completion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated during the appellate proceedings arising out of the relevant assessment proceedings. It is only where the assessment proceedings are independent and not directly linked to the assessment proceedings that the result of such proceedings in the course of which the penalty proceedings were initiated does not affect the levy of penalty. On such penalty proceedings, independent of the assessment proceedings Clause (c) has been made applicable. In this category the period of limitation for completing the penalty proceedings is linked with the initiation of the penalty proceedings itself. 36. In such cases, the penalty proceedings can be initiated independent of any proceedings but obviously, the penalty proceedings can be initiated only when the default is brought to the notice of the concerned authority which may be during the course of any proceedings and, therefore, for this type of cases where the penalty proceedings have been initiated in connection with the defaults for which no statutory mandate is there about any particular proceedings during the course of which only such penalty proceedings can be initiated, a different period of limitation has been prescribed under Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... kachha adhatiya did not amount to deposit and its utilisation and dealing with it at the instance of farmer constituents did not amount to repayment of loan or deposits within the meaning of Section 269SS or Section 269T and on the ground that limitation under Section 275(1)(c) applies to such proceedings we hold in favour of the respondents. 40. Accordingly, these appeals fail and are hereby dismissed. No order as to costs." (underline provided for emphasis) 16. The Hon'ble High Court first talks about initiation of penalty proceedings which are independent of any proceedings but obviously, penalty proceedings can be initiated only when the default is brought to the notice of the concerned authority, which may be during the course of any proceedings…, but different period of limitation has been prescribed. So, even the Hon'ble High Court talks about initiation of penalty proceedings during the course of proceedings, when the default is detected. Then it goes on to talk about the time limit within which the proceedings have to be completed and has observed that it has no relevance to completion of appellate proceedings arising out of such assessment proceedings. It cl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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