Time limit for initiation of penalty proceedings u/s 271D & 271E to be reckoned from date of JCIT Notice

Brief of the case:

• The Hon’ble Kerala High Court in the case of Grihalakshmi Vision Vs. ADIT held that the penalty proceeding under Sec 271D and 271E can be initiated by Joint commissioner only and the limitation period of six months to be reckoned from the end of month of initiation of penalty proceedings by Joint Commissioner and not from the date of assessment order.
• Thus, even if the assessment order providing that the penalty proceedings being initiated the time limits as prescribed u/s 275 won’t start running as Assessing officer has no power to initiate penalty proceeding u/s 271D & 271E.

Facts of the case:

• During the course of assessment proceedings the AO found that there was acceptance and repayment of deposits in cash in excess of Rs.20,000/- thereby violating the provisions of Sec 269SS and 26T.
• Accordingly, the matter was referred to the Joint Commissioner of Income Tax and who issued notice dated 28.3.2008 and after receipt of reply from assessee levied penalty u/s 271D and 271E to tune of Rs. 10,83,000/- and Rs. 2,97,000/- To the notice, replies were given and finally order under Section 271D. These orders were confirmed by the Commissioner of Income Tax (Appeals) and also by ITAT.
• Aggrieved by the order of ITAT assessee is in appeal before Hon’ble Kerala High Court.

Contention of Assessee: