Ramakrishna Murali Vs ITO Ward-6(3)(1) (ITAT Bangalore)
ITAT Bangalore held that penalty u/s 271D of the Income Tax Act is leviable on loan taken by way of cash. Notably, repayment of cash loan by way of cheque wouldn’t exonerate the assessee from levy of penalty.
Facts-
The assessee is an individual engaged in the business of wholesale trading in wines, liquor and other related products as a proprietor and under the name & style of M/s. Nanjundeshwara Wines. During assessment proceedings, it was noticed by the AO that assessee has taken unsecured loan by way of cash at Rs.1,64,70,000/- by various parties.
AO issued a show cause notice on 1.4.2015 requiring the assessee to show cause as to why an order imposing penalty should not be made u/s 271D of the Act. The notice was duly served on the assessee. There was no response from the assessee to the said notice since the change of jurisdiction from Range-6(2) to 6(3), again one more letter dated 14.8.2015 was issued as a final opportunity and the said letter was duly served on 14.8.2015 itself and the acknowledgement was brought on record by AO and there is no response from the assessee for the said letter.
Consequently, AO levied penalty of Rs. 164.70 Lakhs u/s 271D. The same was confirmed by CIT(A). Being aggrieved, the present appeal is filed.
Conclusion-
Mere fact that the physical delivery of the notice was made to a person other than the addressee and a person who had no authority to receive the letter on the addressee’s behalf, would not be sufficient to prove that there has been no proper service.
The repayment of said cash loan by way of cheques would not exonerate the assessee from levy of penalty u/s 271D of the Act and this is not stipulated in the provisions of section 273B of the Act. Accordingly, in our opinion, there is no reasonable cause so exist at the time of taking this impugned amount of cash loan from various parties otherwise than by crossed cheque or demand draft. In view of the above discussion, we confirm the levy of penalty u/s 271D of the Act to the tune of Rs.1,64,70,000/-.
FULL TEXT OF THE ORDER OF ITAT BANGALORE
This appeal by assessee is directed against order of CIT(A), NFAC passed u/s 250 of the Income-tax Act,1961 [‘the Act’ for short] dated 4.8.2022, wherein the Ld. CIT(A) confirmed the levy of penalty u/s 271D of the Act at Rs.1,64,70,000/-. The assessee has raised following grounds of appeal:-
1. The Id. Commissioner of Income Tax (Appeals) has grossly erred in upholding the penalty order u/s 271D of the Act under the facts and circumstances of the case.
2. The Id. Commissioner of Income Tax (Appeals) has grossly erred in upholding the of Rs.1,64,70,000/- under the facts and circumstances of the case.
3. The penalty order passed by the learned assessing officer under section 271D of the Act is barred by limitation and consequently penalty order is liable to be quashed on the facts and circumstances of the case.
4. The assessing officer has grossly erred in serving the impugned penalty order dt. 28.10.2015 on 16.01.2018 which is barred by limitation and the penalty order is liable to be quashed in full under the facts and circumstances of the case.
5. The appellant denies himself regarding the acknowledgement for service of penalty order [as given personally by the ACT, Circle — 6(2)(1), Bangalore] inasmuch as the same is not delivered on the appellant and accordingly the penalty order is liable to be quashed in full under the facts and circumstances of the case.
6. The assessing officer has grossly erred in not serving the impugned penalty order in accordance with law under the facts and circumstances of the case.
7. The appellant denies himself from being served with the impugned penalty order inasmuch as date of acknowledgement of receipt as shown in the photocopy given by the Assessing Officer is 28.10.2015; whereas date of despatch of order from the Assessing Officer’s office control is 30.10.2015 and accordingly the impugned order could never have been served upon the appellant under the facts and circumstances of the case.
8. The assessing officer has grossly erred in not mentioning as to, what prevented him from serving the impugned penalty order to the appellant by way of RPAD which is duly recognised under the Act under the facts and circumstances of the case.
9. The assessing officer has grossly erred in alleging that the impugned penalty order is served personally on the appellant’s wife who is neither a party to the assessment/ penalty proceedings nor is authorized by the appellant to receive the impugned penalty order under the facts and circumstances of the case.
10. The assessing officer has grossly erred in making false allegations that the impugned penalty order is served on the appellant’s wife under the facts and circumstances of the case.
11. Without prejudice to the above, the appellant denies himself liable to be levied with penalty amounting to Rs.1,64,70,000/- u/s 271D of the Act under the facts and circumstances of the case.
12. For the above and other grounds to be urged during the hearing of the appeal the appellant prays that the appeal be allowed in the interest of equity and justice.
2. Facts of the issue are that the assessee is an individual engaged in the business of wholesale trading in wines, liquor and other related products as a proprietor and under the name & style of M/s. Nanjundeshwara Wines. For the assessment year under consideration, the assessee filed return of income declaring total income of Rs.19,41,200/- on 21.11.2012 vide acknowledgement No.532491861211112. The assessee’s case was subject to scrutiny assessment u/s 143(3) of the Act and the assessment order was passed u/s 143(3) of the Act on 27.3.2015 by assessee assessing the total income of assessee at Rs.39,49,290/- as against declared income of Rs.19,41,200/-. It was noticed by the AO that at the time of assessment, assessee has taken unsecured loan by way of cash at Rs.1,64,70,000/- by various parties as below:-
