Jagdish Chandra Suwalka Vs JCIT (ITAT Jaipur)
ITAT observed that the provisions contained u/s 275(1)(a)are not applicable on the facts of present case for the reason that undisputedly no appeal has been filed against the assessment order passed on 28.12.2017. Therefore, it cannot be said that the relevant assessment or other order was subjected to some appellate proceeding. Consequently, the extended period of limitation of 6 months from the availability of the appellate order, will not be available to the revenue. But otherwise also, the computation of the income has no bearing over the imposition or otherwise of the penalty provided u/s 271D and 271E of the Act.
For the same reason section 275 (1)(b) is also not applicable in as much as the assessment order was not subjected to Revision u/s 263 or u/s 264. Now coming to section 275(1)(c), we find that two types of limitations are provided therein viz, (1) expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed or (2) six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.
Thus, a penalty u/s 271D could not be imposed after the expiry of the larger period of limitation. In this case, we find that the ld. JCIT in the impugned penalty order has clearly observed that the assessment for A.Y 2015-16 was completed by the AO (ACIT Tonk) vide assessment order dated 28.12.2017 u/s 147/143(3) of the Act. The ld. JCIT also referred to the observation made by the AO that the assessee had received cash payment of Rs.47,50,000/- from various persons as per details given, which are in contravention of Sec.269SS of the IT Act. Thus, the relevant proceedings were the assessment proceedings during the course of which, the default of accepting cash over the prescribed limit was noted by the AO and since the assessment proceedings were completed on 28.12.2017, the related financial year ended on 31.03.2018. Accordingly, the first time limit thus expired on 31.03.2018. For the second time limit, an action for imposition of penalty was taken on 28.12.2017 by the AO, when the assessment was completed and six months from end of that month expired on 30.06.2018 which time limit clearly expires later. Hence, the penalty u/s 271D could have been validly imposed only on before 30.06.2018 as against which, in this case, the impugned penalty was imposed much later on 28.05.2019 hence, the same is clearly barred by limitation. The ld. D/R however, contended that for this period of 6 months has to be reckoned from the date of issue of show cause notice by the ld. JCIT, who was the competent Authority to impose a penalty u/s 271D and since he issued the notice on dated 06.11.2018 and imposed the penalty on 28.05.2019 itself, which was well within the period of 6 month from the month in which action for imposition of penalty was taken. The ld. A/R however, strongly contended that for this purpose the observation made by the AO in the assessment order has to be considered and the date of the assessment order being 28.12.2017 was relevant and therefore, the period of 6 months has to be reckoned from that date. Consequently, the limitation from that date the limitation had already expired.
ITAT find that the issue involved in the present case is fully covered by the decision of Hon’ble Jurisdictional High Court in the case of CIT vs. Hissaria Bros. (Supra).The same has been affirmed by the Hon’ble Apex Court in the case of CIT Vs. Hissaria Brothers [2016] 386 ITR 719 (SC), holding as under.
“Penalty under ss. 271D and 271E-Limitation under s. 275- Computation-Penalty orders under ss. 271D and 271E passed beyond six months from the end of the month in which the assessments were completed were barred by limitation-CIT vs. Hissaria Bros. (2007) 211 CTR (Raj) 156 affirmed.”
Similar view was taken again by the Hon’ble Rajasthan High Court in the JCIT Vs. Jitendra Singh Rathore [2013] 352 ITR 327(Raj), wherein it was held under:
“Penalty under s. 271D-Limitation under s. 275-Applicability of cl (a) or cl. (c) of s. 275(1)-Show-cause notice was served on the assessee by AO on 27th March, 2003-Thereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by Jt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was applicable to the case-Even when the authority competent to impose penalty under s. 271D was the Jt. CIT, the period o f limitation for the purpose of such penalty proceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings”.
Since there is no dispute on the facts stated above, hence respectfully applying the binding judicial precedents, I hold that the penalty imposed u/s 271D, under challenge, is barred by limitation u/s 275(1)(c) of the Act. Hence, the same is hereby quashed.
FULL TEXT OF THE ORDER OF ITAT JAIPUR
This appeal by the assessee is directed against the order of ld. CIT (A), National Faceless Appeal Centre (NFAC), Delhi dated 30.08.2022 for the assessment year 2015-16. The assessee has raised the following grounds of appeal :-
1. The impugned penalty order u/s 271D dated 28.05.2019 is bad in law and on facts of the case, for want of jurisdiction and various other reasons and hence the same kindly be quashed.
2. Rs. 47,50,000/-: The ld. CIT (A) erred in law as well as on the facts of the case confirming the penalty imposed u/s 271D of the Act. The penalty so imposed by the AO and confirmed by the ld. CIT (A) being totally contrary to the provisions of law and facts kindly be deleted in full.
3. The ld. CIT (A) erred in law as well as on the facts of the case in passing the impugned order in a haste without affording adequate and reasonable opportunity of being heard. The impugned order having been framed in gross breach of natural justice, hence the same kindly be quashed or alternatively be restored to the file of the ld. CIT (A).
4. The appellant prays your honour indulgences to add, amend or alter of or any of the grounds of the appeal on or before the date of hearing.
2. The brief facts of the case are that the assessee filed his return declaring income of Rs.3,12,060/- and agriculture income of Rs. 75,200/- on 29.10.2015 through E-filing which was processed u/s 143(1) at the returned income. The case of the assessee was selected for limited scrutiny through CASS and hence notice u/s 143(2) and 142 were issued on different dates. In response Sh. Ravi Kumar Jain and Sh. Mukesh Kumar Jain, Advocates & A/R attended and furnished details as required from time to time. Various aspects of the case were discussed with them. During the relevant period the assessee was engaged in trading of Tudi i.e. wastage of Sarson plant which is used as a fuel by the bio-bricks manufacturing units. The assessee had shown sales of Tudi amounting to Rs. 12,56,230/- on which net profit of Rs. 54,970/- only was declared. The AO held that by applying provisions of section 44AD the net profit @8% i.e. Rs. 100,498/- should have been declared. Thus there is a difference of Rs 45,528/- which the AO added to the income of the assessee and assessment was completed vide order dated 28.12.2017 u/s 143(3) of the Act at total income of Rs. 4,19,430/-. However, no appeal was filed against the additional income of Rs. 45,528/-.
2.1 After completion of the assessment proceeding, the ld. JCIT issued a show cause notice dated 06.11.2018 under section 271D. In response to which, the assessee filed detailed submission on 4.01.2019, which are reproduced at page 2-3 of the penalty order. From the perusal of the assessment order, it doesn’t appear that the AO has initiated the penalty proceedings u/s 271D nor there any reference in the impugned order of getting any reference or request from concerned jurisdictional offices i.e., ITO WD, TONK. The Ld. JCIT not feeling satisfied with the submissions so made, imposed penalty of Rs 47,50,000/- vide order dated 28.05.2019 holding as under:
“Assessee’s submission has been considered thoroughly, however, same has not been found to be acceptable for the reason that the amount received in cash for filling an application for the tender of liquor could have been taken by the way of account payee cheque/ Demand Draft/ RTGS rather than taking in form of cash. Further, assessee could not prove that there was reasonable cause which was beyond the control of the assessee for accepting cash loans. In the view of the above discussion, it is apparent that the assess has violated the provisions of section 269SS by accepting cash loans of Rs 47,50,000/-instead of account payee cheque or demand draft from the various persons. Thus, this is a fit case for imposing penalty u/s 271D of the I.T. Act 1961 levied for default so committed.”
Aggrieved by the order of the AO, the assessee preferred appeal before ld. CIT (A). The ld. CIT (A), National Faceless Appeal Centre (NFAC), Delhi, confirming the order of the AO, dismissed the appeal of the assessee.
3. Now the assessee is in appeal before the Tribunal. The assessee has also raised an additional ground, which is purely legal, as under and relying on the decision of Hon’ble Supreme Court in the case of National Thermal Power corporation Ltd., 229 ITR 383 (SC) prayed admission of the same :
Additional Ground :
“ That the impugned penalty order dated 28.05.2019 passed by the ld. JCIT Range-7 Jaipur is clearly barred by limitation u/s 275(1)(c) of the Act and therefore the same deserves to be quashed. ”
4. After hearing both the parties, I am convinced that this is purely a legal ground objecting to the imposition of the penalty as barred by limitation. Since the facts relating to this ground are available on the record, requiring no fresh investigation of facts hence, relying upon the judgment of Hon’ble Supreme Court in the case of National Thermal Power Corporation Ltd. 229 ITR 383 (SC), the additional ground is hereby admitted.
5. Before me, the ld. A/R of the assessee submitted his submissions as under :-
“At the outset, it is submitted that based on the undisputed facts available on record, imposition of penalty vide the impugned order u/s 271D passed by the ld. JCIT, Jaipur on 28.05.2019, is clearly barred by the limitation in as much as, the law u/s 275(1)(c) reads as under:
