SHRI LAL SINGH CHOUHAN,JHABUA vs. THE JCIT ,RANGE, JHABUA

अपील�य अ�धकरण, इ�दौर �यायपीठ, इ�दौर IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE

BEFORE SHRI MANISH BORAD,ACCOUNTANT MEMBER AND Ms. MADHUMITA ROY, JUDICIAL MEMBER Virtual Hearing ITA No.104/Ind/2020 Assessment Year:2009-10 Shri Lal Singh Chouhan JCIT 1, Gayatri Gali Ratlam बनाम/ Jhabua (M.P.) Vs. (Appellant) (Revenue ) P.A. No. ADMPC49181 Appellant by Shri S.N. Agrawal, CA Revenue by Shri Harshit Bari, Sr. DR Date of Hearing: 21.06.2021 Date of Pronouncement: 27.07.2021 आदेश / O R D E R PER MANISH BORAD, A.M:

The above captioned appeal filed at the instance of the assessee for Assessment Year 2009-10 is directed against the orders of Ld. Commissioner of Income Tax(Appeals) (in short ‘Ld. CIT], Ujjain dated 22.01.2020 which are arising out of the order u/s 143(3) r.w.s. 147 of the Act dated 20.01.2017 framed by JCIT, Ratlam.

Shri Lal Singh Chouhan ITANo.104/Ind/2020

The assessee has raised following grounds of appeal:

[1] That on the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in confirming the levy of penalty under section 271E of the Income-Tax Act, 1961 even when the penalty order as passed under section 271E of the Income-Tax Act, 1961 was without jurisdiction and barred by limitation of time. [2] That on the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in confirming the levy of penalty under section 271E of the Income-Tax Act, 1961 even when no proper satisfaction was recorded by the assessing officer. [3] That on the facts and in the circumstances of the case and in law, the Ld CIT (A) erred in confirming the levy of penalty under section 271E of the Income-Tax Act, 1961 of Rs.4,00,000/- without properly appreciating the facts of the case and submission made before him more so when no such amount of loan was found credited in the books of accounts of the appellant which was repaid in cash.

conducted in the case of person namely Shri Ramesh Chand

Upadhya and certain documents were impounded which also

included some documents allegedly showing transactions of cash

loan given and taken with the assessee. Assessment of Mr. Ramesh

Chand Upadhya was completed u/s 143(3) r.w.s. 147 of the Act for

A.Ys. 2008-09 & 2009-10. This information of cash loan

transactions were forwarded to the Ld. AO of the assessee showing

Shri Lal Singh Chouhan ITANo.104/Ind/2020

that there as repayment of loan Rs.5,50,000/- in cash which was in

contravention to the provision of section 269T of the Act. Penalty

proposal was received by ld. AO, Jhabua. Accordingly, notice issued

for levy of penalty u/s 271E of the Act. Statement of the assessee

was taken wherein he categorically denied to have taken any cash

loan from Mr. Ramesh Chand Upadhya. During the penalty

proceedings again it was submitted that no loan transaction have

been taken or repaid by the assessee during A.Ys. 2007-08 & 2009-

10 with Mr. Ramesh Chand Upadhya. Ld. AO was not convinced.

Though the information was received for repayment of cash loan at

Rs.5,50,000/- but Ld. AO levied the penalty u/s 271E of the Act at

Rs.4,00,000/-

could not get relief. It was contended before the Ld. CIT(A) that in

view of the settled judicial precedence no penalty was leviable as no

assessment proceedings were pending in the case of assessee and

so there was no satisfaction recorded by the ld. AO to initiate

penalty. It was also submitted that penalty levied for A.Ys. 2007-08

& 2009-10 u/s 271D of the Act and for A.Y.2008-09 u/s 271E were

Shri Lal Singh Chouhan ITANo.104/Ind/2020

of the Act deleted by Ld. CIT(A) accepting the assessee’s contention

that no cash loan was taken/repaid. However, in the instant case

Ld. CIT(A) was not convinced and he confirmed the penalty levied

u/s 271E of the Act observing as follows:

“5. I have gone through the facts of the case leading to levying of penalty. In the written argument it has been re-iterated that there was no loan transaction and therefore the question of levy of penalty does not arise. The appellant also referred to the order passed by my predecessor dated 22.08.2019 where penalty levied u/s 271D has been deleted. 6. I have perused the order of my predecessor referred supra and I am not in agreement with the finding given therein. It is seen that my predecessor deleted the penalty by noting that the AO failed to bring any material in support of the loan transaction. This finding of my predecessor is against the facts. It is seen from the penalty order passed by JCIT Ratlam Range that the basis of levy od penalty is noting on the seized documents, which was seized from Ramesh Chandra Upadhya. The notice contains date wise repayment of loan. Therefore there was basis for levy of penalty u/s 271E. 7. In the light of aforesaid facts I am of the considered opinion that there was adequate basis for levy of penalty in the form of noting on the seized documents and therefore penalty levied u/s 271E at Rs.4,00,000/- is confirmed.

for the assessee vehemently argued referring to the detailed written

synopsis as well as paper book filed on 15.06.2012 running from 1

to 70 pages. Two fold contentions were made; firstly, that there is

Shri Lal Singh Chouhan ITANo.104/Ind/2020

no evidence suggesting that assessee has taken any loan from Mr.

Ramesh Chand Upadhya so there remains no possibility of

repayment of alleged cash loan, no cross examination was done

between the assessee and Mr. Ramesh Chand Upadhya and

Revenue authorities in assessee’s own case deleted the penalty

levied u/s 271D of the Act which clearly proves that no cash loan

was taken. Secondly, it was contended that on legality also the

assessee deserves to succeed as there was no pending assessment

in the case of assessee and in view of the decision of Coordinate

Bench Chandigarh in the case of Baldev Singh vs. ACIT (2018) 93

Taxman.com 212 impugned penalty deserves to be deleted. Reliance

was also placed on the following decision mentioned in the

synopsis:-

i. CIT Vs Manohar Lal Thakral as reported in [2018] 93 taxmann.com 156 (Punjab & Haryana) ii. CIT Vs Jai Laxmi Rice Mills Ambala City as reported in [2015] 64 taxmann.com 75 (SC) iii.ACIT Vs M/s Narsi Iron & Steel Pvt. Ltd. [Appeal No: I.T.A. No. 2866/Del/2013](Delhi –Trib.) iv. Prithvi Singh Poonia Vs JCIT [Appeal No: ITA No. 3108/Ahd/2015] (Ahmedabad Trib.) v. DCIT Vs M/s Karan Empire Pvt. Ltd. [Appeal No: ITA No. 409/Chd/2011] (Chandigarh - Trib.) 5

Shri Lal Singh Chouhan ITANo.104/Ind/2020

vi. Smt. S.B. Patil Vs JCIT [Appeal No: ITA No. 1053 & 1054 (BNG.)/2014 (Bangalore Trib.)

argued supporting the orders of both lower authorities but could

not controvert this fact that there is no evidence on record could

show that assessment proceedings for A.Y. 2009-10 were carried

out in the case of assessee.

before us. Sole issue raised in this appeal by the assessee is

challenging the finding of Ld. CIT(A) confirming the levy of penalty

u/s 271E of the Act at Rs.4,00,000/- for the alleged contravention of

the provision of section 269T of the Act for repayment of loan in cash

exceeding the permissible limit.

namely Shri Ramesh Chand Upadhya certain documents were

impounded. Assessment proceedings u/s 143(3) r.w.s. 147 of the Act

was completed in the case of Ramesh Chand Upadhya. Information

was passed on in the form of penalty proposal to ITO, Jhabua on

09.06.2016 for levying penalty u/s 271E of the Act on the cash loan

Shri Lal Singh Chouhan ITANo.104/Ind/2020

repayment of Rs.5,50,000/- by cash. Though it was contended that

neither any loan was taken nor any cash loan was repaid in

contravention of provision of u/s 269T of the Act, assessee failed to

find any favour from both the lower authorities.

on oath on 01.02.2016 u/s 131(1) of the Act wherein repeatedly

assessee denied the charge of having taken or repaid any cash loan

from Ramesh Chand Upadhya. Further penalty u/s 271D of the Act

was levied on the assessee for A.Ys. 2007-08 & 2009-10 and also u/s

271E for A.Y. 2008-09 and Ld. CIT(A) decided in favour of the

assessee deleting all these penalties accepting the contentions of

assessee that no cash loan was received/repaid from Ramesh Chand

Upadhya.

any assessment proceedings were carried out by the Ld. AO in the

case of assessee. Even Ld. DR was fair enough to accept this fact. It

is a settled judicial precedence that for initiating penalty proceedings

Ld. AO has to first record a proper satisfaction in the assessment

order by analyzing the facts. So for levy of penalty u/s 271E of the

Shri Lal Singh Chouhan ITANo.104/Ind/2020

Act in the case of assessee ld. AO has to clear the hurdle by

recording a satisfaction in the assessment order which in this case is

absent.

proceedings were not pending before Ld. AO for A.Y. 2009-10 still the

penalty has been levied u/s 271E of the Act.

ACIT (Supra) has dealt with very same issue and has decided in

favour of the assessee observing as follows:

“15. Chapter-XXI of the Income Tax Act deals with penalty imposable/leviable. Penalty under various sections are imposable by the revenue authorities, where they are satisfied that particular default defined under the respective section/s has been committed by the assessee. The language of section is clear that the penalty can be imposed only if there is violation of one or more of the circumstances mentioned in the section. The levy of penalty for failure to perform statutory obligation prescribed under the Act is a matter of discretion of the authorities to be exercised judicially and on consideration of relevant circumstances and the law laid down by the Apex Court on the issue of levy of penalty. Imposition of penalty in the given set of circumstances is not mandatory but discretionary and in order to exercise its power on levy of penalty under the respective section/s, primary conditions is that the proceedings in respect of the said assessee for the captioned assessment year should be pending before the Assessing Officer to come to the conclusion that the given set of 8

Shri Lal Singh Chouhan ITANo.104/Ind/2020

facts and circumstances merits the initiation of penalty proceedings in the case. In the facts of the present case before us, no proceedings were initiated for the financial year 2004-05 i.e. assessment year 2005-06, which is the year to which the aforesaid transaction of accepting and payment of the cash loan relates. The show-cause notice was issued to the assessee by the Assessing Officer, however, in the proceedings relating to assessment year 2007-08 and even penalty proceedings were initiated under sections 271D and 271E of the Act while completing assessment order relating to assessment year 2007-08. We find no merit in the said initiation of penalty proceedings under sections 271D and 271E of the Act relating to assessment year 2005-06, while completing assessment proceedings relating to assessment year 2007-08.”

Rice Mills Ambala (supra) has held that “for initiating the process of

levying penalty u/s 271E of the Act recording of satisfaction in the

assessment order by the Ld. AO is mandatory else no such penalty

could be levied”.

and respectfully following the decisions referred hereinabove, are of

the considered view that Ld. AO erred in levying penalty u/s 271E of

the Act in the case of assessee as firstly revenue failed to prove

whether assessee actually received any cash loan or repaid any cash

loan from R.C. Upadhya and secondly Ld. AO was not having any 9

Shri Lal Singh Chouhan ITANo.104/Ind/2020

jurisdiction to levy the penalty as no assessment proceedings were

pending in the case of assessee and thus no satisfaction was

recorded by the ld. AO to initiate the penalty. Thus, finding of ld.

CIT(A) is set aside and Ld. AO is directed to delete the penalty of

Rs.4,40,000/- levied u/s 271E of the Act. Grounds raised by the

assessee are allowed.

27.07.2021.

Sd/- Sd/- (MADHUMITA ROY) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER

Indore; �दनांक Dated : 27/07/2021 Patel/PS Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Assistant Registrar, Indore