PR COMMISSIONER OF INCOME TAX JAIPUR-II vs. SHRI PRASHANT SHARMA

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 120/2018 Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur. ----Appellant Versus Shri Prashant Sharma, A-34, Nehru Nagar, Jaipur ----Respondent D.B. Income Tax Appeal No. 122/2018 Pr. Commissioner Of Income Tax, Jaipur-Ii, Jaipur. ----Appellant Versus Shri Prashant Sharma, A-34, Nehru Nagar, Jaipur ----Respondent For Appellant(s) : Mr. Prateek Kedawat for Mr. R.B. Mathur HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 09/04/2018 1. In both these appeals, common question of law and facts are involved hence they are decided by this common judgment. 2. By way of these appeals, the appellant has assailed the judgment and order of the tribunal whereby tribunal has dismissed the appeal of the department. 3. Counsel for the appellant has framed following substantial questions of law:-

(2 of 17) [ITA-120/2018] Appeal No.120/2018 “(i) Whether in the facts and circumstances of the case the ITAT was justified in law in confirming the cancellation of penalty of Rs.11704411/- u/s 271E computing the limitation from the date of issuance of notice by the Assessing Officer instead of Additional/ Joint Commissioner who is the authority of imposing the penalty. (ii) Whether on the facts and circumstances of the case the Hon’ble ITAT was justified in cancelling the penalty of Rs.11704411/- imposed u/s 271E by computing the limitation for the purpose of passing the order u/s 271E of the Act from the date of the notice issued by the AO instead of the date of the notice issued by the JCIT as clarified by the CBDT in Circular no.9/DV/2016 dated 26.04.2016.” Appeal No.122/2018 “(i) Whether in the facts and circumstances of the case the ITAT was justified in law in confirming the cancellation of penalty of Rs.14822485/- u/s 271D computing the limitation from the date of issuance of notice by the Assessing Officer instead of Additional/ Joint Commissioner who is the authority of imposing the penalty. (ii) Whether on the facts and circumstances of the case the Hon’ble ITAT was justified in cancelling the penalty of Rs.1,48,22,585/- imposed u/s 271D by computing the limitation for the purpose of passing the order u/s 271D of the Act from the date of the notice issued by the AO instead of the date of the notice issued by the JCIT as clarified by the CBDT in Circular no.9/DV/2016 dated 26.04.2016.” 4. The facts of the case are that during the course of scrutiny assessment u/s 143(3) the AO noticed that the assessee has received cash on various dates in person as well as in bank account and subsequently paid the amount in cash to M/s MPPL

(3 of 17) [ITA-120/2018] which is in contravention of the provisions of section 269SS and 269T of the Act. The AO called certain information from M/s MPPL, in response to which, the company had submitted that the assessee is having imprest account in the books of the company. The AO found that there was opening cash balance of Rs. 19,85,495/- on 01.04.2008 in the hands of the assessee and during the period the assessee has also received cash amounting to Rs. 1,48,22,585/- on various dates, the closing balance as on 31. 03.2009 was at Rs. 51,03,669/-. Since the assesse has received substantial amount in cash and also paid a substantial amount in cash, therefore, the AO initiated the penalty u/s 271D as well as 271E of the Act. The assessee raised objections before the AO including the issue of limitation that the limitation for passing the penalty order u/s 271D and 271E would reckon from the date when the show cause notice was issued by the AO and not from the date when the show cause notice was issued by the Joint Commissioner who is competent to pass the penalty orders. 5. Counsel for the appellant has relied upon the decision of Kerala High Court in Grihalakshmi Vision vs. The Additional Commissioner of Income Tax reported in (2015) 379 ITR 100 (Ker) wherein it has been held as under:- “8. Insofar as these cases are concerned, the assessment order was passed on 6.11.2007 and the assessment order concluded by stating thus: "Since the assessee has violated the provisions of section 269SS and 269T of the IT Act by accepting and repaying loans exceeding Rs.20,000/- aggregating and otherwise at any point of time, as given above, penalty provisions of Section 271D and 271E of the IT Act are attracted.

Accordingly

initiated

penalty proceedings under Section 271D and 271E."

(4 of 17) [ITA-120/2018] It was relying on the last sentence in the assessment order that "Accordingly initiated penalty proceedings under Section 271D and 271E", the counsel for the assessee is contending that the Assessing Officer having initiated the proceedings vide his order dated 6.4.2007, the order passed by the Joint Commissioner on 29.7.2008 levying penalty is beyond the time permitted in Section 275(1)(c). It was to substantiate this contention that the learned counsel placed reliance of the Supreme Court judgment in D.M.Manasvi v. Commissioner of Income Tax, Gujarat II [1972] 86 ITR557and Commissioner of Income Tax v. Jitendra Singh Rathore [2013] 352 ITR327(Raj). 9. As we have already seen, although Section 271D and E of the Income Tax Act provides for levy of penalty for contravention of Sections 269SS and 269T. As per sub section (2) to both these sections any penalty imposable under sub section (1) of these provisions shall be imposed by the Joint Commissioner. It was, therefore, that the matter was referred to the Joint Commissioner who passed orders on 29.7.2008 levying penalty. 10. Question to be considered is whether proceedings for levy of penalty, are initiated with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under Section 271D and E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply. 11. The only case of the assessee is that if the period of limitation prescribed in Section 271(1) (c) is reckoned from the date of the assessment order dated 6.11.2007, the penalty order passed

(5 of 17) [ITA-120/2018] by the Joint Commissioner on 29.7.2008 is beyond the time permitted in the above section. As we have already held, the initiation of the penalty proceedings is not by the Assessing Officer but by the Joint Commissioner and if that be so, the order levying penalty passed by the Joint Commissioner is within the time prescribed in Section 275(1)(c). 12. Insofar as the judgment of the Apex Court in D.M.Manasvi v. Commissioner of Income Tax, Gujarat II [1972] 86 ITR557is concerned, that was a case where penalty was levied under Section 271(1)(c) and as is evident from the provision itself, the proceedings under that Section are to be initiated on the basis of the satisfaction of the officers mentioned therein including the Assessing Officer. Unlike the provisions of Section 271(1)(c), under the provisions of Section 271D and E, the exclusive authority is conferred on the Joint Commissioner. Therefore, the principles laid down in the judgment of the Apex Court cannot be called in aid to impugn the concurrent findings of the lower authorities. Therefore, the first contention raised by the learned counsel for the assessee deserves to be rejected and we do so. 6. While considering the matter, the CIT(A) has observed as under:- 3.3 I have perused the facts of the case, the penalty order and the submissions of the appellant. The facts of the case are that the during the course of assessment under section 143(3) the Assessing Officer noticed that the assessee has received cash on various dates in person as well as in bank account and subsequently paid the amount in cash to M/s. MPPL which was in contraction to the provisions of section 269ss and 269T of the l.T. Act, 1961. The Assessing Officer then referred the matter to the Additional Commissioner of Income Tax, Range-4 to initiate penalty under section 271E of the IT. Act, 1961 vide her letter No. W- 4(1)/JPR/2011-12/1431 dated 29.02.2012 in terms of provisions of section 269T. The Additional Commissioner of Income Tax issued a show cause notice No. Addl CITR- 4/JPR/12- 13/928 dated 10.09.2012 to explain the above.

(6 of 17) [ITA-120/2018] It was submitted during the penalty proceedings that the assessee was working as a director of M/s Majestic Properties Pvt. Ltd. (MPPL) for making payment for advances booked by the company during the financial year 2004-05 for project at Jaipur, whatever deposits are coming in this bank account are in respect of repayment of amount taken by company M/S MPPL in respect of advance booking of plots at Jaipur and the company further claimed that when the transactions was not completed the amount has been returned back through Shri Prashant Sharma and for this purpose company has utilised the his bank account. It was also submitted that Shri Prashant Sharma was appointed on the board of the Company, a claim which is disputed by the assessing officer and Additional commissioner of Income tax in the assessment order as well as the penalty order and discussed in detail therein. The Additional Commissioner of Income Tax further opined that the assessee has received cash amounting to Rs. 1,48,22,585/- and assessee has returned back Rs. 51,03,669/-, thus the assessee has returned back Rs. 1,17,04,411/- to MPPL in cash. It was also held that the amounts were to be treated as deposits and a debtor and creditor relationship existed between the assessee and M/S MPPL and hence the provisions were applicable. Thus, penalty of Rs. 1,17,04,411/- was imposed under Section 271E for violation of provision of Section 269T. In the present proceedings, the first submission made is regarding the penalty order being passed beyond limitation and bad in law. It was submitted that the assessment order was passed by the ITO, ward-4(1), Jaipur on 30.12.2011 and penalty proceedings were initiated by him code notice dated 30.12.2011. Subsequently, he referred the case to the additional Commissioner of Income Tax to issued the show cause notice on 10.09.2012. The authorized representative further contended that as per provisions of Sec.275, no order of penalty could be passed beyond six months from the end of the month in which the additional Commissioner of Income Tax initiates action for imposition of penalty and the assessing officer had issued the notices on 30.12.2011 and order passed on 31.03.2013, the penalty was barred by limitation. Reliance was placed on the Rajasthan High Court decisions in the case of CIT vs. Jitendra Singh Rathore 352 ITR 327 (Raj.) and CIT vs. Banshilal (DB Income Tax Appeal No. 119/2011)(Raj.). The submissions

(7 of 17) [ITA-120/2018] were forwarded to the Assessing Officer for his comments. The remand report and the rejoinder of the assessee are reproduced below: Assessee's case was selected for scrutiny under CASS System on the point of cash deposited in bank exceeding Rs.10 Lac. After collecting his copy of bank statement from ICICI bank ( u/s 133(6) of the Act), assessee was asked to explain the cash deposit withdrawals made by him through his bank account. In reply to it, assessee had replied that the bank account was operated on behalf of M/s Majestic Properties Pvt. Ltd., (Ms. MPPL a Delhi based Company, for whom the bank account was utilized. Thereafter, a detailed reply was filed and the brief of the reply is reproduced as under:- "Imp-rest Bank account on behalf of the Company - We submit that Mr. Prashant Sharma (assessee) was appointed on the Board on 3/1/2005 to look after the housing project at Jaipur, since the company was new Jaipur and for sake of convenient of local business. Mr. Prashant Sharma was appointed by the Board as well granted the permission to open an bank account separately to make the transactions on behalf of the company. Mr. Prashant Sharma was key person to manage all the things related to project and a general POA was granted for the same. To make expenses and refund of booking amount, a saving bank account No. 001201557588 with ICICI bank Ltd. was opened. Since the company was having so many project all over India and to make separate project the account was opened . Further since the assessee was authorized to look after the development of project and refund of booking amount only and not to authorize to collect booking amount on his personal capacity. Hence in assessee account, there are credit summations from the company only. Further copy of imp-rest cash & ICICI Bank account is enclosed herewith for your current reference & record. Reasons behind withdrawal & depositing of cash- Since the company was having the housing project in which so many items consumed on cash basis, as well as there so many type of Government duties & taxes which have to be deposited in cash or DD only. Regarding depositing of cash, some time, the cash is not utilized for the purpose for which withdrawal is made as well all the transaction are recorded in the books of company as well there is refund of small amounts on instructions of the police

(8 of 17) [ITA-120/2018] department, here there is no question to un- justify cash transactions". After verification, the AO found that:- a) He was appointed as an Additional Director on 7/2/2009. Thus during the period from 1-4-2008 to 6/2/2009 he was not a Director of M/s MPPL b) As per Audit Report of M/s. MPPL, no remuneration was paid to Mr. Prashant Sharma for the period under consideration as the name of Shri Prashant Sharma was not reflected in the list of Key persons and in the name of Directors. C) Cash in hand was declared at Rs. 98,48,191/- and in bank it was Rs. 1,20,44,229/- by the Company. d) Accounting method declared by the company as on "Accural basis". e) As per Audit Report of M/s MPPL, point No. 15, Key management personal with whom there was transaction during the year was :- i) Rajat Gupta ii) Anurag Gupta iii)Sanjeev Jain iv) And the relative with the key management person were a) Jyoti Gupta b) Ms. Vastu Project c) Ms Vastunidhi f) The details with the key persons through which transaction during the year and the amount having no reference of Mr.Prashant Sharma as per Col. 11 of the Balance Sheet. However, there were having each detail in respect of other key persons, their relative and directors. g) In respect of key person detailed in the ITR- VI submitted by M/s MPPL, there was no reference of Mr Prashant Sharma. The AO was of the view & as mentioned in the assessment order that there was only an appointment letter in the name of Prashant Sharma in Form No.32 and according to that he was appointed as Director on 7/2/2009. All the other documents showed that he was not a director during the period under consideration. Further the appointment letter was with effect from 27/2/2009 only just before the end of the Financial Year. Finally, in the assessment order A.O had concluded that "Mr. Prashant Sharma was neither a Director in the Company nor he was a Key person through which amount was rotated to be claimed in the ICICI Bank account by the Company. Further it is more important to mention here that the assessee was an

(9 of 17) [ITA-120/2018] obligation to return the amount so received as and when desired by the depositor", Hence the assessee violated the provisions of section 269SS/269T". In these back ground the AO found that there was violation of provision of section 269 SS and 269T for which penalty provision u/s 271D & 271 E were applicable. Later on the A.O referred the matter to the Addl. Commissioner of Income- tax, Range-4,Jaipur, vide letter dated 21/29-2- 2012, for imposition of penalty u/s 271D de 271 E as imposition of penalty under these section lies with the Addl. Commissioner as per section 274. On receipt of reference from AO, the Additional commissioner of Income-tax, Range-4, Jaipur, vide letter dated 10-9-2012 fixed the date for hearing on 18-9-2012. The Addl Commissioner of Income-tax, Range-4, Jaipur, passed an order ws 27ID & 27IE imposing penalty of Rs 1,48,22,585 Rs. 1,17,04,411/- respectively based on the imprest account as under: On the basis of amount transacted through imprest account penalty worked out as under :- Imprest Income Particulars Opening Balance Transaction Closing Stock Debit Credit Imprest

Prashant Sharma(JPR) 1819309 Dr. 7866122 3 7615678 6 4323746 Dr. Imprest

Prashant Sharma (JPR Cash) 1985495 Dr. 1482258 5 1170441 1 5103669 Dr. Imprest

Prashant Sharma(JPR-ICICI) 166186 Cr. 6383863 8 6445232 5 779923 Cr. Against these penalty orders, assessee is in appeal before your good self. Assessee's submission that the penalty got barred by limitation is not acceptable in view of Hon'ble Allahabad High Court's decision in the case of CIT. Faizabad Vs. Gupta Mills Stores reported in (2009) 184 Taxman 230 (Allahabad)/ (2010)230 CTR 75(Allahabad). The gist of the order is reproduced as under:- "Section 275, read with section 271E, of the Income-tax Act, 1961 – Penalty-Bar of limitation for imposition of – Assessment Year 2001-02- There was deposit in name of "D" with assessee- firm-Assessee had issued bearer cheques in name of 'D' for repayment of a part of aforesaid deposit in year under consideration- Revenue alleged that assessee had defaulted because it

(10 of 17) [ITA-120/2018] had made repayment of deposit through bearer cheques and not through bearer cheques and not through account payee cheques or account payee drafts as required under section 269T – Therefore, Assessing Officer issued notice u/s 271E on 1.8.2003. Thereafter, matter was referred to Joint Commissioner, who issued a notice dated 3.9.2003 to assessee fixing the date of hearing vide order dated 29.3.2004, Joint Commissioner imposed penalty under section 271E. Whether, on facts, order passed by Joint Commissioner on 29.3.2004 could be said to barred by limitation held, no." Further the Hon'ble Supreme Court in the case of Assistant Director of Inspection V. Kum. A.B. Shanti reported in (2002) 122 Taxman 574(SC)/ (2002)255 ITR 258(SC)/(2002)174 CTR 513(SC) held Section 269 SS in any way not violative of article 14 of the Constitution. As there are different opinion of one High Court to another on the point of limitation, with due respect, it is submitted that the decision of Rsj. High Court in the case of Commissioner of Income-tax Vs.Jitender Singh Rathore (against DB ITA No.90/2007) may not be considered as applicable in this case. In the case of Jitender Singh Rathore i.e. the case decided by the Hon'ble Rajasthan High Court,

penalty

imposed

u/s271D

was Rs.4,00,000/- that was less than the monitory limit prescribed for filing SLP before the Hon'ble Supreme Court, probably, no SLP might have been filed considering the quantum of penalty amount. The penalty u/s 271D & 271E are different from other penalties. In the other penalties initiation date starts from finalization of asstt. Order, in case no appeal preferred against the said order. Where as the power to impose penalty u/s 271D & 271E as per section 274 lies with Joint/Addl. Commissioner, the date of limitation starts from the notice issued by the Joint/Addl. Commissioner. Thus the assessee's submission deserves to be rejected." The rejoinder to the remand submitted by the Authorized Representative is reproduced below: 1. "That the reply of the A.O. in the Remand Report is against all principles of legal jurisprudence. The A.O. has requested your Honour not to follow the Jurisdictional Rajasthan High Court Decisions in the case of CIT v/s Jitendra Singh Rathore 352 ITR 327(Raj.) and CIT v/s Banshilal without even differentiating why the above cases are not applicable in the facts of the present case. The assessee's case is

(11 of 17) [ITA-120/2018] squarely covered by the Jurisdictional High Court Decisions which is of a Binding Nature. 2. Without Prejudice to above, even on Merits, no penalty is leviable in the facts of case as per our written submissions dt. 16.12.2014, 05.01.2015 submissions filed during the appellate proceedings. In the reply the A.O. has not even replied to basic issues like how there is any violation of Section 269SS on the amount withdrawn by the appellant from his Bank SB A/c and how there is violation of Section 269T on depositing cash in his Bank SB A/c. The earlier submissions of the appellant be treated as part of this reply." In the case of CIT Vs Jitendra Singh Rathore, it has been held as follows: - The notice for issuance of the penalty proceedings under Section 27 ID for the alleged contravention of provisions of section 269SS was issued to the assessee by the Assessing Officer on 25.03.2003. - Even if the matter had otherwise been in appeal before the Commissioner (Appeals) against the original assessment order and the appeal was decided on 13.02.2004, the same was hardly of relevance so far the penalty proceedings under section 271D were concerned. As held by the High Court in CIT v. Hissaria Bros. [2007] 291 ITR 244/ [2008] 169 Taxman 262 (Raj), completion of appellate proceedings arising out of assessment proceedings has no relevance over sustaining such penalty proceedings. In such matter, clause (c) of section 275(1) would be applicable. [para 8] -In the present case, the first show cause notice for initiation of proceedings was issued by the Assessing Officer on 25.03.2003 and was served on the assessee on 27.03.2003. Obviously, the later period also expired on 30.09.2003 when six months expired from the end of the month in which the action for imposing the penalty was initiated. The order as passed by the Joint Commissioner for the penalty under section 271D on 28.5.2004 was clearly hit by the bar of limitation and has rightly been set aside in the orders impugned. [para 9] -Even when the outhority competent to impose penalty under section 271D, was the Joint Commissioner, the period of limitation for the purpose of such penalty proceedings was not to be reckoned from the issue of first show cause by the Joint Commissioner; but the period of limitation was to be reckoned from the date of

(12 of 17) [ITA-120/2018] issue of first show cause for initiation of such penalty proceedings. -The proceedings having been initiated on 25.03.2003, the order passed by the Joint Commissioner under section 271D on 28.05.2004 was hit by the bar of limitation and the Commissioner (Appeals) and the Tribunal had, thus, not committed any error in setting aside the order of penalty. [Para 10] 10. In view of the above, our answer to the formulated question of law is that even when the authority competent to impose penalty under S.271D was the Jt. CIT, the period of limitation for the purpose of such penalty proceedings was not to be reckoned from the issue of first 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. For the purpose of present case, as observed hereinabove, for the proceedings having been initiated on 25th March, 2003, the order passed by the Jt. CIT under s. 271D on 28th May, 2004 was hit by the bar of limitation. The CIT(A) and the Tribunal have, thus, not committed any error in setting aside the order of penalty. Consequently the appeal fails and is, D.B. Income Tax Appeal No.119/2011 The Commissioner of Income Tax, Ajmer vs. Shri Banshilal Rathi therefore, dismissed". The present appeal is, accordingly, dismissed for the same reasons, which have been assigned in Commissioner of Income Tax vs. Jitendra Singh Rathore (supra). A circular No.9/DV/2016 dated 26.4.2016 regarding clarification on limitation for penalty proceedings under section 271D and 271E has taken a view based on the Kerala High Court decision and the same is reproduced below: "It has been brought to the notice of the Central Board of Direct Taxes (hereinafter referred to as the Board that there are conflicting interpretations of various High Courts on the issue whether the limitation for imposition of penalty under sections 271D and 271E of the Income tax Act, 1961 (hereafter referred to as the Act) commences at the level of the Assessing Officer (below the rank of Joint Commissioner of Income Tax) or at level of the Range authority i.e. the Joint Commissioner of Income Tax /Addl. Commissioner of Income Tax.

(13 of 17) [ITA-120/2018] Some High Courts have held that the limitation commences at the level of the authority competent to impose the penalty i.e. Range Head while others have held that even though the Assessing Officer is not competent to impose the penalty, the limitation commences at the level of the Assessing Officer where the Assessing Officer has issued show cause notice or referred to the initiation of proceedings in assessment order. 2. On careful examination of the matter, the Board is of the view that for the sake of clarity and uniformity, the conflict needs to be resolved by way of a "Departmental View". 3. The Hon'ble Kerala High Court in the case of Grihalaxmi Vision v. Addl. Commissioner of Income Tax. Range 1. Kozhikode, vide its order dated 8.7.15 in ITA Nos. 83&86 of 2014, observed that, "Question to he considered is whether proceedings for levy of penalty, are initiated with the Missing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the. notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the .Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under Section 271D and E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that he so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply". 4. The above judgment reflects the "Departmental View". Accordingly, the Assessing Officers (below the rank of Joint Commissioner of Income Tax) may be advised to make a reference to the Range Head, regarding any violation of the provisions of section 269SS and section 269T of the Act, as the case may be, in the course of the assessment proceedings (or any other proceedings under the Act). The Assessing Officer, below the rank, of Joint Commissioner of Income Tax) shall not issue the notice in this regard. The Range Head will issue the penalty notice and shall dispose/ complete the proceedings within the limitation prescribed u/s 275(1) (c) of the Act.

(14 of 17) [ITA-120/2018] 5. Where any High Court decides this issue contrary to the "Departmental View", the Departmental View" thereon shall not be operative in the area falling in the jurisdiction of the relevant High Court. However, the CIT concerned should immediately bring the judgment to the notice of the Central Technical Committee. The CTC shall examine the said judgment on priority to decide as to whether filing of SLP to the Supreme Court will be adequate response for the time being or some legislative amendment is called for." In light of the facts and judicial decisions as above, it is clear that in this particular case the penalty order is passed beyond six months from the end of the financial year in which the notice was issued by the Assessing officer. However, if the notices issued by the Additional Commissioner of Income Tax is taken into consideration then the penalty order passed is within time. However, in view of the two of the jurisdictional High Court decisions as cited above, which are binding and also in view of the exception to the departmental view wherein if the High Court decides the issue contrary to the departmental view, the departmental view shall not be operative in the area of jurisdiction of the relevant High Court, the penalty in this case is barred by limitation. Since, the penalty order passed has been held to be barred by limitation and the order not being sustainable on that ground itself, the quantum of penalty is not being adjudicated. 6.1 Thereafter, the tribunal has observed as under:- “5. We have considered the rival submission as well as relevant material on record. There is no dispute that there are two show cause notices issued u/s 274 of the Act for initiation of penalty u/s 271D and 271E of the Act. The first show cause notice was issued by the ITO on 30.12.2011 at the time of completion of the assessment and the second show cause notice was issued thereafter by the additional/Joint Commissioner on 10.09.2012. The assessee has raised the question of validity of the orders passed u/s 271D and 271E being barred by limitation as these orders dated 25.03.2013 as per the assessees were beyond the period of 6 months from the date of the first show cause notice dated 30.11.2011 the limitation as provided u/s 275(1)(c) of the Act. So far as the

(15 of 17) [ITA-120/2018] fact of issuing two show cause notices one by the ITO on 30.12.2011 and another by the Additional/Joint Commissioner on 10.09.2012, the same is not disputed by the Revenue. Therefore question arises whether the limitation for the purpose of levy of penalty u/s 271D and 271E would reckon from the date of show cause notice issued by the ITO. Though he was not competent the passed the order u/s 271D and 271E or from the date on which the show cause notice

issued

the

Additional/Joint Commissioner on 10.09.2012. The ld. AR has placed reliance on the decision of the Hon’ble jurisdiction High Court in case of CIT vs. Jitendra Singh Rathore (supra) where as the ld. DR has relied upon the decision of Hon’ble Kerala High Court in case of Girhlaxmi Vs. AIT (supra). We find that there are divergent view on this point of reckoning of limitation from the date of issuing the notice by the ITO or by the JCIT. The Hon’ble jurisdiction High Court has taken a view that even though the AO was not competent to pass order u/s 271D and 271E the limitation would reckon from the date of show cause notice was issued by the AO whereas, the Hon’ble Kerala High Court held that the proceedings for levy of penalty u/s 271D and 271E are initiated with issuance of notice by Joint Commissioner and not by the Assessing Officer. Therefore the Hon’ble Kerala High Court held that the limitation would reckon from the date of the show cause notice issues by the Joint Commissioner. Thus it is clear that two different High Courts have taken the views contrary to each other however, for the Jaipur Benches of this Tribunal the decision of the jurisdiction High Court is binding precedent. The Hon’ble High Court in case of CIT Vs. Jitendra Singh Rathore (supra) has held in para 8 to 10 as under:- 8. In the present case, the notice for issuance of the penalty proceedings under Section 271D of the Act for the alleged contravention of provisions of Section 269SS was issued to the assessee, of course by the AO, on 25.03.2003. Even if the matter had otherwise been in appeal before the CIT(A) against the original assessment order and the appeal was decided on 13.02.2004, the same was hardly of relevance so far the penalty proceedings under Section 271D were concerned. As held by this Court in Hissaria Bros. (supra), completion of appellate proceedings arising out of assessment proceedings has no relevance over sustaining such penalty proceedings. As held clearly by this

(16 of 17) [ITA-120/2018] Court, in such a matter, clause (c) of Section 275 (1) would be applicable. Section 275(1)(c) could be noticed as under:- "275. Bar of limitation for imposing penalties. (1) No order imposing a penalty under this Chapter shall be passed..... (c) in any other case, after the 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 six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later." 9. In the present case, the first show cause notice for initiation of proceedings was issued by the AO on 25.03.2003 and was served on the assessee on 27.03.2003. Obviously, the later period also expired on 30.09.2003 when six months expired from the end of the month in which the action for imposing the penalty was initiated. The order as passed by the Joint Commissioner of Income Tax for the penalty under Section 271D on 28.05.2004 was clearly hit by the bar of limitation and has rightly been set aside in the orders impugned. 10. In view of the above, our answer to the formulated question of law is that even when the authority competent to impose penalty under Section 271D was the Joint Commissioner, the period of limitation for the purpose of such penalty proceedings was not to be reckoned form the issue of first show cause by the Joint Commissioner; but the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings. For the purpose of present case, as observed hereinabove, for the proceedings having been initiated on 25.03.2003, the order passed by the Joint Commissioner under Section 271D on 28.05.2004 was hit by the bar of limitation. The CIT(A) and the Tribunal have, thus, not committed any error in setting aside the order of penalty. We further note that the Hon’ble jurisdiction High Court has reiterated this view in case of CIT Vs. Banshi Lal Rathi vide order dated 17.05.2013 ITA No. 119 of 2011 following the decision in case of CIT Vs Jitendra Singh Rathore respectively following the decision of Hon’ble jurisdiction High Court. We do not find any reason to interfere with the impugned orders by the ld. CIT(A). “

(17 of 17) [ITA-120/2018] 6. In our considered opinion, in view of the decision of this court in CIT vs. Jitendra Singh Rathore 352 ITR 327 (Rajasthan) and CIT vs. Banshilal Tax Appeal No.119/2011, no substantial question of law arises. 7. The judgment of Kerala High Court in Grihalakshmi Vision (supra) will not apply as there is jurisdictional High Court judgment. Even otherwise, the interpretation put forward by the counsel for the appellant that it should be completed within six months from the date of notice cannot be accepted. Such period can limit the power of the Joint Commissioner to initiate proceedings at any time. The basic object of the section is to complete the initial proceedings within six month show that the assessee has not to undergo trauma for six months. In that view of the matter, the interpretation is to be looked into with the sought to be achieved. 8. In that view of the matter, no substantial question of law arises. 9. The appeals stand dismissed. (VIJAY KUMAR VYAS),J (K.S.JHAVERI),J Brijesh 133-134.