SH. VIKRAM SOOD,MANALI vs. ADDL. CIT, MANDI RANGE, MANDI

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ITA 1487/CHANDI/2017Status: DisposedITAT Chandigarh02 January 2019AY 2011-125 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the Assessing Officer did not record any satisfaction regarding the penalty proceedings under Section 271D in the assessment order. Following the Supreme Court's decision in CIT vs. Jai Laxmi Rice Mills, the Tribunal deleted the penalty.

What were the facts?

The Assessing Officer levied a penalty of Rs. 12,05,000/- under Section 271D for accepting loans/deposits exceeding Rs. 20,000/- otherwise than by account payee cheques. The assessee argued that penalty proceedings were not initiated with the required satisfaction in the assessment order.

What were the issues?

Whether a penalty under Section 271D can be levied without the Assessing Officer recording satisfaction in the assessment order. Whether the penalty was sustainable in the absence of proper initiation.

Which sections of the Income-tax Act were involved?

Section 271D,Section 269SS,Section 143(3),Section 271(1)(c)

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Cases cited in this judgment(3)Show list

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आदेश/Order

This is an appeal by the assessee against the order dated 24.8.2017 of the Commissioner of Income Tax (Appeals), Palampur

2.

Following grounds have been raised in this appeal: 1. That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding that the Assessing Officer is not required to record satisfaction during the course of assessment proceedings which is illegal, arbitrary and unjustified. 2. That without prejudice to the above, the Ld. Commissioner of Income Tax Appeals) has erred in upholding the imposition of penalty of Rs.12,05,000/- under section 271D of the Act which is arbitrary and unjustified.

3.

That the Ld. Commissioner of Income Tax (Appeals) has erred in law as well as on facts in upholding the imposition of penalty under section 271D of the Act even in respect of one Sh. Rakesh

ITA No. 1487-Chd-2017- Sh. Vikram Sood, Distt. Kullu 2

Thakur for which no show cause notice was issued and as such levy of penalty on this amount is against the Principals of Natural Justice which renders it arbitrary and unjustified.

4.

That in any case, the Ld. Commissioner of Income Tax (Appeals) has failed to appreciate the reasonable cause pleaded before her in the correct perspective and as such the order passed by him is arbitrary and unjustified.

5.

That the order of the Ld. Commissioner of Income Tax is erroneous, arbitrary, opposed to law and facts of the case and is, thus, untenable.

3.

From the above grounds, it is gathered that the only grievance of

the assessee relates to the sustenance of the penalty of Rs. 12,05,000/-

levied by the Assessing officer u/s 271D of the Income-tax Act, 1961

(in short 'the Act').

4.

The facts of the case in brief are that the assessee filed return of

income on 6.12.2011 declaring an income of Rs. 4,46,020/- which was

processed u/s 143(1) of the Act. Later on, the case was selected for

scrutiny. The Assessing officer framed the assessment at an income of

Rs. 4,50,224/- by making an addition of Rs. 4,204/-. The Assessing

officer initiated penalty proceedings u/s 271(1)(c) of the Act in the

assessment order. Thereafter, the Assessing officer separately initiated

penalty proceedings u/s 271D of the Act by observing that the assessee

had received loan / deposit aggregated to Rs. 12,05,000/- from 08

persons. The Assessing officer asked the assessee to show cause and

explain as to why penalty for violating the provisions of section 269SS

of the Act may not be imposed upon the assessee for accepting the loan

/ deposits exceeding Rs. 20,000/- otherwise by the account payee

cheques or account payee drafts. The Assessing officer did not find

ITA No. 1487-Chd-2017- Sh. Vikram Sood, Distt. Kullu 3

merit in the explanation of the assessee and levied the impugned

penalty.

5.

Being aggrieved the assessee carried the matter to the Ld. CIT(A)

and submitted that the penalty cannot be levied because the Assessing

officer has not initiated penalty proceedings while completing

assessment proceedings u/s 143(3) of the Act. The Ld. CIT(A),

however, did not find merit in the said submissions and sustained the

penalty levied by the Assessing officer.

6.

Now the assessee has come in appeal. The Ld. Counsel for the

assessee submitted that Assessing officer had not recorded any

satisfaction in the assessment order regarding initiation of the penalty

proceedings u/s 271D of the Act, therefore, the penalty levied by the

Assessing officer and sustained by the Ld. CIT(A) u/s 271D of the Act

was not justified. Reliance was placed on the following case laws:- 1. CIT Vs. Saini Medical Store, 277 ITR 420 (P&H) 2. CIT Vs. Sunil Kumar Goes, 315 ITR 163 (P&H) 3. CIT Vs. Jai Laxmi Rice Mills, 379 ITR 521 (SC) 4. Mohinder Pal Singh, Ramneek Sehgal & Paramjeet Kaur Vs. The Addl. CIT, ITA Nos. 192 to 197/Chd/2018, order dated 8.6.2018. 5. Binod Kumar Agarwal Vs. JCIT, ITA Nos. 238 & 238/Kol./2013 order dated 4.2.2016 6. Smt. S.B. Patil Vs. JCIT, ITA Nos.1053 & 1054/BNG./2014order dated 10.2.2016

7.

In her rival submissions, the Ld. Sr DR strongly supported the

orders of the authorities below.

ITA No. 1487-Chd-2017- Sh. Vikram Sood, Distt. Kullu 4

8.

I have considered the submissions of both the parties and perused

the material available on record. In the present case it is noticed that

the Assessing officer passed the assessment order dated 14.3.2014 u/s

143(3) of the Act and made the addition of Rs. 4,204/- . The Assessing

officer nowhere initiated penalty proceedings u/s 271D of the Act

although penalty proceedings u/s 271(1)(c) of the Act were initiated.

The relevant findings given by the Assessing officer in the said

assessment order dated 14.3.2014 reads as under:-

“The assessee has shown bank interest in his return of income at Rs. 11428/- thus the assessee not decaled interest to the extent of Rs. 4204/- (15635-11428). Hence, interest at Rs. 4204/- is treated as income of the assessee and the same is added to his total income.

From the above I am satisfied that the assessee has concealed his income and furnished inaccurate particulars of his income to the extent of Rs. 4204/- as mentioned above. Penalty proceedings u/s 271(1)(c) of the Act has been initiated separately.”

9.

On a similar issue, the Hon'ble Supreme Court in the case of ‘CIT

v Jai Laxmi Rice Mills’ (supra) held as under;-

“that in the fresh assessment order there was no satisfaction recorded regarding penalty proceedings u/s 271D of the Act though in that order the Assessing officer wanted penalty proceedings to be initiated u/s 271(1)(c) of the Act. Thus, the penalty under seciton271D was without any satisfaction and, therefore, no such penalty could be levied.”

10.

In the present case, as I have already pointed out that the

Assessing officer had not recorded any satisfaction regarding the

penalty proceedings u/s 271D of the Act in the assessment order passed

u/s 143(3) of the Act. I, therefore, keeping in view the ratio laid down

ITA No. 1487-Chd-2017- Sh. Vikram Sood, Distt. Kullu 5

by the Hon'ble Supreme Court in the aforesaid referred to case of ‘CIT v Jai Laxmi Rice Mills’ delete the impugned penalty levied by the Assessing officer and sustained by the CIT(A).

11.

In the result, the appeal of the assessee is allowed. Order pronounced in the Open Court on 03.01.2019

Sd/- (एन.के. सैनी/ N.K. SAINI) उपा�य�/ VICE PRESIDENT Dated : 03.1.2019 “आर.के.” आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File

आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar

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