DY. COMMISSIONER OF INCOME-TAX, CENTRAL CIRCLE-2, JAIPUR, JAIPUR vs. M/S GOKUL KRIPA COLONIZERS & DEVELOPERS PVT. LTD., JAIPUR

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"clean_text": "आयकर अपीलीय अधिकरण, जयपुर न्यायपीठ, जयपुर\nIN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, \"B\" JAIPUR\nडा० एस. सीतालक्ष्मी न्यायिक सदस्य एवं श्री राठोड कमलेश जयन्तभाई, लेखा सदस्य के समक्ष\nBEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI,\nआयकर अपील सं./ITA Nos. 1162, 1164 to 1170, 1174 to 1178/JP/2025\nनिर्धारण वर्ष / Assessment Year : 2015-16 to 2021-22\nDy. Commissioner of Income Tax,\nCentral Circle-02,\nJaipur\nबनाम\nVs.\nM/s Gokul Kripa Colonizers &\nDevelopers Pvt. Ltd.\nCentral Circle-03, Jaipur\nस्थायीलेखा सं. / जीआईआर सं./PAN/GIR No.:AAECG8317K\nअपीलार्थी / Appellant\nप्रत्यर्थी / Respondent\nCO. Nos. 34 to 46/JPR/2025\n(Arising out of ITA. No. 769/JPR/2023)\nनिर्धारण वर्ष / Assessment Year : 2015-16 to 2021-22\nM/s Gokul Kripa Colonizers &\nDevelopers Pvt. Ltd.\nCentral Circle-03, Jaipur\nबनाम\nVs.\nDy. Commissioner of Income\nTax,\nCentral Circle-02, Jaipur\nस्थायी लेखा सं. / जीआईआर सं./PAN/GIR No.: AAECG8317K\nअपीलार्थी / Appellant\nप्रत्यर्थी / Respondent\nनिर्धारिती की ओर से / Assessee by: Shri Vijay Goyal, CA &\nShri Gulshan Agrwal, CA\nराजस्वकी ओरसे / Revenue by: MS. Alka Gautam, CIT-DR\nसुनवाई की तारीख / Date of Hearing : 29/10/2025\nउदघोषणा की तारीख / Date of Pronouncement: 13/11/2025\nआदेश/ORDER\nPER BENCH:\nThe present bunch of appeals were filed by the revenue and cross\nobjections to those appeals so filed by the revenue were preferred by the\nassessee. Since the issue raised by the revenue and that of the assessee\nin cross objection are similar in all the assessment year and since we have\nheard these bunch appeals and cross objections together with the consent\nof parties, we considered it to dispose of these bunch together with this\ncommon order. The details of the appeals filed by the revenue are as\ntabulated herein below:\nSr.\nNo\nITA No.\nA.\nY.\nDate of order\nof CIT(A)-4,\nJaipur\nDate and section under which the\nAddl./Jt. CIT passed order which was\ndisputed before Id.CIT(A)\n1\n1162/JP/2025\n2015-16\n19.06.2025\nLevy of penalty u/s 271D of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 2,37,98,650/-\n2\n1164/JP/2025\n2015-16\n19.06.2025\nLevy of penalty u/s 271E of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 1,40,80,050/-\n3\n1165/JP/2025\n2016-17\n19.06.2025\nLevy of penalty u/s 271D of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 1,26,03,513/-\n4\n1166/JP/2025\n2016-17\n19.06.2025\nLevy of penalty u/s 271E of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 1,13,34,587/-\n5\n1167/JP/2025\n2017-18\n19.06.2025\nLevy of penalty u/s 271D of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 11,02,13,000/-\n6\n1168/JP/2025\n2017-18\n19.06.2025\nLevy of penalty u/s 271E of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 90,95,257/-\n7\n1169/JP/2025\n2018-19\n19.06.2025\nLevy of penalty u/s 271E of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 3,22,15,053/-\n8\n1170/JP/2025\n2019-20\n19.06.2025\nLevy of penalty u/s 271D of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 9,51,16,277/-\n9\n1174/JP/2025\n2019-20\n19.06.2025\nLevy of penalty u/s 271E of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 4,20,26,176/-\n10\n1175/JP/2025\n2020-21\n19.06.2025\nLevy of penalty u/s 271E of the Act\nvide order dated 28.08.2023 for an\namount of Rs.\n11\n1176/JP/2025\n2020-21\n19.06.2025\nLevy of penalty u/s 271D of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 6,52,43,524/-\n12\n1177/JP/2025\n2021-22\n19.06.2025\nLevy of penalty u/s 271D of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 8,33,67,454/-\n13\n1178/JP/2025\n2021-22\n19.06.2025\nLevy of penalty u/s 271E of the Act\nvide order dated 28.08.2023 for an\namount of Rs. 32,96,15,250/-\nAgainst all these appeals of the revenue the assessee preferred\ncross\nobjections which were numbered as CO/39/JP/2025 to\nCO/46/JP/2025.\n2.\nAs agreed by the parties the lead case of revenue is considered in\nITA no. 1168/JP/2025 for assessment year 2017-18 and the connected\ncross objection of assessee on it numbered as CO no. 39/JP/2025 is taken\nup for discussion as lead case and the finding shall apply mutatis mutandis\non the similar issue in the other appeals and cross objection since the\ngrounds were similar in other years.\n3.\nRevenue feeling dissatisfied with the finding so recorded in the order\nof Commissioner of Income Tax, Appeal, Jaipur 4 [ for short CIT(A) ]\ndated 19.06.2025 preferred the present appeal and thereby the assessee\npreferred the cross objection which arise from that order of the Id. CIT(A).\nThe dispute relates to the assessment year 2017-18. That order of the Id.\nCIT(A) arises because the assessee has challenged the order of levy of\npenalty passed on 28.08.2023 as per provision of section 271E of the\nIncome Tax Act, 1961 [ for short Act ] by Addl./Jt. CIT, Central, Jaipur [ for\nshort AO].\n4.\nBefore moving towards the facts of the case we would like to mention\nthat the revenue has assailed the appeal for assessment year 2017-18 in\nITA No. 1168/JP/2025 on the following grounds.\n(i)\nWhether on the facts and circumstances of the case, the Ld.CIT(A) has erred\nin deleting levy of penalty by CIT only on technical ground without giving any\nfinding on the merits of levy of penalty?\n(ii)\nWhether on the facts and circumstances of the case, the Ld.CIT(A) has erred\nin holding that the relevant date for determining the limitation period for imposing\npenalty u/s 271E of LT. Act is the date when the assessment order was passed\nby the A.O. and not the date when show cause notice was issued by the Addl/Jt.\nCIT & ignoring the legal aspect that the A.O. was not allowed to impose penalty\nu/s 271E of I.T. Act and therefore passing of assessment order by the A.O. and\nreference made by A.O. has no bearing on deciding the limitation date for\nimposing penalty u/s 271E of 1.T. Act?\n(iii)\nWhether on the facts and in circumstances of the case, the Ld.CIT(A) has\nerred in ignoring the decision of Hon'ble Kerla High Court in the case of\nGrihalaxmi Vision v Addl. Commissioner of Income Tax, Range-1, Kozhikode in\nITA No 83 & 86 of 2014 dated 08.07.2015, wherein it was held that limitation of\npenalty proceedings u/s 271D/E of LT. Act start from the issue of show cause\nnotice(s) by the Addl/Jt. CIT?\n(iv)\nWhether on the facts and in circumstances of the case Ld.CIT(A) has erred in\nrelying on the decision of Hon'ble Apex court in the case of Hissaria Brothers\nwithout appreciating the fact that the facts of the case of Hissaria Brothers were\ndifferent from the present case as in the case of Hissaria Brothers, the issue was\nregarding extension of limitation date for imposition of penalty u/s 271D/E of I.T.\nAct on the ground of pendency of appeal against relevant assessment order but\nin present case, there is no such issue involved?\n(v)\nThe appellant craves leave or reserves right to amend, modify, alter, add or\nforego any ground(s) of appeal at any time before or during the hearing of this\nappeal.\n4.1\nIn the connected cross objection no. 39/JP/2025 the assessee has\nraised the following ground:-\n1.\nOn the facts and in the circumstances of the case and in law the Ld. CIT\n(A) rightly deleted the penalty of Rs. 90,95,257/- levied by Ld. AO u/s 271E of I.\nTax Act by holding that the penalty order passed on 28.08.2023 is beyond the\ndate of limitation. However, in addition to or/and in alternative, the contentions of\nthe assessee are as under\n1.1\nIn the assessment order, no satisfaction was recorded for initiation of\npenalty u/s 271E of the Act, hence the penalty imposed is not maintainable, bad\nin law and deserves to be annulled on this count also.\n1.2\nthe Ld. A.O. assessed the alleged loans as income of assessee so debit\nentries are repayments of income or return of income or expenses, therefore out\nof purview of section 269T of the Act.\n2.\nThe appellant craves leave to add, alter, amend, any of the grounds of\nappeal at or before the time of hearing of appeal.\n5.\nSuccinctly, the fact as culled out from the records is that in this case,\nsearch and seizure action u/s 132 of the Act and/or survey action u/s 133A\nof the Act was carried out on 19-01-2021 by the Income Tax Department\non M/s Gokul Kripa Colonizers & Developers Pvt. Ltd (hereinafter referred\nas GKCDPL or assessee), one of the members of the Gokul Kripa Group.\nWhile in search proceeding various incriminating documents were\nfound/seized including forensic data from premises covered in the \"Gokul\nkripa group. These incriminating documents include information related to\nrepayment of cash loans by the assessee company GKCDPL through its\nfounders/promoters/owners/key person namely Shri Sumer Singh Saini,\nShri Phool Chand Saini, Shri Rajesh Kumar and Shri Ganga Singh Tanwar\n& others and these cash loans were utilized for the purpose of business of\nassessee company i.e. in the business of real estate done by the assessee\ncompany. Further, during the course of assessment proceedings, the\nassessee company was asked to explain these financial transactions done\nthrough its key persons for the purpose of business of real estate\nconducted by the assessee company, i.e. cash loans repayments by the\nassessee company through its key persons but the assessee was failed to\nprovide any satisfactory reply regarding these cash loan repayments.\nAccordingly, the Assessing Officer i.e., ACIT, Central Circle-2, Jaipur\nreferred the matter to Addl./Jt. CIT, Central Range, Jaipur for initiation of\npenalty proceedings under section 271E of the Act for contravention to the\nprovisions of section 269T of the Act i.e. the assessee accepted loan or\ndeposit in an amount exceeding the limit specified in section 269T by other\nthan a cheque or bank draft, in violation of provisions of section 269T of the\nAct. The Addl. CIT, Central Range, Jaipur issued notice u/s 274 r.w.s. 271E\nof the Act on 14.02.2023 initiating penalty under section 271E of the Act for\nviolation of provisions of section 269T of the Act vide show cause notice\ndated 01.03.2023. The assessee filed its reply on 15.3.2023 in response to\nabove show cause notice on ITBA. Again after change of incumbent,\nanother show cause notice dated 03.08.2023 was issued to the assessee\nfixing the case for hearing on 10.08.2023. In response to this notice, the\nassessee submitted that the reply submitted on 15.03.2023 may be\nconsidered as reply to this notice. The salient points as jotted down by the\nId. AO in his order on the reply dated 15.03.20238 10.08.2023 reads as\nunder :\n1. The assessee company was not right person to allege that it has taken cash\nloan;\n2. The AO assessed the alleged loan as Income so out of preview of section\n269T of the Act.\n3. Complete working was not given either assessment stage or penalty\nproceedings stage;\n4.\nThe company is artificial person so it cannot take or repay the loans, it\nalways acts through living persons;\n5. The first onus is on the department to show cause that the assessee company\nhas taken cash loan which has not been discharged,\n6. Presumption u/s 132(4) not available for penalty proceedings;\n7 The assessment proceedings and penalty proceedings are two separate\nproceedings:\n8. & 9) That the alleged loans were treated as income of the assessee and the\nsame cannot be considered as a loan for the purpose of levy of penalty; and that\nwithout any credible evidences the caption amounts should be alleged as loans,\nit is submitted that the section 269T falls in Chapter XXB which deals with\nrequirement as to mode of acceptance, payment or repayment in certain cases to\ncounter act evasion of tax;\nAnd further enclosed the list of schemes developed by the assessee company\nalong with percentage share of key persons.\nLd. AO noted that the reply of the assessee was considered but not tenable\non account of the following reasons;\nPara1\nThe assessee company has tried to camouflage the whole business done by it\nthrough its founders/promoters/owners/key person namely Sh. Sumer Singh\nSaini, Sh. Phool Chand Saini, Sh. Rajesh Kumar and Sh. Ganga Singh Tanwar\nin the garb of treating it as association of persons. Here, it is pertinent to\nemphasize the important points:\na) Firstly, the whole business had been done under the entity being\ncompany namely M/s Gokul Kripa Colonizers & Developers Pvt. Ltd.\n(PAN: AAECG8317K)\nb) Secondly, the company being a artificial person always controlled by\npersons, here in this case being Sh. Sumer Singh Saini, Sh. Phool Chand\nSaini, Sh. Rajesh Kumar and Sh. Ganaga Singh Tanwar, who had been\nhandling the day to day business activities of the assessee company le.\nbusiness of real estate (developing different residential/commercial\nplotting schemes)\nc) Thirdly, the assessee Group has filed returns as a company for the real\nestate business, neither any legal entity being AOP was created nor\nreturns for AOP had been filed by the assessee group for transactions\ndone in the name of M/s GKCDPL.\nd) Fourthly, the assessee company has itself filed affidavits of its key\npersons during the course of assessment proceedings stating therein that\n\"to avoid the additions in multiple hands and to avoid the multiple\nproceedings the same may kindly be considered in hands our lead\ncompany naming M/s. Gokul Kripa Colonizers & Developers Private\nLimited because the end use of such funds was for real estate business\nbeing carried out by us. This admission is given to our assessing officer\njust to avoid the addition in multiple hands and by way of this affidavit we\nhereby confirm that In future we will never challenge to the addition on\nthe ground that the same has been considered in wrong hands.\"\ne) The content of the affidavit is reproduced as under:\n\"We, (1) Sumer Singh Saini Slo Shri Gokul Chand Saini, Address: C-\n33, 6D, Engineers Colony, Mangayawas, Mansarover, Jaipur-\nRajasthan (2) Phool Chand Saini S/o Shri Ram Dev Saini, Address:\nPlot No. 22, Monika Vihar-Ist, Behind Maharani Garden, Mangyawas\nRoad, Mansarover, Jaipur (3) Rajesh Kumar S/o Shri Deep Chand\nVerma Address:\nD-6/342, Chitrakoot, Vaishali Nagar, Jaipur (4)\nGanga Singh Tanwar S/o Shri Sahadev Singh Address: Flat No. 702,\nUDB Indus Tower, Opp. Pillar No. 5, Near Mansarover Metro Station,\nJaipur do hereby solemnly declare and confirm that:-\n1) We the above name persons are promoters and owners of various\nconcerns of the group known as \"Gokul Kripa Group\", therefore\ncompetent to sign this affidavit on behalf of this group. This affidavit is\nbeing filed in our Individual capacity as well as by Shri Sumer Singh\nSaini in the capacity of director of company naming Gokul Kripa\nColonizers & Developers Private Limited\n2) We all four persons in association of each other were carrying on\nthe business of real estate and under such association several\nschemes in several name were developed and sold.\n3) The Income Tax department carried out search over our residential\nand business premises on 19.01.2021 and during the course of search\nfound & seized various documents. As a consequence of search the\nassessment proceedings of various assessee of our group are pending\nwith ACIT, Central Cirlce-2 Jaipur (hereinbelow referred as assessing\nofficer) and we have submitted our explanation on the each and every\nquery raised during assessment proceeding\n4) During the course of assessment proceedings, the queries wore\nraised regarding the alleged unsecured loans taken in cash by us from\nthe various parties and explanation of the same has been submitted by\nus. However, without admitting anything contra, we have requested to\nour assessing officer that if our explanation is not accepted and such\nalleged loans are considered for addition than to avoid the additions in\nmultiple hands and to avoid the multiple proceedings the same may\nkindly be considered in hands our lead company naming Gokul Kripa\nColonizers & Developers Private Limited because the end use of such\nfunds was for real estate business being carried out by us. This\nadmission is given to our assessing officer just to avoid the addition in\nmultiple hands and by way of this affidavit we hereby confirm that in\nfuture we will never challenge to the addition on the ground that the\nsame has been considered in wrong hands.\n5) During the course of search several data were found from the\nmobile of Shri Vikas Saini and the explanation of the same has been\nsubmitted in our submission filed to assessing officer. In this regard we\nalso submitted to our assessing officer that Shri Vikash Saini in his\nindividual capacity was not carrying any such activities for which the\ntransactions noted in captioned images or data, would have been\nmade by him as Individual. Shri Vikas Saini is mainly assisting to his\nfather Shri Phool Chand Saini in the real estate business of Gokul\nKripa Group and he has no business in his individual capacity. The\ntransactions mentioned in the data extracted from the mobile of Shri\nVikas Saini is either pertaining to real estate business of the Gokul\nKripa Group or someone else as explained in respective reply.\nTherefore, we have requested to our assessing officer that if our\nsubmission is not accepted and If any adverse interference is drawn on\nthe basis of such data than the same may kindly be considered in the\nhands of company naming Gokul Kripa Colonizers & Developers\nPrivate Limited and due credit of such receipt on a/c of alleged\nunaccounted sales may kindly be allowed. We by way of this affidavit\nhereby confirm that in future we will never challenge that the same has\nbeen considered in wrong hands.\"\nThus, the claim of the assessee company that the business was run as AOP has\nno basis and it is apparent from the above that the justification furnished by the\nassessee company has no basis and moreover, it is just an afterthought of the\nassessee company to safeguard itself from the penalty.\nPara 2: On going through the assessment record, it may be noted that the\nassessee company GKCDPL (PAN: AAECG8317K) had repaid cash loans\nthrough key persons of Gokul kripa Group. It is also apparent from the\nassessment order itself that the details of repayment of loans were found in the\nseized record and all the key persons of the group accepted the repayment of\ncash loans taken by any of the key persons/associates, is for the business of the\nassessee company. An affidavit in this regard was filed by key persons of the\nassessee company, is appended in the assessment orders.\nMoreover, on perusal of the assessment orders, it is further noted that the AO has\ncomprehensively discuss the seized records, submissions of the assessee\ncompany which clearly shows that these receipts were nothing but repayment of\ncash loans by the assessee company thorough its key persons. The additions as\nunexplained business receipts are exclusive and independent of the fact that the\ncash loans were repaid in contraventions to the provisions of section 269T of the\nAct ad further the penalty proceedings are independent to the addition made\nduring assessment proceedings.\nPara 3: The plea of the assessee company regarding non-receipt of complete\nworking of the amount so worked out alongwith reference of relevant seized\nmaterial is nothing but an excuse as the detailed working has been mentioned in\nthe assessment order itself and the seized material was provided to them and\nmoreover, the digital seized material was only forensically cloned in the presence\nof the key persons of the assessee company during the search proceedings and it\nhad been always available with the assessee company.\nPara 4 & Para 5: The assessee company has taken the plea of artificial person so\nit cannot repaid the loans, it always act through living persons and the further that\nthe onus is on the department to shown that the assessee company has taken\ncash loan which has not been discharged:\n1 At the outset, the plea of the assessee company being artificial person so it\ncannot take the loans, it always act through living persons is totally irrelevant in\nthe instant case as the company always being run by living persons and key\nmanagerial persons are the one totally responsible for the business activities\nconducted by the company.\n2. Here, the assessee company has itself accepted the fact that in case of\ncompany, it always act through the living persons which is the case in the present\nscenario and this fact has been discussed in the assessment orders that these\ncash loans were repaid through its key persons namely Sh. Sumer Singh Saini,\nSh. Phool Chand Saini, Sh. Rajesh Kumar and Sh. Ganaga Singh Tanwar for the\nbusiness of the assessee company. Further, the affidavit filed by the key persons\nmade it categorically clear that the transactions made by the key persons had\nbeen made by them in their capacity as key managerial persons of the assessee\ncompany not in their individual capacity.\n3. Moreover, the fact that directors used to take cash loans from various parties\nand the cash loans obtained from these parties were ultimately utilized for the\nbusiness purpose of M/s GKCDPL ile for cash expenses. This fact has been\ndiscussed in the assessment order of relevant years as under: It has been even\naccepted by the directors in their statement recorded during the search and post\nsearch proceedings. During the course of assessment proceedings, the assessee\n(through its directors) furnished an affidavit that \"to avoid the additions in multiple\nhands and to avoid the multiple proceedings the same may kindly be considered\nin hands our lead company naming M/s. Gokul Kripa Colonizers & Developers\nPrivate Limited because the end use of such funds was for real estate business\nbeing carried out by us.\nPara 6 & Para 7: The reply of the assessee company is perused and was not\nrelevant in response to show cause notice of penalty proceedings as the\ndepartment is justifiable in initiating the penalty proceedings which has been done\nafter following due procedure as per the provisions of the Income Tax Act, 1961.\n1. The assessment proceedings have been completed in the instant case of\nAssessee Company and matter was discussed in the assessment order regarding\nrepayment of cash loans. Neither the assessee company has denied repayment\nof cash loans during the assessment proceedings nor furnished any substantial\nreply in response to penalty proceedings about contravention of section 269T of\nthe Act done by the assessee company.\n2 The penalty proceedings are separate proceedings and therefore, separate\nopportunity is provided to the assessee company to furnish its reply in terms of\ncash loans repayment by it in contravention of section 269T of the Act.\nPara 8 & 9: (i) The assessee has taken the plea that alleged loans were taken as\nincome and therefore, the same cannot be treated as loan repaid for the purpose\nof penalty u/s 271E of the Act is not acceptable as the assessee company has\nitself considering penalty proceeding as separate proceedings and therefore, the\nplea of the additions made in the assessment proceedings being separate\nproceedings cannot be taken.\n(ii) Further, the additions as unexplained business receipts are exclusive and\nindependent of the fact that the cash loans repayments were made in\ncontraventions to the provisions of section 269T of the Act.\nBased on the above discussion Id. AO did not accepted the\ncontention of the assessee company and thereby he concluded that the\nassessee has violated the provisions of section 269T and thereby liable for\nlevy of penalty as per provisions of section 271E of the Act for an amount\nof Rs. 90,95,257/- and she ordered accordingly vide her order dated\n28.08.2023.\n6.\nAggrieved from the order of Assessing Officer, assessee preferred an\nappeal before the Id. CIT(A). Apropos to the grounds so raised the relevant\nfinding of the Id. CIT(A) is reiterated here in below:\n4.2 I have considered the facts of the case and written submissions of the\nappellant as against the observations/findings of the AO in the penalty order for\nthe year under consideration. The contentions/submissions of the appellant are\nbeing discussed and decided as under:\nIn this case it is noticed that assessee company has made repayment of cash\nloans aggregating to Rs. 90,95,257/- on various dates of FY 2016-17 relevant to\nAY 2017-18, which is in violation to the section 269T of the Income Tax Act,\n1961. It is noted that assessment order in this case was passed on 29.04.2022.\nThe Addl./Jt. CIT finally summarized in the penalty order that the appellant has\nrepaid a cash loan of Rs. 90,95,257/- which is in contravention of Section 269T\nand therefore levied penalty of section 271E of the Act for Rs. 90,95,257/-. In\nappeal the A/R of the appellant filed submission on merits as well as legality of\nthe penalty order. On legality he argued that the penalty levied is barred by\nlimitation and the issue is covered by decisions of Hon'ble Supreme Court,\nHon'ble Rajasthan High Court and Hon'ble Juri iction ITAT Jaipur.\nThe legal ground of the appellant is taken first for discussion. The main issue in\nlegal ground is whether the penalty imposed is barred by limitation or not?\nIn this connection, the provisions of section 271E read with section 275 is\nreproduced as under:\n271E. (1) if a person repay any loan or deposit or specified advances referred to in\nsection 269T otherwise than in accordance with the provisions of that section, he shall\nbe liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or\nspecified sum so repaid\n(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint\nCommissioner.\nProvided that any penalty under sub-section (1), on or alter the 1st day of April, 2025,\nshall be imposed by the Assessing Officer.\n*275 Bar of limitation for imposing penalties (1) No order imposing a penalty under this\nChapter shall be passed-\n(a) in a case where the relevant assessment or other order is the subject matter of an\nappeal to the Joint Commissioner (Appeals) or to the Commissioner (Appeals) under\nsection 246 or section 245A or an appeal to the Appellate Tribunal under section 253,\nafter the expiry of the financial year in which the proceedings, in the course of which\naction for the imposition of penalty has been initiated, are completed, of six months from\nthe end of the month in which the order of the Joint Commissioner (Appeals) or the\nCommissioner (Appeals) or as the case may be the Appellate Tribunal is received by the\nPrincipal Commissioner of Commissioner, whichever period expires later\nProvided that in a case where the relevant assessment or other order is the subject-\nmatter of an appeal to the Joint Commissioner (Appeals) or to the Commissioner\n(Appeals) under section 246 or section 246A, and the Joint Commissioner (Appeals) or\nthe Commissioner (Appeals) passes the order on or after the 1st day of June, 2003\ndisposing of such appeal, an order imposing penalty shall be passed before the expiry of\nthe financial year in which the proceedings, in the course of which action for imposition\nof penalty has been initiated, are completed, or within one year from the end of the\nfinancial year in which the order of the Joint Commissioner (Appeals) or the\nCommissioner (Appeals) is received by the Principal Commissioner of Commissioner,\nwhichever is later\n(b) in a case where the relevant assessment or other order is the subject matter of\nrevision under section 263 or section 264, after the expiry of six months from the end of\nthe month in which such order of revision is passed,\n(c) in any other case, after the expiry of the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are completed,\nor six months from the end of the month in which action for imposition of penalty is\ninitiated, whichever period expires later.\nIn this case the limitation period is governed by clause (c) of Section 275(1). As\nper this section, the penalty order is to be passed before the end of the FY. in\nwhich the proceeding in the course of which the action for imposition of penalty\nhas been initiated are completed or 6 months from the end of the month in which\npenalty is initiated, whichever expires later.\nNow the issue at hand is to determine the correct date of limitation of passing of\nthe penalty order. There are various situations which can arise with respect to the\npassing of the penalty order, le. whether it is passed before the passing of the\nassessment order or after the passing of the assessment order. In this case\nunder discussion the penalty has been levied after the passing of the assessment\norder. From the perusal of the various cases laws relied upon by the appellant as\nwell as other cases available in the legal domain, it is seen that the exact issue\nhas been discussed in the following cases\nHon'ble Supreme Court in the case of Hissaria Brothers 386 ITR 719 held as\nunder\n\"Penalty under ss. 2710 and 271E-Limitation under s 275- Computation-Penalty orders\nunder ss. 2710 and 271E passed beyond six months from the end of the month in which\nthe assessments were completed were barred by Imitation-CIT v. Hissaria Bros. (2007)\n211 CTR (Raj) 156 affirmed.\"\nHon'ble Rajasthan High Court in the CIT v. Jitendra Singh Rathore [2013] 31\ntaxmann.com 52/352 ITR 327 held as under:\n\"Penally unders 2710-Limitation under s. 275-Applicability of of (a) or ol. (c) of 275(1)-\nShow-cause notice was served on the assessee by AO on 27th March, 2003-Thereafter,\nthe matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by Jt. CIT by\norder dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was applicable\nto the case Even when the authority competent to impose penalty under s. 271D was the\nJt. CIT, the period of limitation for the purpose of such penalty proceedings was not to be\nreckoned from the issue of show cause by the Jt. CIT, but the period of limitation was to\nbe reckoned from the date of issue of first show cause for initiation of such penalty\nproceedings\"\n(b) in a case where the relevant assessment or other order is the subject matter of\nrevision under section 263 or section 264, after the expiry of six months from the end of\nthe month in which such order of revision is passed,\n(c) in any other case, after the expiry of the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are completed\nor six months from the end of the month in which action for imposition of penalty is\ninitiated, whichever period expires later.\nIn this case the limitation period is governed by clause (c) of Section 275(1). As\nper this section, the penalty order is to be passed before the end of the FY. in\nwhich the proceeding in the course of which the action for imposition of penalty\nhas been initiated are completed or 6 months from the end of the month in which\npenalty is initiated, whichever expires later.\nNow the issue at hand is to determine the correct date of limitation of passing of\nthe penalty order. There are various situations which can arise with respect to the\npassing of the penalty order, le. whether it is passed before the passing of the\nassessment order or after the passing of the assessment order. In this case\nunder discussion the penalty has been levied after the passing of the assessment\norder. From the perusal of the various cases laws relied upon by the appellant as\nwell as other cases available in the legal domain, it is seen that the exact issue\nhas been discussed in the following cases\nHon'ble Supreme Court in the case of Hissaria Brothers 386 ITR 719 held as\nunder\n\"Penalty under ss. 2710 and 271E-Limitation under s 275- Computation-Penalty orders\nunder ss. 2710 and 271E passed beyond six months from the end of the month in which\nthe assessments were completed were barred by Imitation-CIT v. Hissaria Bros. (2007)\n211 CTR (Raj) 156 affirmed.\"\nHon'ble Rajasthan High Court in the CIT v. Jitendra Singh Rathore [2013] 31\ntaxmann.com 52/352 ITR 327 held as under:\n\"Penally unders 2710-Limitation under s. 275-Applicability of cl (a) or cl. (c) of 8.\n275(1)- Show-cause notice was served on the assessee by AO on 27th March, 2003-\nThereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by\nJt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was\napplicable to the case Even when the authority competent to impose penalty under s.\n271D was the Jt. CIT, the period of limitation for the purpose of such penalty\nproceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the\nperiod of limitation was to be reckoned from the date of issue of first show cause for\ninitiation of such penalty proceedings\"\nHon'ble ITAT Jaipur Bench in the case of Jagdish Chandra Suwalka v. Joint\nCommissioner of Income-tax [2023] 154 taxmann.com 504 (Jaipur - Trib.) held as\nunder:-\n\"Thus, a penalty u/s 271D could not be imposed after the expiry of the larger period of\nlimitation. In this case, we find that the Id. JCIT in the impugned penalty order has clearly\nobserved that the assessment for A.Y 2015-16 was completed by the AO (ACIT Tonk)\nvide assessment order dated 28-12-2017 u/s 147/143(3) of the Act. The Id. JCIT also\nreferred to the observation made by the AO that the assessee had received cash\npayment of Rs. 47,50,000/- from various persons as per details given, which are in\ncontravention of Sec. 269SS of the IT Act. Thus, the relevant proceedings were the\nassessment proceedings during the course of which, the default of accepting cash over\nthe prescribed limit was noted by the AO and since the assessment proceedings were\ncompleted on 28-12-2017, the related financial year ended on 31-3-2018. Accordingly,\nthe first time limit thus expired on 31-3-2018. For the second time limit, an action for\nimposition of penalty was taken on 28-12-2017 by the AO, when the assessment was\ncompleted and six months from end of that month expired on 30-6-2018 which time limit\nclearty expires later. Hence, the penalty u/s 271D could have been validly imposed only\non before 30-6-2018 as against which, in this case, the impugned penalty was imposed\nmuch later on 28-5-2019 hence, the same is clearly baned by limitation. The Id. D/R\nhowever, contended that for this period of 6 months has to be reckoned from the date of\nissue of show cause notice by the id. JCIT, who was the competent Authority to impose\na penalty u/s 271D and since he issued the notice on dated 6-11-2018 and Imposed the\npenalty on 28-5-2019 itself, which was well within the period of 6 month from the month\nin which 28-5-2018 action for imposition of penalty was taken. The Id. A/R however,\nstrongly contended that for this purpose the observation made by the AO in the\nassessment order has to be considered and the date of the assessment order being 28-\n12-2017 was relevant and therefore, the period of 6 months has to be reckoned from that\ndate. Consequently, the limitation from that date the limitation had already expired.\n7.2 After careful consideration, I find that the issue involved in the present case is fully\ncovered by the decision of Hon'ble Juri ictional High Court in the case of Hissaria Bros.\n(supra). The same has been affirmed by the Hon'ble Apex Court in the case of Hissaria\nBrothers [2016] 74 taxmann.com 22/243 Taxman 174/386 ITR 719 holding as under.\n\"Penalty under ss. 271D and 271E-Limitation under s. 275- Computation-Penalty orders\nunder ss. 2710 and 271E passed beyond six months from the end of the month in which\nthe assessments were completed were barred by limitation-CIT v. Hissaria Bros. (2007)\n211 CTR (Raj) 156 affirmed\"\nSimilar view was taken again by the Hon'ble Rajasthan High Court in the CIT v. Jitendra\nSingh Rathore [2013] 31 taxmann.com 52/352 ITR 327 wherein it was held under:\n\"Penalty under s. 271D-Limitation under s. 275-Applicability of cl (a) or cl. (c) of 8.\n275(1)- Show-cause notice was served on the assessee by AO on 27th March, 2003-\nThereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by\nJt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was\napplicable to the case Even when the authority competent to impose penalty under s.\n271D was the Jt. CIT, the period of limitation for the purpose of such penalty\nproceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the\nperiod of limitation was to be reckoned from the date of issue of first show cause for\ninitiation of such penalty proceedings\"\n(b) in a case where the relevant assessment or other order is the subject matter of\nrevision under section 263 or section 264, after the expiry of six months from the end of\nthe month in which such order of revision is passed,\n(c) in any other case, after the expiry of the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are completed\nor six months from the end of the month in which action for imposition of penalty is\ninitiated, whichever period expires later.\nIn this case the limitation period is governed by clause (c) of Section 275(1). As\nper this section, the penalty order is to be passed before the end of the FY. in\nwhich the proceeding in the course of which the action for imposition of penalty\nhas been initiated are completed or 6 months from the end of the month in which\npenalty is initiated, whichever expires later.\nNow the issue at hand is to determine the correct date of limitation of passing of\nthe penalty order. There are various situations which can arise with respect to the\npassing of the penalty order, le. whether it is passed before the passing of the\nassessment order or after the passing of the assessment order. In this case\nunder discussion the penalty has been levied after the passing of the assessment\norder. From the perusal of the various cases laws relied upon by the appellant as\nwell as other cases available in the legal domain, it is seen that the exact issue\nhas been discussed in the following cases\nHon'ble Supreme Court in the case of Hissaria Brothers 386 ITR 719 held as\nunder\n\"Penalty under ss. 2710 and 271E-Limitation under s 275- Computation-Penalty orders\nunder ss. 2710 and 271E passed beyond six months from the end of the month in which\nthe assessments were completed were barred by Imitation-CIT v. Hissaria Bros. (2007)\n211 CTR (Raj) 156 affirmed.\"\nHon'ble Rajasthan High Court in the CIT v. Jitendra Singh Rathore [2013] 31\ntaxmann.com 52/352 ITR 327 held as under:\n\"Penally unders 2710-Limitation under s. 275-Applicability of cl (a) or cl. (c) of 8.\n275(1)- Show-cause notice was served on the assessee by AO on 27th March, 2003-\nThereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by\nJt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was\napplicable to the case Even when the authority competent to impose penalty under s.\n271D was the Jt. CIT, the period of limitation for the purpose of such penalty\nproceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the\nperiod of limitation was to be reckoned from the date of issue of first show cause for\ninitiation of such penalty proceedings\"\nHon'ble ITAT Jaipur Bench in the case of Jagdish Chandra Suwalka v. Joint\nCommissioner of Income-tax [2023] 154 taxmann.com 504 (Jaipur - Trib.) held as\nunder:-\n“Thus, a penalty u/s 271D could not be imposed after the expiry of the larger period of\nlimitation. In this case, we find that the Id. JCIT in the impugned penalty order has\nclearly observed that the assessment for A.Y 2015-16 was completed by the AO (ACIT\nTonk) vide assessment order dated 28-12-2017 u/s 147/143(3) of the Act. The Id. JCIT\nalso referred to the observation made by the AO that the assessee had received cash\npayment of Rs. 47,50,000/- from various persons as per details given, which are in\ncontravention of Sec.269SS of the IT Act. Thus, the relevant proceedings were the\nassessment proceedings during the course of which, the default of accepting cash over\nthe prescribed limit was noted by the AO and since the assessment proceedings were\ncompleted on 28-12-2017, the related financial year ended on 31-3-2018. Accordingly,\nthe first time limit thus expired on 31-3-2018. For the second time limit, an action for\nimposition of penalty was taken on 28-12-2017 by the AO, when the assessment was\ncompleted and six months from end of that month expired on 30-6-2018 which time limit\nclearly expires later. Hence, the penalty u/s 271D could have been validly imposed only\non before 30-6-2018 as against which, in this case, the impugned penalty was imposed\nmuch later on 28-5-2019 hence, the same is clearly barred by limitation. The Id. D/R\nhowever, contended that for this period of 6 months has to be reckoned from the date of\nissue of show cause notice by the Id. JCIT, who was the competent Authority to impose\na penalty u/s 271D and since he issued the notice on dated 6-11-2018 and Imposed the\npenalty on 28-5-2019 itself, which was well within the period of 6 month from the month\nin which 28-5-2018 action for imposition of penalty was taken. The Id. A/R however,\nstrongly contended that for this purpose the observation made by the AO in the\nassessment order has to be considered and the date of the assessment order being 28-\n12-2017 was relevant and therefore, the period of 6 months has to be reckoned from that\ndate. Consequently, the limitation from that date the limitation had already expired.\n7.2 After careful consideration, I find that the issue involved in the present case is fully\ncovered by the decision of Hon'ble Juri ictional High Court in the case of Hissaria\nBros. (supra). The same has been affirmed by the Hon'ble Apex Court in the case of\nHissaria Brothers [2016] 74 taxmann.com 22/243 Taxman 174/386 ITR 719 holding as\nunder.\n\"Penalty under ss. 271D and 271E-Limitation under s. 275- Computation-Penalty orders\nunder ss. 2710 and 271E passed beyond six months from the end of the month in which\nthe assessments were completed were barred by limitation-CIT v. Hissaria Bros. (2007)\n211 CTR (Raj) 156 affirmed\"\nSimilar view was taken again by the Hon'ble Rajasthan High Court in the CIT v. Jitendra\nSingh Rathore [2013] 31 taxmann.com 52/352 ITR 327 wherein it was held under:\n\"Penalty under s. 271D-Limitation under s. 275-Applicability of cl (a) or cl. (c) of s.\n275(1)- Show-cause notice was served on the assessee by AO on 27th March, 2003-\nThereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by\nJt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was\napplicable to the case Even when the authority competent to impose penalty under s.\n271D was the Jt. CIT, the period of limitation for the purpose of such penalty\nproceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the\nperiod of limitation was to be reckoned from the date of issue of first show cause for\ninitiation of such penalty proceedings\"\nHon'ble Delhi High Court in the case of Principal Commissioner of Income-tax-5 v. JKD\nCapital & Finlease Ltd. [2017] 81 taxmann.com 80 (Delhi)/[2015] 378 ITR 614 (Delhi)[13-\n10-2015] held as under:-\n“10. Considering that the subject matter of the quantum proceedings was the non-\ncompliance with Section 269T of the Act, there was no need for the appeal against the\nsaid order in the quantum proceedings to be disposed of before the penalty proceedings\ncould be initiated. In other words, the initiation of penalty proceedings did not hinge on\n(b) in a case where the relevant assessment or other order is the subject matter of\nrevision under section 263 or section 264, after the expiry of six months from the end of\nthe month in which such order of revision is passed,\n(c) in any other case, after the expiry of the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are completed,\nor six months from the end of the month in which action for imposition of penalty is\ninitiated, whichever period expires later.\nIn this case the limitation period is governed by clause (c) of Section 275(1). As\nper this section, the penalty order is to be passed before the end of the FY. in\nwhich the proceeding in the course of which the action for imposition of penalty\nhas been initiated are completed or 6 months from the end of the month in which\npenalty is initiated, whichever expires later.\nNow the issue at hand is to determine the correct date of limitation of passing of\nthe penalty order. There are various situations which can arise with respect to the\npassing of the penalty order, i.e. whether it is passed before the passing of the\nassessment order or after the passing of the assessment order. In this case\nunder discussion the penalty has been levied after the passing of the assessment\norder. From the perusal of the various cases laws relied upon by the appellant as\nwell as other cases available in the legal domain, it is seen that the exact issue\nhas been discussed in the following cases: -\n(b) in a case where the relevant assessment or other order is the subject matter of\nrevision under section 263 or section 264, after the expiry of six months from the end of\nthe month in which such order of revision is passed,\n(c) in any other case, after the expiry of the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are completed,\nor six months from the end of the month in which action for imposition of penalty is\ninitiated, whichever period expires later.\nIn this case the limitation period is governed by clause (c) of Section 275(1). As\nper this section, the penalty order is to be passed before the end of the FY. in\nwhich the proceeding in the course of which the action for imposition of penalty\nhas been initiated are completed or 6 months from the end of the month in which\npenalty is initiated, whichever expires later.\nNow the issue at hand is to determine the correct date of limitation of passing of\nthe penalty order. There are various situations which can arise with respect to the\npassing of the penalty order, le. whether it is passed before the passing of the\nassessment order or after the passing of the assessment order. In this case\nunder discussion the penalty has been levied after the passing of the assessment\norder. From the perusal of the various cases laws relied upon by the appellant as\nwell as other cases available in the legal domain, it is seen that the exact issue\nhas been discussed in the following cases\nHon'ble Supreme Court in the case of Hissaria Brothers 386 ITR 719 held as\nunder\n\"Penalty under ss. 2710 and 271E-Limitation under s 275- Computation-Penalty orders\nunder ss. 2710 and 271E passed beyond six months from the end of the month in which\nthe assessments were completed were barred by Imitation-CIT v. Hissaria Bros. (2007)\n211 CTR (Raj) 156 affirmed.\"\nHon'ble Rajasthan High Court in the CIT v. Jitendra Singh Rathore [2013] 31\ntaxmann.com 52/352 ITR 327 held as under:\n\"Penally unders 2710-Limitation under s. 275-Applicability of cl (a) or ol. (c) of 8.\n275(1)- Show-cause notice was served on the assessee by AO on 27th March, 2003-\nThereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by\nJt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was\napplicable to the case Even when the authority competent to impose penalty under s.\n271D was the Jt. CIT, the period of limitation for the purpose of such penalty\nproceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the\nperiod of limitation was to be reckoned from the date of issue of first show cause for\ninitiation of such penalty proceedings\"\n(b) in a case where the relevant assessment or other order is the subject matter of\nrevision under section 263 or section 264, after the expiry of six months from the end of\nthe month in which such order of revision is passed,\n(c) in any other case, after the expiry of the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are completed\nor six months from the end of the month in which action for imposition of penalty is\ninitiated, whichever period expires later.\nIn this case the limitation period is governed by clause (c) of Section 275(1). As\nper this section, the penalty order is to be passed before the end of the FY. in\nwhich the proceeding in the course of which the action for imposition of penalty\nhas been initiated are completed or 6 months from the end of the month in which\npenalty is initiated, whichever expires later.\nNow the issue at hand is to determine the correct date of limitation of passing of\nthe penalty order. There are various situations which can arise with respect to the\npassing of the penalty order, le. whether it is passed before the passing of the\nassessment order or after the passing of the assessment order. In this case\nunder discussion the penalty has been levied after the passing of the assessment\norder. From the perusal of the various cases laws relied upon by the appellant as\nwell as other cases available in the legal domain, it is seen that the exact issue\nhas been discussed in the following cases\nHon'ble Supreme Court in the case of Hissaria Brothers 386 ITR 719 held as\nunder\n\"Penalty under ss. 2710 and 271E-Limitation under s 275- Computation-Penalty orders\nunder ss. 2710 and 271E passed beyond six months from the end of the month in which\nthe assessments were completed were barred by Imitation-CIT v. Hissaria Bros. (2007)\n211 CTR (Raj) 156 affirmed.\"\nHon'ble Rajasthan High Court in the CIT v. Jitendra Singh Rathore [2013] 31\ntaxmann.com 52/352 ITR 327 held as under:\n\"Penally unders 2710-Limitation under s. 275-Applicability of cl (a) or cl. (c) of 8.\n275(1)- Show-cause notice was served on the assessee by AO on 27th March, 2003-\nThereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by\nJt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was\napplicable to the case Even when the authority competent to impose penalty under s.\n271D was the Jt. CIT, the period of limitation for the purpose of such penalty\nproceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the\nperiod of limitation was to be reckoned from the date of issue of first show cause for\ninitiation of such penalty proceedings\"\nHon'ble Delhi High Court in the case of Principal Commissioner of Income-tax-5 v. JKD\nCapital & Finlease Ltd. [2017] 81 taxmann.com 80 (Delhi)/[2015] 378 ITR 614 (Delhi)[13-\n10-2015] held as under:-\n“10. Considering that the subject matter of the quantum proceedings was the non-\ncompliance with Section 269T of the Act, there was no need for the appeal against the\nsaid order in the quantum proceedings to be disposed of before the penalty proceedings\ncould be initiated. In other words, the initiation of penalty proceedings did not hinge on\n(b) in a case where the relevant assessment or other order is the subject matter of\nrevision under section 263 or section 264, after the expiry of six months from the end of\nthe month in which such order of revision is passed,\n(c) in any other case, after the expiry of the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are completed,\nor six months from the end of the month in which action for imposition of penalty is\ninitiated, whichever period expires later.\nIn this case the limitation period is governed by clause (c) of Section 275(1). As\nper this section, the penalty order is to be passed before the end of the FY. in\nwhich the proceeding in the course of which the action for imposition of penalty\nhas been initiated are completed or 6 months from the end of the month in which\npenalty is initiated, whichever expires later.\nNow the issue at hand is to determine the correct date of limitation of passing of\nthe penalty order. There are various situations which can arise with respect to the\npassing of the penalty order, le. whether it is passed before the passing of the\nassessment order or after the passing of the assessment order. In this case\nunder discussion the penalty has been levied after the passing of the assessment\norder. From the perusal of the various cases laws relied upon by the appellant as\nwell as other cases available in the legal domain, it is seen that the exact issue\nhas been discussed in the following cases\nHon'ble Supreme Court in the case of Hissaria Brothers 386 ITR 719 held as\nunder\n\"Penalty under ss. 2710 and 271E-Limitation under s 275- Computation-Penalty orders\nunder ss. 2710 and 271E passed beyond six months from the end of the month in which\nthe assessments were completed were barred by Imitation-CIT v. Hissaria Bros. (2007)\n211 CTR (Raj) 156 affirmed.\"\nHon'ble Rajasthan High Court in the CIT v. Jitendra Singh Rathore [2013] 31\ntaxmann.com 52/352 ITR 327 held as under:\n\"Penally unders 2710-Limitation under s. 275-Applicability of cl (a) or cl. (c) of 8.\n275(1)- Show-cause notice was served on the assessee by AO on 27th March, 2003-\nThereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by\nJt. CIT by order dt. 28th May, 2004 was clearly barred by limitation- Sec. 275(1)(c) was\napplicable to the case Even when the authority competent to impose penalty under s.\n271D was the Jt. CIT, the period of limitation for the purpose of such penalty\nproceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the\nperiod of limitation was to be reckoned from the date of issue of first show cause for\ninitiation of such penalty proceedings\"\nHon'ble Delhi High Court in the case of Principal Commissioner of Income-tax (Central)-\n2 v. Mahesh Wood Products (P.) Ltd. [2017] 82 taxmann.com 39 (Delhi)/[2017] 394 ITR\n312 (Delhi)[05-05-2017] held as under:-\n“9. However, this question came up for consideration in JKD Capital & Finlease Ltd.\n(supra). The date on which the AO recommended the initiation of penalty proceedings\nwas taken to be the relevant date as far as Section 275(1)(c) was concerned. There was\nno explanation for the delay of nearly five years in the ACIT acting on the said\nrecommendation. The Court held that the starting point would be the 'initiation' of penalty\nproceedings. Given the scheme of Section 275(1)(c) it would be the date on which the\nAO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true\nthat the ACIT had the discretion whether or not to issue the SCN, if he did decide to\nissue a SCN, the limitation would begin to run from the date of letter of the AO\nrecommending 'initiation' of the penalty proceedings.\n10. In the present case, the limitation in terms of Section 275 (1) (iii) of the Act began to\nrun on 23rd July, 2012 and the last date for passing the penalty orders was 31st\nJanuary, 2013. Therefore, the penalty orders issued on 26th February 2013 were clearly\nbarred by limitation.”\nIn view of the ratio laid down by the Hon'ble Apex Court in the case of Hissaria Brothers,\nthe relevant date for determining the limitation period is the date from the passing of the\nassessment order by the Id. Assessing Officer. In this case since the assessment was\npassed by the assessing officer on 27.04.2022, hence the date of limitation for passing\nthe penalty order u/s 271D is 31.10.2022 or 31.03.2023, whichever is later, that is,\n31.03.2023 in this case. However, the\npenalty order has been passed on 28.08.2023 which is beyond the limitation\ndate.\nIn view of the above, the penalty order is found to have been passed beyond the date of\nlimitation and thus the same cannot be sustained and due to this factual position, the\npenalty levied is directed to be deleted.\n3.4\nThe similar finding given for deleting the penalty levied u/s 271E and for\nthis the reference may kindly be drawn at Para 4.2 (Page 26 to 32 of CIT (A)\norder of A.Y. 2015-16 271E penalty).\n4.\nAppeal before Hon'ble Bench of ITAT Jaipur\n4.1\nAggrieved from the order of CIT (A), the department filed the appeal and\nthe assessee also filed the C.O.\n4.2\nThe department raised 4 grounds in each appeal in form 36 and the same\nare reproduced hereunder: -\n(i)\nWhether on the facts and circumstances of the case, the Ld. CIT (A) has erred in\ndeleting levy of penalty by Addl./Jt. CIT only on technical ground without giving any\nfinding on the merits of levy of penalty?\n(ii)\nWhether on the facts and circumstances of the case, the Ld. CIT(A) has erred in\nholding that the relevant date for determining the limitation period for imposing penalty\nu/s 271D of I.T. Act is the date when the assessment order was passed by the A.O and\nnot the date when show cause notice was issued by the Addl./Jt. CIT & ignoring the\nlegal aspect that Act the AO was not allowed to impose penalty u/s 271D of I.T. Act and\ntherefore passing of assessment order by the A.O and reference made by A.O. has no\nbearing on deciding the limitation date for imposing penalty u/'s 271D of T. T. Act?\n(iii)\nWhether on the facts and in circumstances of the case, the Ld. CIT(A) has erred\nin ignoring the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v\nAddl. Commissioner of Income Tax, Range-1, Kozhikode in ITA No 83 & 86 of 2014\ndated 08.07.2015, wherein it was held that limitation of penalty proceedings w/'s 271D/E\nof 1T. Act start from the issue of show cause notice(s) by the Addl/Jt. CIT?\n(iv)\nWhether on the facts and in circumstances of the case Ld. CIT(A) has erred in\nrelying on the decision of Hon'ble Apex court in the case of Hissaria Brothers without\nappreciating the fact that the facts of the case of Hissaria Brothers were different from\nthe present case as in the case of Hissaria Brothers, the issue was regarding extension\nof limitation date for imposition of penalty u/s 271D/E of I. T. Act on the ground of\npendency of appeal against relevant assessment order but in present case, there is no\nsuch issue involved?\n4.3\na) The assessee raised following ground in the cross objection: -\nGround Taken in A.Y. 2015-16 in appeal filed against the deletion of\npenalty u/s 271D of the Act: -\n1. On the facts and in the circumstances of the case and in law the Ld. CIT (A)\nrightly deleted the penalty of Rs. 2,37,98,650/- levied by Ld. AO u/s 271D of I. Tax Act\nby holding that the penalty order passed on 28.08.2023 is beyond the date of limitation.\nHowever, in addition to or/and in alternative, the contentions of the assessee are as\nunder\n1.1\nIn the assessment order, no satisfaction was recorded for initiation of penalty u/s\n271D of the Act, hence the penalty imposed is not maintainable, bad in law and\ndeserves to be annulled on this count also.\n1.2 the Ld. A.O. assessed the alleged loans as business income of assessee,\ntherefore it is out of purview of section 269SS of the Act.\nb) Ground Taken in A.Y. 2015-16 in appeal filed against the deletion of\npenalty u/s 271E of the Act: -\n1. On the facts and in the circumstances of the case and in law the Ld. CIT (A)\nrightly deleted the penalty of Rs. 1,40,80,050/- levied by Ld AO u/s 271E of I. Tax Act by\nholding that the penalty order passed on 28.08.2023 is beyond the date of limitation.\nHowever, in addition to or/and in alternative, the contentions of the assessee are as\nunder\n1.1\nIn the assessment order, no satisfaction was recorded for initiation of penalty u/s\n271E of the Act, hence the penalty imposed is not maintainable, bad in law and\ndeserves to be annulled on this count also.\n1.2 the Ld. A.O. assessed the alleged loans as income of assessee so debit entries\nare repayment of income or return of income or expenses, therefore out of purview of\nsection 269T of the Act.\nc) The ground taken in cross objection filed for A.Y. 2016-17 to 2021-22 are\nsame as reproduced hereinabove except change in amount of penalty.\n5.\nSubmission on grounds of appeal of departmental appeal (ITA No. 1162,\n1164 to 1170 and 1174 to 1178/JPR/2025)\n5.1\nSince, the grounds taken by the department for deleting the penalty u/s\n271D as well as 271E of the Act are similar, therefore the same are commonly\ndealt with. Before submitting the submission on each ground of appeal, firstly it\nwould be relevant to tabulate the chronology of relevant dates from the\nassessment to penalty order and thus the same is tabulated hereunder: -\nΑ.Υ.\nDate of\nAssessment\nDate of reference\nsent by A.O to\nAddl./Jt. CIT for\npenalty u/s\n271D/271E\nFinancial Year of\nassessment\nmade expires on\n6 months\nexpires from\ndate of asstt.\n6 months expires from date\nof letter of AO sent to Addl\nCIT for levy of penalty\n2015-16\n27.04.2022\n21.07.2022\n31-03-2023\n31-10-2022\n31-01-2023\n2016-17\n27.04.2022\n21.07.2022\n31-03-2023\n31-10-2022\n31-01-2023\n2017-18\n29.04.2022\n21.07.2022\n31-03-2023\n31-10-2022\n31-01-2023\n2018-19\n27.04.2022\n21.07.2022\n31-03-2023\n31-10-2022\n31-01-2023\n2019-20\n27.04.2022\n21.07.2022\n31-03-2023\n31-10-2022\n31-01-2023\n2020-21\n26.04.2022\n21.07.2022\n31-03-2023\n31-10-2022\n31-01-2023\n2021-22\n26.04.2022\n21.07.2022\n31-03-2023\n31-10-2022\n31-01-2023\n5.2\nAs per the provisions of section 275 (1) (c) of the Act the penalty orders\nare time barred\n5.2.1 At the outset, it is submitted that based on the undisputed facts available\non record, imposition of penalty vide the impugned orders u/s 271D and 271E\npassed by the Id. JCIT, Jaipur on 28.08.2023, is clearly barred by the limitation in\nas much as, the law u/s 275(1)(c) reads as under: -\n275. (1) No order imposing a penalty under this Chapter shall be passed\nXXXXXX\nc) in any other case, after the expiry of the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are completed, or\nsix months from the end of the month in which action for imposition of penalty is initiated,\nwhichever period expires later.\n5.2.2 It may be noted that the provision uses the phrase initiation of action for\nimposition of penalty which does not mean the issue of show cause notice but it\nis a preliminary exercise and the AO being the first person who can possibly\nnotice the contravention, mostly during the course of assessment proceedings\nand the competent authority being JCIT, who is the person to impose the penalty,\ntherefore, the fact of contravention must be noted by the AO who may refer to the\nJCIT. Such reference is the initiation of action for imposition of penalty, as\ncontemplated by the law. Thus, the law contained u/s 275(1)(c) does not provide\nthat the limitation to be reckoned from the end of the month in which the\ncompetent authority (JCIT) issued a SCN. The issue of show cause notice is not\ninitiation of levy of penalty, and if so, he may wake up after 10-20 year, and may\nissue SCN after 10-20 years and impose penalty in 6 months after SCN, which is\nagainst legislative intent. The initiation means beginning, starting a legal process,\nor action or proceedings. The Id AO in assessment order has dealt the fact of\nreceiving cash loans and repayment of cash loans by the assessee and the\nassessment orders were passed after approval u/s 153D from Addl CIT.\nTherefore, the action of levy of penalty starts from the date of assessment or in\nworst case from the date of issue of letter by AO to Addl CIT for levy of penalty\nu/s 271D and 271E.\n5.2.3 The assessment order of the assessee u/s 153A of the Income Tax Act,\n1961 for AY 2015-16 was passed on dated 27/04/2022 after prior approval of\nAddl CIT/Joint CIT, Central Range Jaipur. Before the approval, Addl CIT/Joint\nCIT gone thoroughly the draft assessment order, seized records and other\nmaterial relevant to Assessment Order. In assessment order the cash loan is\nclearly mentioned. Therefore, the cause of action of levy of penalty arose on the\ndate of the assessment order which was April-2022.\n5.2.4 Furthermore, Id. AO referred the matter to Additional Commissioner of\nIncome Tax, Central Range, Jaipur for initiating the penalty proceedings u/s\n271D/271E of the Act vide letter dated 21/07/2022.\n5.2.5 Therefore, the time limit u/s 275(1)(c) of the Act for passing the order u/s\n271D of I. Tax Act should be as under: -\n(i)\nOn the basis of date of assessment order 31/03/2023 (after the expiration\nof the financial year in which the proceedings, in the course of which action for\nthe imposition of penalty has been initiated, are completed)\n(ii)\nExpiry of 6 month from initiation of levy of penalty i.e 31-10-2022 from\nexpiry of six months from assessment order or 31-01-2023 from expiry of 6\nmonths from the date of reference sent by AO to Addl CIT for levy of penalty.\nwhichever is later means the penalty u/s 271D/271E cannot be levied after 31-\n03-2023.\n5.2.6 The words \"in which the proceedings, in the course of which action for\nimposition of penalty has been initiated, are completed\" used in section 275\nindicate the proceedings in which the income-tax authority is satisfied about the\ndefault which attracts the penalty. In the case of Id Addl CIT/JCIT satisfied about\nthe default of the assessee at the time of approval of assessment order u/s 153D.\nIn the case of the assessee penalty order was passed on 28/08/2023 therefore,\nthe penalty order was passed without juri iction and time barred on 31-03-2023.\n5.2.7 Thus, the Ld. CIT (A) rightly deleted the penalty on the ground that the\nsame are beyond the limitation date. Therefore, on this aspect, we rely on the\nfinding of CIT (A), which is reproduced in para 3.3 supra.\n5.2.8 In addition to judgments relied by CIT (A) in his order the assessee place\nthe reliance on following latest judgement dated 26.06.2025 as given in the case\nof DCIT V/s Kiran Fine Jewellers Private Limited 2025 (9) TMI 83 (Copy of\njudgement is at case law PB Page 163 to 179). For ready reference, the head\nnote of judgement is reproduced hereunder: -\nPenalty u/s 271D/271E - period of limitation - HELD THAT:- As decided in the binding\nprecedent in the case of Hissaria Bros [2006 (7) TMI 163 - RAJASTHAN HIGH COURT]\nand said decision has been affirmed by the Hon'ble Apex Court in the case of Hissaria\nBrothers [2016 (8) TMI 1044 - SC ORDER] wherein our High Court held that “"Penalty\nunder ss. 271D and 271E-Limitation u/s 275-Computation- Penalty orders under ss.\n271D and 271E passed beyond six months from the end of the month in which the\nassessments were completed were barred by limitation. Therefore, based on that\nbinding precedent he held that the relevant date for determining the limitation period is\nthe date when the reference was made by the Id. AO to the Id. Joint Commissioner /\nAddl. Commissioner and not the date when the show cause notice was issued by the Id.\nAddl. Commissioner. He thereby noted that in the present case the reference was made\nby the Id. AO to the Id. Addl. Commissioner on the date of 20.01.2020. Accordingly\nconsidering the period provided under section 275 of the Act, the penalty order should\nhave been passed on or before 31.07. 2020. However, the order has been passed on\n30.08.2022 and therefore, the penalty order is found to have been passed beyond the\ndate of limitation and thus the same cannot be sustained and due to this position, he\ndirected that the penalty levied is to be deleted.\nAppeals of the revenue are dismissed.\n5.2.8 The further reliance is also placed on following judgements: -\n1.\nThe Hon'ble Juri ictional High Court in case of CIT vs. M.A. Presstressed\nWorks, 220 ITR 226 (Raj.) (Copy at Case laws PB Page No. 44-46).\n2.\nITAT Jaipur in the case of Shri Ram Kishan Verma Vs Addl CIT,\nRange -1 Kota ITA No 405/JP/2019 AY 2015-16 order dated 03/07/2019. (Copy\nat Case laws PB Page No. 88-105\n3.\nLodha Builders (P) LTD. vs. ACIT (2014) 163 TTJ (Mumbai) 778\nThe relevant finding of these judgement are available at Page 12 to 15 of order of\nCIT (A) of A.Y. 2015-16 (against penalty u/s 271D) and therefore in order to\nbrevity, the same is not reproduced here again.\n5.3\nSubmission on Ground No. 1 of departmental appeal wherein it is\ncontended that CIT(A) erred in deleting the penalty only on technical ground\nwithout giving the findings in the merits of the penalty.\n5.3.1 At the outset, it is respectfully submitted that, in order to examine the\nfoundation of the maintainability of an order, it is essential to first ascertain\nwhether the order satisfies the legal test on all four corners and is devoid of any\nlegal infirmity. If an order does not satisfy the legal test, it ceases to be a valid\nand maintainable order in the eyes of law. Consequently, the appellate\nauthorities are not obliged to enter into or adjudicate upon the merits of such an\norder. In the present case, since the penalty order was not legally valid, therefore\nthe CIT (A) rightly not deal with the merit of the case.\n5.3.2 This view is fortified from the finding given by Hon'ble ITAT Jaipur Bench\nin the case of DCIT V/s Kiran Fine Jewellers Private Limited 2025 (9) TMI 83\n(Copy of judgement is at case law PB Page 163 to 179). The finding of Hon'ble\nITAT as given on this issue is as under: -\n“Since we have confirmed the view of the Id. CIT(A) on technical grounds we are of the\nconsidered view that the Id. CIT(A) has rightly not decided the merits of the dispute as\nthe proceeding were barred by limitation and therefore, ground no. 1 raised by the\nrevenue stands dismissed.\"\n5.3.3 Without prejudice to above, regarding the merit of the case, we relied\nupon the elaborate submission given during penalty proceeding, which is\navailable in paper book. Further, we also relied upon the submission given on\nmerit before CIT (A), which is reproduced by CIT (A) in his order. In order to\nbrevity and not considering it relevant here, the same is not reproduced herein\nagain.\n5.4\nSubmission on Ground No. 2 and 3 of the departmental appeal wherein it\nis contended that Ld. CIT(A) has erred in holding that the relevant date for\ndetermining the limitation period for imposing penalty u/s 271D of I.T. Act is the\ndate when the assessment order was passed by the A.O and not the date when\nshow cause notice was issued by the Addl./Jt. CIT and in this regard the reliance\nwas also placed on the decision of Hon'ble Kerla High Court in the case of\nGrihalaxmi Vision v Addl. Commissioner of Income Tax, Range-1, Kozhikode in\nITA No 83 & 86 of 2014 dated 08.07.2015.\n5.4.1 In this regard this is to submit that decision of Hon'ble Kerla High Court is\nnot binding in the case of assessee because the binding judicial precedence of\njuri ictional Rajasthan High Court on this issue is available in favour of\nassessee. Based on that binding precedent the Ld. CIT(A) held that the relevant\ndate for determining the limitation period is the date when the assessment order\nis passed by Id. AO and not the date when the show cause notice was issued by\nthe Id. Addl./Jt. CIT. The Ld. CIT (A) thereby noted that in the present case the\nassessment orders were passed in the month of April-2022 and accordingly\nconsidering the period provided under section 275 of the Act, the penalty order\nshould have been passed on or before 31.03. 2023. However, since the order\nhas been passed on 28.08.2023 and therefore, the penalty order is found to have\nbeen passed beyond the date of limitation and thus the same cannot be\nsustained and due to this position, he directed that the penalty levied is to be\ndeleted.\n5.4.2 The above, submission is duly covered from the finding given by Hon'ble\nITAT Jaipur Bench in the case of DCIT V/s Kiran Fine Jewellers Private Limited\n2025 (9) TMI 83 (Copy of judgement is at case law PB Page 163 to 179). The\nfinding of Hon'ble ITAT as given on this issue is as under: -\n“Since, we have binding precedent over the other High Court decision cited by the\nrevenue and we are also of the considered view that our High Court view is further\nconfirmed by the apex court and even the revenue has accepted this fact has changed\nthe provision in the Act w.e.f. 01.04.2025 wherein the power to levy this penalty has\nbeen given to the assessing officer, the relevant amended provision reads as under:\nPenalty for failure to comply with the provisions of section 269SS.\n271D. (1) If a person takes or accepts any loan or deposit or specified sum in\ncontravention of the provisions of section 269SS, he shall be liable to pay, by way of\npenalty, a sum equal to the amount of the loan or deposit or specified sum so taken or\naccepted.\n(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint\nCommissioner:\n14-18[Provided that any penalty under sub-section (1), on or after the 1st day of April,\n2025, shall be imposed by the Assessing Officer.]\nThus, the reading of the amended provision of the law and the view of our High Court in\nthe case of Hissaria Bros supra we are of the considered view that there is no infirmity in\nthe finding of the Id. CIT(A) and thereby ground no. 2 & 3 raised by the revenue stands\ndismissed.\"\n5.5\nSubmission on Ground No. 4 of the departmental appeal wherein it is\ncontended that CIT (A) erred in relying on the decision of Hon'ble Apex court in\nthe case of Hissaria Brothers without appreciating the fact that the facts of the\ncase of Hissaria Brothers were different from the present case as in the case of\nHissaria Brothers, the issue was regarding extension of limitation date for\nimposition of penalty u/s 271D/E of I. T. Act on the ground of pendency of appeal\nagainst relevant assessment order.\n5.5.1 In this regard this is to submit that, admittedly in the case of Hissaria\nBrothers the penalty was levied by taking the recourse of extension of limitation\ndate for imposition of penalty u/s 271D/E of I. T. Act on the ground of pendency\nof appeal against relevant assessment order. However, in this case the Hon'ble\nHigh Court categorically held that the extension period on account of pendency of\nappeal would not be available in the case of penalty levied u/s 271D/E and also\nheld that the period of limitation reckoned from the date of assessment order.\nThe relevant finding of Hon'ble High Court is reproduced hereunder: -\n19. In the facts and circumstances noticed above, the Tribunal has held the penalty\norders to be barred by time in terms of section 275(1)(c).\n20. The revenue contends that the provisions of section 275(1)(a) are attracted so far as\nlimitation in the present case is concerned and if section 275(1)(a) is applicable, the\nlimitation for completing the penalty proceedings is extended up to six months from the\ndate of expiry of the month in which the order has been passed in appeal or other\nproceedings arising out of the assessment in the course of which penalty proceedings\nhave been initiated and the order imposing penalties under sections 271D and 271E had\nbeen passed within such extended period from the date of the appellate decision against\nthe assessment order for the assessment year during which notice under sections 271D\nand 271E was issued.\n21. It would be apposite here to refer to section 275 in its fullness :\n\"275. Bar of limitation for imposing penalties.—(1) No order imposing a penalty under\nthis Chapter shall be passed—\n(a)\n(b)\n(c)\nin a case where the relevant assessment or other order is the\nsubject-matter of an appeal to the Commissioner (Appeals)\nunder section 246 or an appeal to the Tribunal under section\n253, after the expiry of the financial year in which the\nproceedings, in the course of which action for the imposition of\npenalty has been initiated, are completed, or six months from the\nend of the month in which the order of the Commissioner\n(Appeals) or, as the case may be, the Tribunal is received by the\nChief Commissioner or Commissioner, whichever period expires\nlater;\nin a case, where the relevant assessment or other order is the\nsubject-matter of revision under section 263, after the expiry of\nsix months from the end of the month in which such order of\nrevision is passed;\nin any other case, after the expiry of the financial year in which the\nproceedings, in the course of which action for the imposition of\npenalty has been initiated, are completed, or six months from the\nend of the month in which action for imposition of penalty is\ninitiated, whichever period expires later.\n(2) The provisions of this section as they stood immediately before their\namendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall\napply to and in relation to any action initiated for the imposition of penalty on or\nbefore the 31st day of March, 1989.\nExplanation. In computing the period of limitation for the purposes of this\nsection,-\n(1)\n(ii)\n(iii)\nthe time taken in giving an opportunity to the assessee to be\nreheard under the proviso to section 129;\nany period during which the immunity granted under section\n245H remained in force; and\nany period during which a proceeding under this Chapter for the\nlevy of penalty is stayed by an order or injunction of any Court.\"\n15. It would not be out of place to consider the relevant legislative history of the\nprovision in question for the present purposes.\n16. Under the Income-tax Act, 1961, as originally enacted, no limitation was\nprescribed for completion of the penalty proceedings. However, considering that\nthere should not be any inordinate delay in imposing penalty and to streamline\nthe levy of penalty within reasonable time in the Act of 1961, section 275 was\nenacted as a new provision for regularising imposition of penalty. It is pertinent to\nnotice that if at the relevant time when the scheme for levy of penalty was\nenacted in the 1961 Act, the case in which the penalty was envisaged under\nChapter XXI, the penalty proceedings were required to be initiated during the\ncourse of relevant assessment proceedings or its appellate proceedings by the\nappellate authority. Attention may be invited to the provisions contained in\nsections 271 and 273 which were the principal provisions for imposing penalty.\nThe simple provision which was enacted was that no order in this chapter shall be\npassed after the expiration of two years from the completion of proceedings, in\nthe course of which the proceedings for imposition of penalty have been\ncommenced. Thus, the limitation for imposing penalty under section 275 as\noriginally enacted was directly linked with the completion of proceedings in the\ncourse of which the penalty proceedings were initiated in terms of section 271 or\nsection 273 which were the principal provisions for imposing penalty under\nChapter XXI. Since the initiation of penalty proceedings was linked with\nassessment proceedings and the orders in such assessments were subject to\nappeal, the findings in such proceedings ordinarily became the foundation for\ninitiating proceedings for penalty and remained relevant evidence to reach a final\nconclusion in penalty proceedings which were otherwise independent. Where\nassessment proceedings in the course of which penalty proceedings were\ninitiated became the subject-matter of appeal and there was modification or\nreversal of findings, it affected final result of penalty proceedings also.\n17. Section 275 was substituted by the Taxation Laws (Amendment) Act, 1970,\nwhich came into effect from 1-4-1971. The change was explained by the\nBoard vide Circular No. 56, dated 19-3-1971. Significantly, it postulated that\nsection 275 of the Income-tax Act which specified the time-limit for completion of\npenalty proceedings has been substituted by a new section. Under the existing\nsection, penalty proceedings for concealment of income or defaults in furnishing\nthe return or accounts called for by notice or failure to pay advance tax on the\ntaxpayer's own estimate, etc., are required to be completed within two years from\nthe date of completion of the proceedings in the course of which the penalty\nproceedings were commenced. The operation of this time-limit has resulted in\npractical difficulties in cases where the AAC remands the appeal against the\nassessment for further enquiry by the ITO or deletes or reduces the addition\nmade on account of concealed income and the Department takes up the matter in\nfurther appeal before the Tribunal. Sometimes, a final decision on the quantum of\nthe concealed income becomes available only after the expiry of the two years\ntime-limit.\n18. Section 275 as substituted aims at obviating difficulties in such cases,\nreducing avoidable work and avoiding hardship to the assessees. It provides that\nthe time-limit for making an order imposing a penalty under the provisions of\nChapter XXI of the Income-tax Act will, ordinarily, be two years from the end of\nthe financial year in which the proceedings, in the course of which action for\nimposition of penalty has been initiated, are completed. However, in a case where\nthe relevant assessment or other order is the subject-matter of an appeal to the\nAAC or an appeal by the ITO to the Tribunal, the time-limit for completing the\npenalty proceedings will be either the two years' period as stated above or a\nperiod of six months from the end of the month in which the order of the AAC or,\nas the case may be, of the Tribunal is received by the CIT, whichever period\nexpires later. It may be noted that the two years period will henceforth expire at\nthe end of a financial year, instead of on different dates during the financial year,\nand the six months period will expire at the end of a calendar month. This\nfacilitates the exercise of vigilance by the tax administration on the expiry of the\nlimitation period and ensures that penalty proceedings are completed in all cases\nin time.\n19. Secondly, the Direct Tax Laws (Amendment) Act, 1987, which came into\neffect from 1-4-1989, section 275 was amended. Vide amendment, the time-limit\nfor completion of penalty proceedings which was generally two years from the\nend of financial year in which such proceedings were completed or six months\nfrom the end of the month in which action for imposition for penalty was initiated,\nwhichever period expires later.\n20. By these amendments, the three categories were made for applying limitation\nfor completing the penalty proceedings taking into consideration the various\npenalty proceedings for default of certain provisions of the Income-tax Act which\nare not necessarily linked with proceedings for any particular assessment year in\nthe course of which only penalty proceedings were required to be initiated. Such\nconsequences of default were not linked with the principal assessment\nproceedings for any specific assessment year but were independent of it.\n21. By substituting section 275(1), which became operative from 1-4-1989, the\nprovision of divided cases for the purpose of prescribing limitation for completing\npenalty proceedings into three categories :\n(1)\nCategory I covers cases where the assessment to which the\nproceedings for imposition of penalty relate is the subject-matte\nof an appeal to the Dy. CIT(A) or the CIT(A) under section 246\nor with effect from 1-6-2000, section 246A or an appeal to the\nTribunal under section 253;\n(ii)\nCategory II covers cases where the relevant assessment is the\nsubject-matter of revision under section 263; and\n(iii)\nCategory III covers all other cases not falling within category\nand category II which is governed by clause (c).\nBy dividing into three categories the period of limitation for cases falling under\ncategory (i), i.e., clause (1)(a) is the financial year in which the proceedings, in the\ncourse of which action for the imposition of penalty has been initiated, are\ncompleted or six months from the end of the month in which the order of the Dy.\nCIT(A) or the CIT(A) or, as the case may be, the Tribunal is received by the Chief\nCIT or CIT, whichever period expires later.\n22. The period of limitation for the cases falling under category II is six months\nfrom the end of the month in which such order on revision is passed and the\nperiod of limitation for the cases falling under the above category III is the\nfinancial year in which the proceedings, in the course of which action for the\nimposition of penalty has been initiated, are completed, or six months from the\nend of the month in which action for imposition of penalty is initiated, whichever\nperiod expires later. In the last category, filing of appeal in respect of order\npassed in proceedings during which penalty proceedings were initiated is not\nrelevant.\nTo this effect, a Circular No. 551, dated 23-1-1990 [(1990) 82 CTR (St.) 325] and\nanother Circular No. 554, dated 13-2-1990 [(1990) 82 CTR (St.) 280] were issued\nby the CBDT.\n23. A close scrutiny of section 275 which is reproduced hereinabove shows that\nclause (1)(a) covers those cases where the penalty proceedings are in respect of\na default related to principal assessment for a particular assessment year and the\npenalty proceedings are required to be initiated in the course of that proceedings\nonly. In such cases where the relevant assessment order or other orders are the\nsubject-matter of an appeal to the CIT(A) under section 246 or an appeal to the\nTribunal under section 253, after the expiry of the financial year in which the\nproceedings in the course of which action for the imposition of penalty has been\ninitiated, are completed, or six months from the end of the month in which the\norder of CIT(A) or, as the case may be, of the Tribunal is received by the Chief\nCIT or CIT, whichever period expires later.\nApparently, clause (a) governs the categories which are integrally related to the\nassessment proceedings and are not independent of it.\n24. We have also noticed that this provision was brought into effect in 1970 with\neffect from 1-4-1971, so that proceedings may not require rectification or\nmodification depending on the outcome of the appeal against the orders passed\nin the relevant assessment proceedings or the other proceedings in the course of\nwhich the penalty proceedings are required to be initiated.\n25. We have also noticed that sections 271 and 273 were the two original penalty\nprovisions, which require the penalty proceedings to be initiated during the course\nof relevant assessment proceedings or the other relevant proceedings, as the\ncase may be. The penalty proceedings could also be initiated during the appellate\nproceedings arising out of the relevant assessment proceedings. It is only where\nthe assessment proceedings are independent and not directly linked to the\nassessment proceedings that the result of such proceedings in the course of\nwhich the penalty proceedings were initiated does not affect the levy of penalty.\nOn such penalty proceedings, independent of the assessment proceedings,\nclause (c) has been made applicable. In this category, the period of limitation for\ncompleting the penalty proceedings is linked with the initiation of the penalty\nproceedings itself.\nIn such cases, the penalty proceedings can be initiated independent of any\nproceedings but obviously, the penalty proceedings can be initiated only when the\ndefault is brought to the notice of the concerned authority which may be during\nthe course of any proceedings and, therefore, for this type of cases where the\npenalty proceedings have been initiated in connection with the defaults for which\nno statutory mandate is there about any particular proceedings during the course\nof which only such penalty proceedings can be initiated, a different period of\nlimitation has been prescribed under clause (c) as a separate category. In cases\nfalling under clause (c), penalty proceedings are to be completed within six\nmonths from the end of the month in which the proceedings during which the\naction for imposition of penalty is initiated, are completed, or six months from the\nend of the month in which action for imposition of penalty is initiated, whichever\nperiod expires later. There is no provision under clause (c) for the extended\nperiod of limitation commensurating with completion of the appellate\nproceedings, if any, arising from the proceedings during the course of which such\npenalty proceedings are initiated as in the case where the penalty proceedings are\nlinked with the assessment proceedings or the other relevant proceedings.\n26. The expression 'other relevant thing' used in section 275(1)(a) and clause (b)\nof sub-section (1) of section 275 is significantly missing from clause (c) of section\n275(1) to make out this distinction very clear.\n27. We are, therefore, of the opinion that since penalty proceedings for default in\nnot having transactions through the bank as required under sections 269SS and\n269T are not related to the assessment proceedings but are independent of it,\ntherefore, the completion of appellate proceedings arising out of the assessment\nproceedings or the other proceedings during which the penalty proceedings under\nsections 271D and 271E may have been initiated has no relevance for\nsustaining or not sustaining the penalty proceedings and, therefore, clause (a) of\nsub-section (1) of section 275 cannot be attracted to such proceedings. If that\nwere not so, clause (c) of section 275(1) would be redundant because otherwise,\nas a matter of fact every penalty proceeding is usually initiated when during some\nproceedings such default is noticed, though the final fact finding in this\nproceeding may not have any bearing on the issues relating to establishing\ndefault, e.g., penalty for not deducting tax at source while making payment to\nemployees, or contractor, or for that matter not making payment through cheque\nor demand draft where it is so required to be made. Either of the contingencies\ndoes not affect the computation of taxable income and levy of correct tax on\nchargeable income; if clause (a) was to be invoked, no necessity of clause (c)\nwould arise.\n28. Thus, both on the ground that the transaction in question of retention of sale\nprice by the Kachcha Arhatiya did not amount to deposit and its utilisation and\ndealing with it at the instance of farmer constituents did not amount to repayment\nof loan or deposits within the meaning of section 269SS or section 269T, and on\nthe ground that limitation under section 275(1)(c) applies to such proceedings, we\nhold in favour of the respondent.\n29. Accordingly, these appeals fail and are hereby dismissed. No order as to\ncosts.\nSince, we have binding precedent over the other High Court decision cited by the\nrevenue and we are also of the considered view that our High Court view is\nfurther confirmed by the apex court and even the revenue has accepted this fact\nhas changed the provision in the Act w.e.f. 01.04.2025 wherein the power to levy\nthis penalty has been given to the assessing officer, the relevant amended\nprovision reads as under:\nPenalty for failure to comply with the provisions of section 269SS.\n271D. (1) If a person takes or accepts any loan or deposit or specified sum in\ncontravention of the provisions of section 269SS, he shall be liable to pay, by way\nof penalty, a sum equal to the amount of the loan or deposit or specified sum so\ntaken or accepted.\n(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint\nCommissioner:\n14-18[Providedthat any penalty under sub-section (1), on or after the 1st day of\nApril, 2025, shall be imposed by the Assessing Officer.]\nThus, the reading of the amended provision of the law and the view of our High\nCourt in the case of Hissaria Bros supra we are of the considered view that there\nis no infirmity in the finding of the Id. CIT(A) and thereby ground no. 2 & 3 raised\nby the revenue stands dismissed.\nSince we have confirmed the view of the Id. CIT(A) on technical grounds\nwe are of the considered view that the Id. CIT(A) has rightly not decided the\nmerits of the dispute as the proceeding were barred by limitation and therefore,\nground no. 1 raised by the revenue stands dismissed.\nOn being consistent to the findings recorded herein above wherein all the\ncontention of the revenue that has been raised has already been dealt with\nand therefore, we see no infirmity in the finding of the Id. CIT(A) in following\nthe binding precedent of our Rajasthan High Court in the case of Hissaria\nBrothers 74 taxmann.com 22. In view of the finding so recorded herein\nabove we see no infirmity in the finding of the Id. CIT(A) and thereby the\nappeal of the revenue in ITA no. 1168/JP/2025 is dismissed.\n11. Now coming to the cross-objection ground no. 1.1 wherein the\nassessee contended that while passing the the assessment order, no\nsatisfaction was recorded for initiation of penalty u/s 271E of the Act, hence\nthe penalty imposed is not maintainable, bad in law and deserves to be\nannulled on this count also. On this count we note that there was no\nsatisfaction for levy of penalty in the assessment and even the Id. AO\nconsidered that income and opted to levy the penalty on the other sections\nof the Act. Be that it so may then in that circumstance on this issue Id. AR of\nthe assessee serviced before us the decision of Apex Court in the case of\nCIT Vs. Jai Laxmi Rice Mills 379 ITR 521 wherein the Apex court has also\nheld that;\n5. As pointed out above, insofar as, fresh assessment order is concerned, there\nwas no satisfaction recorded regarding penalty proceeding under Section 271E of\nthe Act, though in that order the Assessing Officer wanted penalty proceeding to\nbe initiated under Section 271(1)(c) of the Act. Thus, insofar as penalty under\nSection 271E is concerned, it was without any satisfaction and, therefore, no such\npenalty could be levied. These appeals are, accordingly, dismissed.\nHere is also the facts of the case is that while passing an order of\nassessment Id. AO mentioned a satisfaction for levy of penalty as he\nconsidered these loans as income and has initiated penalty u/s. 270A and\n271AAC(1) of the Act and therefore, the ratio of the above Judgment of the\nApex Court squarely applicable in this case and thereby also the levy of\npenalty without any satisfaction in the order of the assessment cannot\nsurvive as held in the above case. A similar view is taken by our\nJuri ictional High Court recently while dealing with the case of Sunil\nAgarwal, Vijay Kumar Chordia and others Vs. JCIT, Central Jodhpur [ 172\ntaxmann.com 54 (Rajasthan ] wherein Hon'ble High Court held that;\n11. The issue involved in the present writ petition is squarely covered by the\ndecision of the Supreme Court in Jai Laxmi Rice Mills Ambala City (supra). The\nnotice issued under Section 271E and the proceedings in pursuance thereto are\nquashed.\n12. The writ petitions are allowed.\nThus, this decision of the Apex Court is also considered by our High Court\nin the recent decision and therefore, even on this ground, the penalty levied\nis not sustainable and therefore, we considered the ground no. 1.1 raised\nby the assessee in the cross objection.\nThe Id. AR of the assessee fairly accepted that since they are\npressing for ground no. 1.1. ground no. 1.2 not pressed and thereby the\nsame is not decided and left open.\nBased on these observations the cross objection filed by the\nassessee in CO/39/JP/2025 stands partly allowed.\nIn the result the appeal of the revenue in ITA no. 1168/JP/2025\nstands dismissed, and the cross-objection no. 39/JP/2025 stands Partly\nAllowed.\n12. The facts of the case in ITA Nos. 1162, 1164 to 1167, 1169 to 1170,\n1174 to 1178/JP/2025 and CO No. 34 to 38 & 40 to 46/JP/2025 are similar\nto the case in ITA No. 1168/JP/2025 and CO No. 39/JP/2025 and we have\nheard both the parties and persuaded the materials available on record.\nThe bench noticed that the issues raised by the revenue and the assessee\nin this appeal ITA No. 1168/JP/2025 and CO No. 39/JP/2025 are equally\nsimilar on set of facts and grounds as that of with the appeal of the revenue\nin ITA No. ITA No. 1168/JP/2025 and CO No. 39/JP/2025. Therefore, it is\nnot imperative to repeat the facts and various grounds raised by both the\nparties. Hence, the bench feels that the decision taken by us in ITA No.\n1168/JP/2025 and CO No. 39/JP/2025 for Assessment Year 2017-18 shall\napply mutatis mutandis in ITA Nos. ITA Nos. 1162, 1164 to 1167, 1169 to\n1170, 1174 to 1178/JP/2025 and CO No. 34 to 38 & 40 to 46/JP/2025 for\nthe Assessment Years 2015-16 to 2016-17, 2018-19 to 2021-22.\nIn the result, the appeals of the revenue stands dismissed, and the\ncross objection of the assessee are partly allowed.\nOrder pronounced in the open court on 13/11/2025.\n \n(डा० एस. सीतालक्ष्मी )\n(Dr. S. Seethalakshmi)\nन्यायिक सदस्य/ Judicial Member\n \n( राठोड कमलेश जयन्तभाई )\n(Rathod Kamlesh Jayantbhai)\nलेखा सदस्य / Accountant Member\nजयपुर/ Jaipur\nदिनांक/Dated:-\n13/11/2025\n*Ganesh Kumar, Sr. PS\nआदेश की प्रतिलिपिअग्रेशित/Copy of the order forwarded to:\n1.\nThe Appellant- DCIT, Central Circle-2, Jaipur\n2.\n3.\n4.\n5.\n6.\nप्रत्यर्थी / The Respondent- Gokul Kripa Colonizers & Developers Pvt. Ltd., Jaipur\nआयकरआयुक्त / The ld CIT\nआयकर आयुक्त (अपील) / The ld CIT(A)\nविभागीय प्रतिनिधि, आयकरअपीलीय अधिकरण, जयपुर/DR, ITAT, Jaipur\nगार्डफाईल / Guard File (ITA Nos. 1164 to 1170/JP/2025 and 1174 to 1178/JP/2025 &\nCO Nos. 34 to 46/JP/2025)\nआदेशानुसार / By order,\nसहायक पंजीकार / Asst.