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Income Tax Appellate Tribunal, DELHI BENCH “D”: NEW DELHI
Before: SHRI H. S. SIDHU & SHRI PRASHANT MAHARISHI
O R D E R PER BENCH 01. All the above appeals are filed by the revenue against cancellation of penalty under section 271E, or 271D of the Income Tax Act by the Ld. CIT (A) [hereinafter referred to as „The First appellate authority‟ also] levied by the Ld. Assessing officer [hereinafter referred to as „The AO‟] for violation of the provisions of section 269SS or section 269T of the act. As the issues involved in all these appeals are common and identical except the amount of the penalty, therefore they are heard and disposed off by this common order.
In all these appeals, the assessee has also filed cross objections challenging the decision of Ld. CIT (A) in rejecting the contention of the assessee that the penalty proceedings are barred by limitation. It also challenges the decision of the Ld. CIT (A) in rejecting the contention of respondent that Ld. assessing officer initiated penalty proceedings under the impugned sections only and not by the joint Commissioner of income tax, who is only authorized to levy the penalty. It also challenges the decision of Ld. CIT (A) in not giving setoff of Rs. 20,000/-is payment of deposit or acceptance of depositing cash 03. The brief facts of the case is that assessee is Non banking financial company who accepts deposits through its sister concern M/s Sahara India firm which acts as agency for mobilization of deposits for Sahara India financial corporation, Sahara India commercial Corporation, Sahara India airlines Ltd. For this arrangement, a separate agreement is entered into between these concerns from year to year. M/s, Sahara India (firm) who is servicing the assessee company through a large ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 number of network spread all over the country. It has more than 600 branches operating for this work.
Briefly stated, the facts for assessment year 93-94 which is the 1st year wherein the penalty with respect to acceptance and repayment of deposit in violation of the provisions of section 269SS and 269T of the Income Tax Act, 1961, were initiated as during the course of assessment proceedings it was detected that assessee has accepted and repaid deposits on loans about Rs. 20,000/- in violation of the provisions of section 269SS and 269T of the Income Tax Act, 1961, which attracts penalty under section 271D and 271E of the Income Tax Act. Therefore, the assessing officer referred the matter to the Additional Commissioner of Income Tax for levying penalty under section 271D and 271E of the Income Tax Act. Therefore, the appellant was issued show cause notice. The assessee submitted before the adjudicating authority that the main schemes run by the assessee company are in the nature of saving schemes of recurring nature such as daily deposit scheme, monthly deposit scheme and these deposits are mobilized from rural areas, which remained unbanked. It was further submitted that assessee is registered with the reserve bank of India, as residuary nonbanking financial company, which is subject to various restriction and supervision of RBI. It was also submitted that in the majority of the cases the amount of loan received or repaid are far less than the monetary limit prescribed under section 269 SS of the income tax act. It was further contended that assessee collects deposits through its agent M/s Sahara India through its own network. It further pleaded that identity, genuineness of the depositor is established by various norms established by the firm. It further argued that as the deposit is ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 collected by the various agents, who are working in a remote area, were carrying on the work of mobilization of deposits for the assessee and in the areas where there are no banking facilities available. Therefore, the deposits are repaid to the depositors in cash. Therefore, it was pleaded that there is a reasonable cause for violation of the provisions of section 269SS and 269T of the income tax act. The Ld. adjudicating authority rejected the contention of the assessee stating that though the contention of the assessee, in this respect sounds reasonable, but cannot be accepted as identity and genuineness of the depositor cannot be considered for violation of provisions of acceptance repayment of deposit in cash. He further rejected the contention of the assessee that actual repayment is less than Rs. 20,000/-. Consequently, a penalty of Rs. 9251608 was imposed for violation of provisions of section 269T of the income tax act for repayment of deposit. Therefore the adjudicating authority levied penalty on substantive basis on the assessee and on protective basis on the agent i.e. M/s Sahara India.
5. Assessee being aggrieved by the order of the Ld. Additional Commissioner of Income tax preferred appeal before the Commissioner of Income Tax (A) who in turn deleted the penalty after obtaining the remand report on the written submission filed by the assessee wherein lengthy arguments were advanced. The Ld. CIT (A) was of the view that there was reasonable cause for violation of the provisions of section 269T of the income Tax Act and therefore if there is a reasonable cause as provided under section 273B of the income tax act, no penalty should have been levied. The Ld. CIT (A) was of the view that as the appellant is a residuary nonbanking financial company, which is carrying on the business of mobilization of deposits ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 through its agent firm i.e. M/s Sahara India, which was operating through around 600 branches and the agents, was also acting through subagents and in the end, the deposit to the principal is passed down through different stages. Further, the entire amount has been received from the firm through account payee banking instrument and no amount has been directly received by the appellant company from the depositor in cash. He further held that identically the same processes also applied at the time of repayment of the deposit and therefore ultimately, the deposit is repaid to the end customer in cash but the appellant company directly is not in the knowledge of the mode of actual repayment of the deposits. He noted that the complete identity of the depositor to whom the repayment is made is taken and all the payments are duly vouched witnessed and verifiable. The 2nd reason which was given by the 1st appellate authority is that more than 90% of the deposits are mobilized by the appellant company in the nature of recurring deposit scheme and therefore there are the petty balances which are repaid to the person of small means who would deposit money with the company for over a period of 5 to 7 years. He further referred to the circular No. 345 dated 28/06/1982 referring to the purpose for which the provisions of section 269T was introduced and held that penalty can be levied if it is found that a particular deposit is not genuine. He further noted that most of the branches of the agent of the appellant are located in rural areas where there are inadequate banking facilities. He further derived percentages of amount paid in cash to the total deposit maturities and held that it is merely 0.77% of total maturities. He also took into consideration the fact that penalty has been levied for assessment years 93 – 94, 99, 2000, 2000 – 01 and 2001 – 02. Therefore, he noted ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 that penalty has not been levied for intervening years, or subsequent years. Therefore, Ld. Assessing officer himself is not sure about levy of penalty. In view of this, he held that appellant has discharged the burden of showing reasonable cause and therefore he deleted the penalty on the ground of reasonable cause. However, he rejected the contention of the assessee that the penalty is time-barred.
For other years, too the facts and circumstances are similar in nature.
7. Aggrieved by the order of the Ld. CIT (A), revenue is in appeal before us. The assessee has filed cross objection in all above appeals contesting that penalty is time-barred and also referring to the infirmity that penalty should have been initiated by the ld. assessing officer and not by the ld. adjudicating authority in the present case and further contesting about granting of reduction of threshold limit of Rs. 20,000/- from penalty levied.
8. The revenue has raised only one effective grounds of appeal
which is as under:- ―whether on the facts and in the circumstances of the case, the Ld. CIT was right in cancelling the penalty amounting to Rs. 9251608/– imposed by the AO under section 271E of the income tax act, 1961, holding that the penalty has been levied at 0.77% of the total maturity amount which is quite low and very well falls within the ambit of reasonable cause and that the levying of penalty is not mandatory. If there is a reasonable cause since assessee has discharged the burden of proving reasonable cause for violation of provisions of section 269T of the act.‖
09. The Ld. departmental representative relied upon the order of Ld. assessing officer. He submitted that there is no reasonable cause shown by the assessee and merely because of the certain percentages of the total maturities, it cannot be said that there is a reasonable cause.
ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10
The Ld. authorized representative of the assessee filed the written submission and submitted that the issue is squarely covered in favour of the assessee by the order of the coordinate bench in assessee‟s own case in to 3225/Del/2009 for AY 1993-94, 1999-2000 to 2001-02. Which has also been upheld by the Hon‟ble Delhi High Court in appellant‟s own case vide order dated 28/09/2012, The Hon‟ble high court has deleted the penalty under section 271D of the income tax act for assessment year 93 – 94, 99– 2000, 2000 – 01 and 01 – 0 2. He therefore submitted that issue is squarely covered in favour of the appellant.
On the issue of cross objections of the assessee it was agreed by both the parties that issues is squarely covered against the assessee in its own case for earlier years wherein the cross objection of the assessee is dismissed by the coordinate bench. 12. We have carefully considered the rival contentions and perused the orders of lower authorities. We have also perused the order of the coordinate bench in appellant‟s own case in ITA No. 3222 to 3225/Del/2009 for AY 1993-94 and 1999-2000 to 2000-01 vide order dated 17/09/2010 wherein identical issue was decided as under:- ―11. We have considered the rival submissions perused the material on record and have gone through the orders of authorities below. Regarding the factual aspects we find that this is undisputed position of the fact that there is receipt of deposit by the assessee in excess of the amounts prescribed u/s 269 SS which is to the extent of 1.1% (minimum) of the total deposit in Assessment Year 1993-94 and 6.14% (Maximum) of the total deposits in Assessment Year 2001-12. The only contention of the assessee for not levying penalty u/s 271D for this violation is that there was reasonable cause due to which the assessee could not comply with the provisions of Section 269SS with regard to this small portion of the deposit. This factor is also very important in the present case that these deposits are not taken by the ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 assessee as means of finance to finance other business activities but the fact is that taking deposits itself is the business of the assessee in the present case. It has been brought to our notice that deposits are taken by the assessee in the form of daily deposits from poor people mainly in rural and semi urban areas where either there is no banking facilities in the relevant period or inadequate banking facilities coupled with this fact that the depositors are not educated enough to use the banking facilities even if the same is available and if the assessee would have insisted on accepting deposits by cheques only, the business of the assessee would have been adversely affected to a large extent and not only to the extent of 1.1% to 6.1% because other deposits also which are below the prescribed limit are also through cash only in the majority of cases. We now examine the various contentions which are raised by the assessee before the AO noted by the AO in the penalty order. We therefore reproduce the relevant paras of penalty order i.e. 3.3 to 3.6 for Assessment Year 1993-94. ―3.3 The assessee has further stated that looking to the nature of business and the type of depositors as large number of branches are situated in rural areas with inadequate banking facility and considering the general temperament of depositors being of rural and agricultural background who do not have a tendency to open bank account it is not possible to accept deposits as required by the Act. The assessee has also submitted a chart showing the location of the branches. 3.4 Another very peculiar and strange fact bought forward by the assessee is that’s the field workers of the agents face difficulty in even opening the Bank A/c as in certain sectors the banks have refused to open the Bank A/c of agents who were carrying on the works of mobilization of deposits for the assessee company and therefore the agents have no alternative but to accept the deposits in cash. The assessee also filed copes of some correspondence to the effects showing that some of the banks have refused to open the bank A/c of the agent firm on the pretext that the agents effecting their activities in that particular areas.
ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 3.5 The assessee also submit that collection of deposits is its very business and it cannot be refuse legal tender money as per law of the land. It is also submitted that the purpose of introduction of section 269SS as per circular No. 387 dated 6th July 1984 is not applicable to the business of the assessee. In none of the inspections carried out by the RBI has only deposit found to be improper and the genuineness and identity of the depositor being known the provision of section 271D are not mandatory but directory. The assessee therefore contended that the provisions of section 269SS are not strictly applicable to RNBCs. 3.6 The assessee has further enclosed 291 deposit forms pertaining to depositors where account has crossed Rs. 20000/- and claimed that most of the deposits have crossed the mark of Rs. 20000/- on account of accumulation made over a span of time by the deposits making small deposits being individual and each Act of deposit being less than Rs. 100/- and, therefore penalty u/s 271D are not applicable.‖ 12. After recording these submissions of the assessee as per which it was the claim of the assessee that there was reasonable cause regarding violation of the provisions of Section 269SS, we find that these objections are rejected by the AO in arbitrary manner. In para 4.1 of the penalty order, it is observed by the AO that as far as violation of deposits in the rural sector without proper banking facilities is concerned, it is really difficult to give benefit of the reasonable cause to the assessee in the absence of a case by case study and particularly in the absence of exact details of bank branches at various places in the relevant financial year. Again in para 4.3 of the penalty order the AO says that regarding this contention of the assessee that the deposits were accepted in cash because of the insistence of the depositors or because of the inadequate banking facility also benefit of reasonable cause cannot be allowed for the same reasons i.e. in the absence of case by case study and in the absence of exact details of bank branches. It is also observed by the AO that inadequate banking facility may be a reasonable cause but in absence of a case by case analysis and proper documentary proof the argument of the assessee cannot be accepted. These observations of the AO in the penalty order, shows that the AO is ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 also agreeing on one aspect that inadequate banking facility is a reasonable cause for the violation of the provisions of section 269SS. But is was not accepted by him for the reasons that as per the AO the assessee could not establish by furnishing documentary proof that there was in fact inadequate banking facility. In this regard, we find that it has been noted by the AO in para 3.3 of the penalty order which is reproduced above that the assessee has also submitted a chart showing the location of the branches. In para 3.4 of the penalty order, it is also noted by the AO that the assessee has also filed copies of some correspondence to the effect showing that some of the banks have refused to open the bank account of the agent firms on the pretext that the agents are affecting their activities in their particular area. We are unable to understand that as to when the assessee has given a complete chart showing the location of the branches of the agents through which deposits were collected by the assessee company what further details and evidence were being required by the AO? The case of the AO is that the assessee should have furnished the details of the bank branches which existed in those places. We fail to understand that even if these details would have been furnished by the assessee can the AO rely upon such details only and decide the matter. When the assessee has furnished the details of location of the branches of the agent firm the AO could have easily found out as to whether on those locations, any bank branch is existing or not and if existing how may branches are there in a particular location. It is further to be noted that it is not the case of the assessee that in these place, no bank branch existed at all. The case of the assessee is that there is inadequate banking facility and this is compounded by the problem of illiterate depositors who are not conversant with the banking operations. These facts are such which do not require any documentary proof because this is our daily experience particular during the relevant period i.e. financial year 1992-93 and FY 1998-99 to 2000-01 i.e. 10-15 years back and before the liberalization of Indian economy started. We are aware that during that period, banking facilities were inadequate in rural and semi urban areas and moreover the working class and small traders were not conversant with the banking operations and peoples were reluctant to open account with the banks. It is also work noting that even now, it is not very easy to open a bank account for an illiterate person having no documentary evidence readily available in proof of his identity ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 and address. considering all these factors, we are of the considered opinion that this has to be accepted that there were inadequate banking facilities in the rural and semi urban areas during the relevant period of time in our country and moreover the people who participate in such deposit scheme of the assessee for small amount on daily monthly basis below Rs. 100/- they were reluctant to use the banking facility even if it was available and considering these two factors together, it has to be accepted that there was reasonable cause which prevented the assessee to company with the provisions of section 269Ss to some extent.
13. Now we consider as to what extent the assessee has been able to comply with the provisions of section 269SS and we find that as per the AO, the violation to this section by the assessee Assessment Year 1993-94 is only to the extent of 1.1% of the total deposits and the extent of such violation is in Assessment Year 2001-02, which is only to the extent of 6.14% of the total deposits. This goes to show that to the extent of 93.86% to 98.9% of total deposits, the assessee was able to satisfy and fulfill the requirement of Section 269SS and hence, for the violation of the provisions of Section 269SS to the extent of maximum 6.14% during the relevant period, it has to be considered as reasonable cause in the light to those two factors i.e. existence of inadequate banking facilities and reluctance of the customers of the assessee company to utilize the banking facilities for the reasons of their illiteracy and non cooperation in the bank etc. in the light of these facts we are in agreement with the ld Counsel for the assessee that there was reasonable cause due to which the assessee could not comply with the provisions of section 269SS with regard to small percentage of total deposits to the extent of maximum 6.14% of the total deposits in the relevant period of 4 years. Hence, we do not find any reason to interfere in the order of ld CIT(A) in all these four years.
14. Regarding various judgments cited by the both the sides, we would like to mention that we have decided the issue on the basis of existence of reasonable cause as required u/s 273B and hence, out decision is based on facts and hence, there is no relevance of these judgments. Still we would like to consider the judgments of Hon’ble High Court of Madras render in the case of Kassi Consultants Corporation Vs. DCIT (supra) cited by ld DR. The reliance of ld DR on this judgment is misplaced because in ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 that case also, it was held by the Hon’ble High Court of Madras that there is one situation when penalty is not leviable u/s 271D i.e. as per the provisions of section 273B when the assessee can show a reasonable cause for is failure. In that case the matter was decided against the assessee on this basis that the assessee had not demonstrated the shortage of cash in the business which made the assessee to accept cash and hence, the existence of reasonable cause in that case was not found and for this reason the penalty was confirmed. But in the present case, we have seen that reasonable cause exists as per above discussion and hence this judgment of Hon’ble High Court of Madras is not relevant in the present case.
15. The 2nd judgment cited by the ld DR is the judgment of Hon’ble Allahabad High Court rendered in the case of Chaubey Overseas Corporation (supra). This judgment is regarding penalty imposed u/s 271E for violation of the provisions of 269T. in that case the only dispute raised before Hon’ble High Court of Allahabad was as to whether the Tribunal is legally correct in holding that the provisions of section 269T are applicable to trade advances also and there is no decision on this aspect in that case as to whether there was reasonable cause or not as provided in section 273B and since the decision of ld CIT(A) is based on this aspect that in the present case, penalty is not justified because of existence of reasonable cause for the failure of the assessee to comply with the provisions of Section 269SS, this judgment of Hon’ble High Court of Allahabad is also not relevant in the present case. 16. we have seen that none of the judgments cited by the ld DRT of the revenue is applicable in the present case. We have also seen that the AO also says in the penalty order that inadequate banking facilities is no doubt a reasonable cause but the assessee cannot get the benefit for the reason that the assessee should have shown that in the cases where there is violation of section 269SS, there was no banking facility available. But in spite of this, the AO has not made any efforts to find out about availability of banking facility at 600 odd branches of the agent, details of which were made available by the assessee to the AO. He has also not considered one more aspect that even where the banking facility was available, the class of people who were giving deposits to the assessee were not comfortable and willing to avail those banking facilities due to their illiteracy and not ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 being aware about banking system. One more aspect was lost sight of i.e. the nature of the deposit schemes being carried out by the assessee i.e. mostly daily deposit scheme of less than Rs. 100/- per day. If the assessee would have insisted for giving such deposits by cheques only meaning thereby that such poor depositors should go to bank during banking hours i.e. up to 2 pm to deposit cash in the bank and then given the cheque to the assessee. We understand that the result would have been that most of such poor people would not have consented to participate in such deposit scheme and even if some of them would have participated they might not have succeeded in doing so because it is one thing to give to the agent of the assessee the deposit amount in cash at the business place itself before getting any opportunity to spend it and it is altogether a different story to keep the money with himself for the period up to next day morning and then deposit in the bank. 17. we do not say that because of some difficulty only on the part of depositors, we should hold that there was reasonable cause for violation of section 269SS by the assessee. But we have to keep in mind that such deposit schemes are serving the nation and poor people in developing saving habits against so many odds. We have also noted that it is noted by ld CIT(A) that the work of the assessee company was handled by various study groups appointed by RBI. The activities and various schemes of the assessee were under direct supervision of RBI and no violation of any RBL rules has been brought to out notice, which means that these deposit schemes were within the norms prescribed by RBI. In view of the commendable and noble purpose being served by the assessee in promoting deposits by the poor people and in view of inadequate banking facilities in rural and semi urban areas of our country coupled with illiteracy of the deposits and smallness of daily deposit amount etc. it has to be accepted that there was reasonable cause due to which the assessee failed to comply with the provisions of section 269SS to a very small extent of total deposits in the range of 1.1% to 6.14% in the relevant period and hence as per the provisions of section 273B, no penalty is imposable u/s 271D.”
ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10
13. On appeal before the Hon‟ble Delhi High Court by revenue the hon‟ble High Court in 638, 640 and 646 dated 28/09/2012 has confirmed the order of coordinate bench as under:- ―9. The main contention of the revenue before us is that the basis of the order of the Tribunal is untenable in as much as it has held that since the nature of the assesses business itself is to receive deposits, the provisions of Section 269SS cannot be applied. It is also contended that even if the assessee is a Residuary Non-Banking Finance Company (RNBFC), it was obliged to maintain requisite ledgers and registers which it did not and in these circumstances there were no means of verifying the genuineness of the deposits or the genuineness, the identity and creditworthiness of the depositors, an aspect which was overlooked by the Tribunal. According to the Revenue, perversity is writ large in the order of the Tribunal. 10. The counsel for the assessee however submits that the assessee attempted to get exemption from the applicability of Section 269SS under clause (e) of the first proviso to the Section, but the attempts were unsuccessful. He pointed out that the CIT (Appeals) had called for a remand report from the Assessing Officer to which a detailed parawise comment was submitted by the assessee in which every aspect of the matter, both facts and law, was traversed and it was only after an examination of the entire conspectus of the facts and law that the CIT (Appeals) cancelled the penalty which orders were confirmed by the Tribunal. It was urged that the question whether there was reasonable cause for the cancellation of the penalty within the meaning of Section 273B of the Act is a question of fact and ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 there being no material to show that the finding of the Tribunal was unreasonable or perverse or it was based on no evidence, the Court should not interfere.
11. In our opinion no substantial question of law arises for consideration. It is settled by two judgments of this Court that the finding as to the existence of reasonable cause is a finding of fact which cannot give rise to any substantial question of law: (i) CIT v. Parma Nand, (2004) 266 ITR 255 (ii) CIT v. Itochu Corporation, (2004) 268 ITR 172 12. The limited inquiry which the High Court can embark upon is only whether the finding as to the existence of reasonable cause is perverse or is such that no person, properly instructed on facts and law would arrive at. Applying this test to the present case we are afraid that the criticism of the Tribunals order levelled by the Revenue is ill- founded. We have already summarised the findings of the CIT (Appeals) which were based on facts which constitute reasonable cause. These findings have been affirmed by the Tribunal. When two appellate authorities have arrived at concurrent findings of facts as to the existence of reasonable cause in a penalty matter, this Court would be reluctant to interfere with them unless there are materials to show that the findings are perverse.
13. The standing counsel for the Revenue is not correct in his contention that the basis of the decision of the Tribunal is untenable. The Tribunal has not rested its decision on the only circumstance that it is the business of the assessee to collect deposits and, therefore, it was entitled to collect them in cash ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 even if it involves violation of Section 269SS; that is not the substratum of the decision. That was referred to by the Tribunal and the CIT (Appeals) as one of the many circumstances which, taken together, to establish reasonable cause. The other circumstances which were taken note of by both the CIT (Appeals) and the Tribunal were that the depositors came predominantly from rural areas where there was either no proper banking facilities or such facilities were inadequate, that the deposits were basically saving schemes involving small amounts of daily or weekly savings, that there were logistical problems and fear of cumbersome procedure involved in the opening of the bank accounts and that contribution of small amounts were made as savings, that there was evidence in the shape of correspondence to show that some banks were reluctant to allow the agents of the assessee to open bank accounts for various reasons and so on and so forth. The Tribunal also noted that the violation of Section 269SS ranged from just 1.1% to 6.14% for the years under appeal which was very low considering the total amounts of deposits collected. It also noted that no penalty proceedings were initiated for the intervening assessment years namely 1994-95 to 1998-99 and for the assessment years subsequent to the assessment year 2001-02. The CIT (Appeals) and the Tribunal, which had arrived at concurrent findings, had taken note of the entire facts and circumstances in which the assessee was placed in order to examine whether there was reasonable cause or not within the meaning of Section 273B. It is, therefore, not correct to state that the Tribunal based its decision on the only ground that Section ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 269SS cannot be applied to the assessee whose business itself was the collection of deposits.
14. For the above reasons, we are not inclined to hold that the view taken by the Tribunal is either perverse or so irrational that no reasonable person, on the given facts, would have come to that conclusion. The findings recorded by the Tribunal, being essentially findings of facts, do not give rise to any substantial question of law.‖ 14. Before us, the ld Departmental Representative also agreed that the issue of levy of penalty is covered in favour of the assessee by the above decision of Hon'ble Delhi High Court. Parties before us also confirmed that there is no change in the facts and circumstances of the case in this year compared to the Assessment years in which the issue was considered by the Hon'ble High Court in appellant‟s own case. Therefore, respectfully following the decision of Hon'ble Delhi High Court we confirm the order of ld CIT(A) in deleting the penalty u/s 271D of the Income Tax Act in following appeals.
Section Penalty Amount Assessment Year Rs. 3131/DEL/2011 271D 1759210389 2002-03 3133/DEL/2011 271D 2593524621 2003-04 3135/DEL/2011 271D 3106604632 2004-05 3137/DEL/2011 271D 5282670296 2005-06 62/Del/2014 271D 8301963312 2009-10 ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10
In other appeal s of the revenue penalty is levied u/s 271E of the Income tax act for repayment of deposit in violation of section 269T of the Act.
Now we come to the provisions of section 269T which provides as under:-
Section 269T:- No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall or any specified advance received by it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has or paid the specified advance, if- (a) the amount of the or specified advance together with the interest, if any, payable thereon, or (b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, or is twenty thousand rupees or more : (c) the aggregate amount of the specified advances received by such person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such specified advances, Provided that where the repayment is by a branch of a banking company or co-operative bank, such repayment may also be made by crediting the amount of such loan or deposit to the savings bank account or the current account (if any) with such branch of the person to whom such loan or deposit has to be repaid. Provided thatProvided further that nothing contained in this section shall apply to repayment of any loan or deposit taken or accepted from— (i) Government ; ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 (ii) any banking company, post office savings bank or co- operative bank ; (iii) any corporation established by a Central, State or Provincial Act ; (iv) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; (v) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette. Explanation For the purposes of this section, (i) "banking company" shall have the meaning assigned to it in clause (i) of the Explanation to section 269SS ; (ii) "co-operative bank" shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; (iii) "loan or deposit" means any loan or deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes loan or deposit of any nature. (iv) ―specified advance‖ means any sum of money in the nature of advance, by whatever name called, in relation to transfer of an immovable property, whether or not the transfer takes place.‖ 17. For violation of above section provision of section 271E provides for levy of penalty which is as under:-
“Section 271E:-(1) If a person repays any or specified advance referred to in section 269T otherwise than in accordance with the provisions of that section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so repaid. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.‖ ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10
The above provisions of section 271E do not apply if assessee proves that there was a reasonable cause for the said failure. The provisions of section 273B provides as under:- “Section 273B:- Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FAB, section 271FB, section 271G, section 271GA section 271-I, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA or section 272B or sub-section (1) or sub-section 1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.‖ 19. The penalty u/s 271D is levied for acceptance of deposit in violation of provisions of section 269SS and penalty u/s 271E is levied for repayment of deposit made in violation of provisions of section 269T of the Act. These penalties cannot be levied where the assessee establishes that there is a reasonable cause for the failure. In the case of the assessee, the facts and circumstances existing at the time of acceptance of deposit are similar when deposits are repaid as submitted by the parties as well as held by lower authorities. Such causes which is held to be „reasonable cause‟ are dealing with the illiterate depositors and the place where no banking facilities exist. Further the nature of the deposits which are repaid are mostly daily deposits schemes. In any case the depositors to whom the deposits are repaid were already KYC compliant when the deposits are originally accepted. Both the parties confirmed before us that there is no change in the facts and circumstances of the case compared to the time when the deposits are accepted with the facts and circumstances when the ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 deposits are repaid. Further the ld AR also submitted that in case of the sister concern of the assessee the Hon'ble Delhi High Court has upheld the order of the coordinate bench wherein the penalty u/s 271E is deleted. We have carefully perused the decision of the coordinate bench in case of Sahara India Mutual Benefit Co. wherein in and 3589/Del/2009 vide order dated 04.11.2010 penalty u/s 271E is deleted as under:- “5.1 Coming to penalty u/s 271E, though the penalty is technically differe3nt, as mentioned above, but the ingredients of reasonable cause remain by and large the same. The assessee’s business will have a small fraction of cash repayments of deposits where banking facilities are inadequate and other factors as indicated exist. Some depositors insisted for cash repayments of their deposits which were collected on daily, weekly or monthly basis in our view it will not be possible for the assessee to deny the same and invite bad publicity among its depositors which would have serious repercussions for business. It has not been pointed out to us that the volume of such cash repayment of deposits is alarming or disproportionate. 5.2 Apropos some instances of repayment in bigger cities like Bhainder, Gorakhpur etc the assessee has explained that these persons insisted for cash deposits and assessee as a matter of business policy cannot refuse such repayments. Assessee is not diverting its deposits to any sister concern or violating any RBI regulations. Deposits were collected in due course of time on daily, weekly, monthly or similar type in recurring manner. Any irregularity has not been attributed by any of the lower authorities towards the business operations of the assessee. Under these circumstances, we have no hesitation to hold that the reasonable cause as upheld in respect of penalty u/s 271D also existed in case of penalties u/s 271E. Therefore, we uphold the order of CIT(A) deleting such penalties u/s 271E in the years in question. On this issue also revenue’s appeals are dismissed.‖ ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10
The above decision of the coordinate bench was challenged before the Hon'ble Delhi High Court by revenue wherein Hon'ble Delhi High Court in 848, 849, 850, 851 and 876/2011 vide order dated 20.09.2012 has held as under:- ―8. All the penalties were deleted by the CIT(Appeals). He was of the view that there was reasonable cause for the acceptance/repayment of the deposits as explained by the assessee. The revenue carried the matter in appeal before the Tribunal. The Tribunal relied on its orders in the case of ACIT Vs. M/s Sahara India Financial Corporation Ltd., a group company, dated 17.9.2010 in ITA Nos.3222 to 3225/Del./2009 relating to the assessment years 1993-94, 1999-2000, 2000-01 and 2001-02 and following the view taken therein, confirmed the orders of the CIT(Appeals) cancelling the penalties. After noticing the aforesaid order of the Tribunal, the Tribunal in the impugned order, insofar as the penalties under Section 271D are concerned, held as follows : ―5. We have heard rival submissions and have gone through the entire material available on record. Learned DR contends that ITAT in respect of above years while upholding the deletion of penalty u/s 271- D, has not considered the aspect of each transactions while ascertaining reasonable cause. In our view it is not so in as much as ITAT has consciously considered this aspect at more than one places and has held that AO though agreed that assessee has reasonable cause in mobilizing these deposits in rural and semi-urban areas, was not justified in levying penalty by holding that transactions based reasonable cause has not been spelt out. ITAT has held that difficulties spelt out by assessee are common knowledge and it has not been disputed that the main operations of the assessee’s business is to mobilize deposits from rural area and semi-urban areas. ITAT after considering the assessee’s business realities, difficulties in mobilizing daily, weekly or monthly deposits from people of small incomes, agriculturists and rural dwellers has held that this type of mobilizing of funds will have element and a small percentage of cash deposits, therefore, we are unable to agree with learned DR that ITAT has not considered this aspect in proper perspective. In view thereof, respectfully following the order of ITAT in the case of assessee itself in respect of 271-D penalty, the impugned orders of learned CIT(A), deleting ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 penalties us/(sic)271D in the years in question are also upheld. Revenue’s appeals in this behalf are dismissed.‖ 9. As regards the penalty imposed under Section 271E on repayment of the deposits otherwise than through account payee cheque or draft, the Tribunal held that the same facts constitute reasonable cause for the repayment of the deposits also. This is what the Tribunal says: ―5.1 Coming to penalty u/s 271-E, though the penalty is technically different, as mentioned above, but the ingredients of reasonable cause remain by and large the same. The assessee’s business will have a small fraction of cash payments of deposits where banking facilities are inadequate and other factors as indicated exist. Some depositors insisted for cash repayments of their deposits which were collected on daily, weekly or monthly earn over basis in our view it will not be possible for the assessee to deny the same and invite bad publicity among its depositors which would have serious repercussions for business. It has not been pointed out to us that the volume of such cash repayment of deposits is alarming or disproportionate.‖ 10. It would appear that there were some instances of repayment of the deposits otherwise than through account payee cheques or account payee drafts even in bigger cities like the Bhinder, Gorakhpur etc. With reference to these repayments the Tribunal referred to the assessee’s explanation that the depositors insisted on cash payments which the assessee was not in a position to refuse, considering the nature of its business. The Tribunal observed as follows : ―5.2 Apropos some instances of repayment in bigger cities like Bhainder, Gorakhpur etc., the assessee has explained that these persons insisted for cash deposits and assessee as a matter of business policy cannot refuse such repayments. Assessee is not diverting its deposits to any sister concern or violating any RBI regulations. Deposits were collected in due course of time on daily, weekly, monthly or similar type in recurring manner. Any irregularity has not been attributed by any of the lower authorities towards the business operations of the assessee. Under these circumstances, we have no hesitation to hold that the reasonable cause as upheld in respect of penalty u/s 271D also existed in case of penalties u/s 271E. Therefore, we uphold the order of CIT(A) deleting such penalties u/s 271-E in the years in question. On this issue also revenue’s appeals are dismissed.‖ 11. The revenue is in appeal before this Court contending that the order of the Tribunal is untenable in as ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 much as it holds that since the business of the assessee itself is to collect and repay deposits, there can be no violation of the provisions of Section 269SS and Section 269T. We are however, unable to accept the contention. This is not the only reason given by the Tribunal for approving the orders of the CIT(Appeals) cancelling the penalties. It is only one of the many circumstances and facts taken into consideration by the Tribunal in accepting the assessee’s explanation that there existed reasonable cause within the meaning of Section 273B. The Tribunal has in substance relied on its earlier order in the case of M/s Sahara India Financial Corporation Ltd., (a group company) (supra). This aspect of the matter has been considered by us in our judgment today passed in the appeals filed by the revenue against the orders of the Tribunal in the case of M/s Sahara India Financial Corporation Ltd. dated 17.9.2010. We have held that the explanation of the assessee as to the facts and circumstances in which it was placed which constituted reasonable cause has been accepted by the Tribunal and the finding of the Tribunal that there was reasonable cause for the default within the meaning of 273B is a question of fact which cannot be disturbed by the High Court as there was no material or evidence brought before the Court to show that the finding was perverse or was of such nature that no reasonable person, duly instructed on the facts and the legal position, would have reached. In the present case also the revenue has not been able to bring on record any material to show that the finding of the Tribunal as to the existence of reasonable cause is perverse. In the judgments of this Court in Commissioner Of Income Tax vs Parma Nand (2004) 266 ITR 255 and CIT Vs Itocha Corporation (2004) 268 ITR 172, it has been held that whether or not there was reasonable cause for the default is a question of fact which does not give rise to a substantial question of law unless the finding is perverse or irrational. In the light of these judgments and having regard to the finding of fact entered by the Tribunal that there was reasonable cause for the defaults, we do not find any substantial question of law arising for our consideration. The appeals of the revenue are accordingly, dismissed with no order as to costs.‖ 21. The assessee in the issue decided by the Hon'ble Delhi High Court was also engaged in the similar business of mobilization of deposit as a ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 mutual benefit company u/s 620A of the Companies Act 1956 where it can accepts deposits only from its share holders, member and nobody else. The facts before the Hon'ble Court was also that assessee was having a more than 600 branches across the country located in remote areas with inadequate banking facilities. In the present appeal before us assessee is a non banking financial company doing the business in identical manner and similar circumstances. The ld DR could not point out any difference between the facts of the case before Hon'ble High Court and before us. In view of the decision of the coordinate bench in case of sister concern of the assessee operating under similar circumstances wherein penalty u/s 271E has been deleted and the order has been upheld by the Hon‟ble High Court also, we respectfully following the above decisions confirm the order of the ld CIT(A) in deleting the penalty u/s 271E of the Income Tax Act. In view of this following appeals filed by the revenue are dismissed. Section Penalty Amount Assessment Year Rs. 3310/DEL/2009 271E 92,51,608/- 1993-94 3311/DEL/2009 271E 245128118 1999-2000 3312/DEL/2009 271E 240456991 2000-01 3313/DEL/2009 271E 374784966 2001-02 3132/Del/2011 271E 482616466 2002-03 3134/DEL/2011 271E 648411381 2003-04 3136/DEL/2011 271E 1061918377 2004-05 3138/DEL/2011 271E 846000022 2005-06 ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10
Now coming to the cross objection of the assessee identical issue has been considered by the coordinate bench for assessment year 1993 – 1994, 1999 – 2000, 2000 – 01 and 2001 – 02 as under:-
It is submitted by the Ld. counsel for the assessee that in the present case, the provisions contained in clause (c) of section 275(1) are applicable. It is pointed out by him that in the said clause, two situations are envisaged: It is submitted by him that as per the 1st situation, penalty order has to be passed before the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed. It is his submission that the 2nd situation is that the penalty order has to be passed before the expiry of 6 months from the end of the month in which action for imposition of penalty is initiated. If the last date for completion of penalty order as per these two conditions are different, than the later date as per these two situations will be the outer limit for completion of penalty proceedings. It is submitted that it is the admitted position that penalty proceedings has to be initiated in the course of pendency of some proceedings before the Income tax Authorities which may be assessment proceedings or some other proceedings. It is also submitted that in the present case, there was no other proceeding pending with the department apart from assessment proceedings for the relevant year and hence it has to be assumed that the /Del/2009 C.O.No.294-297/Del/2009 penalty proceedings were initiated in the course of assessment proceedings and, therefore, the penalty orders should have been passed within the period of 6 months from the end of the month in which the assessment proceedings were completed for the relevant year. It is submitted that in all the four years, the penalty orders are after the expiry of 6 months from the end of the month in which assessment proceedings were completed and hence all these penalty orders are barred by limitation. Reliance was placed by him on the following judgements: (a) CIT Vs. Chhajer Packaging & Plastics P. Ltd. 300 ITR 180 (Bombay); ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 (b) CIT Vs Hissaria Brothers 291 ITR 244 (Raj.) (c) Shanbhag Restaurant vs DCIT, 266 ITR 393 (Karnataka); (d) CIT Vs NHK Japan Broadcasting Corporation 305 ITR 137 (del.) 6. It is also submitted that although the decision of Special Bench of the Tribunal rendered in the case of Diwan Chand Amrit Lal Vs CIT 98 ITD 200 (Chd. S.B.) is against the assessee but as per this decision of the special bench of the Tribunal, the Tribunal decision rendered in the case of Hissaria Brothers Vs DCIT as reported in 73 TTJ 2 (Jodhpur) was disapproved but this very decision of Jodhpur Bench of the Tribunal was upheld by the Rajasthan High Court as per the judgement reported in 291 ITR 244 on which reliance is /Del/2009 C.O.No.294-297/Del/2009 placed by him and hence, this decision of special bench of the Tribunal stands indirectly disapproved by the Hon'ble High Court of Rajasthan and hence the same should not be followed and the issue should be decided by following these judgement of various High Courts cited by him. As against this, the Ld. D.R. supported the penalty orders and reliance was placed by him on the decision of Special Bench of the Tribunal rendered in the case of Diwan Chand Amrit Lal (supra). It is also submitted by him that he facts of all the High Court decisions cited by she Ld. A.R. for the assessee are different and hence those High Court judgements are not applicable in the present case and the issue involved in the present case is squarely covered against the assessee by the decision of Special Bench of the Tribunal. Regarding the reference of penalty matter by the A.O. to the Addl. CIT in Assessment Year 1999- 2000 on 20th September 2002, it is submitted that the A.O. is not authorized to initiate and pass penalty orders and hence this date is not relevant for the purpose of working out the limitation period.
We have considered the rival submissions. First of all, we feel that the relevant dates which are important for deciding the issue, should be complied in the form of a table which is as under: Assessment Date of Date of notice issued Date of penalty ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 Year assessment by Addl. Commissioner order order u/s 271D 1993-1994 18.02.2003 o8.12.2003 28.05.2004 1999-2000 20.09.2002 01.11.2002 22.05.2003 2000-2001 25.09.2003 08.12.2003 28.05.2004 2001-2002 19.10.2004 21.02.2005 29.07.2005
From the above chart, it is seen that in all the four years the notice u/s 271D was issued by the Additional Commissioner of Income Tax after the completion of relevant assessment order but the penalty order has been passed in all the four years within 6 months from the end of the month in which the notice u/s 271D was issued by him. Now, to decide this aspect that the penalty order passed by him is barred by limitation or not, it is admitted position that the provisions of Section 275(1)(c) are relevant which are as under: "Section 275(1)(c): - No order imposing penalty under this chapter should be passed - (c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later."
The special bench of the Tribunal in the case of Dewan Chand Amrit Lal (supra) has considered the provisions of section 275(1)(c) while deciding the issue regarding limitation period for passing the penalty order u/s 271D /Del/2009 C.O.No.294-297/Del/2009 and 271E of the I. T. Act. The question referred to the Special Bench in that case was as under: "Having regard to the provisions of sections 271D and 271E and section 275 of the income tax Act, whether period of limitation for purposes of section 275 of the Act is to be reckoned from the date when assessment proceedings are completed or from the date when penalty proceedings are initiated by the JCIT?." This issue has been decided by the Tribunal on the basis that the period of limitation for the purpose of Section 275 of the I. T. Act in connection with imposition of penalty u/s 271D and 271E is to be reckoned from the date when the penalty proceedings are ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 initiated by the DCIT (JCIT) and not from the date, when assessment proceedings are completed. As per this decision of the Special Bench of the Tribunal, we find that in all the four years, the penalty orders passed by the revenue are within time and not barred by limitation. We are bound by the decision of Special Bench of the Tribunal until and unless any contrary judgement of any higher authority i.e. larger bench of the Tribunal, any decision of any Hon'ble High court or the Hon'ble Apex Court is brought to our notice. Ld. counsel for the assessee has relied upon the four judgements of various High Courts and hence we examine the applicability of these judgements in the present case.
10. The first judgement cited by him is the judgement of Hon'ble Bombay High Court rendered in the case of CIT Vs Chhajer Packaging & Plastics Pvt. Ltd. (supra). In this case also the assessment proceedings were completed for the relevant year on 30.03.1999. The A.O. in this case by letter-dated 30.03.1999 referred the mater to the additional Commissioner of Income tax for levy of penalty u/s 271D of the I. T. Act. On 6th April 1999, the penalty proceedings were initiated by issuing notice u/s 271D to the assessee and under these facts, it was held by the Hon'ble Bombay High Court that the time limitation for completion of penalty proceedings have to be counted in two manners. As per the 1st part of the provisions of Section 275(1)(c), penalty proceedings were to be completed by 31.03.1999 and as per the later part of the provisions of Section 275(1)(c), the penalty proceedings were barred by limitation on 29th October 1999 being the period of 6 months form the end of the month in which the penalty proceedings were initiated i.e. April 1999. In the present case also, the facts are identical and hence this judgement of Hon'ble High Court of Bombay does not help the assessee in the present case and as per this judgement of Hon'ble High Court of Bombay in the present case, the penalty proceedings limitation period expired on the expiry of the period of 6 months from the end of the /Del/2009 C.O.No.294-297/Del/2009 month in which the notice for initiating the penalty proceedings were initiated by the Additional Commissioner of Income tax. There is one additional argument advanced by the Ld. counsel for the assessee with regard to the Assessment Year 1999-2000 that in this year, the A.O. has intimated Additional Commissioner of Income tax regarding ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 initiation of penalty proceedings u/s 271D on the date of completion of assessment of this year i.e. 20.09.2002 and hence the limitation period of 6 months should be counted from the end of the month of September 2002 and not from the end of the month of November 2002. On this aspect also, we do not find any merit in the argument of the Ld. counsel for the assessee because in that case also, which was before the Hon'ble High Court of Bombay, the A.O. had intimated to the Additional Commissioner of Income tax for initiation of penalty proceedings on the date of completion of assessment proceedings i.e. 30.03.1999 and the notice was issued by the Additional Commissioner on 06.04.1999 and it was held by the Hon'ble High Court of Bombay that he period of limitation i.e. period of 6 months is to be counted from the end of the month of April 1999 and not from the end of the month of March 1999 and hence this argument of the Ld. counsel for the assessee also fails. The 2nd judgement relied upon by the Ld. counsel for the assessee is the judgement of Hon'ble High Court of Rajasthan rendered in the case of CIT Vs Hissaria Brothers (supra). In that case also the issue involved was regarding imposition of penalty u/s 271D and 271E and the issue before the Hon'ble High Court of Rajasthan was as to whether for the purpose of working out the limitation period for imposition of penalty under those two sections, the provisions of Section 275(1)(c) are applicable or the provisions of section 271(1)(a) are to be applied. It was held by the Hon'ble High Court of Rajasthan in that case that for the purpose of computation of limitation period in connection with imposition of penalty u/s 271D and 271E the provisions of Section 275(1)(c) are applicable and not of the section 275(1)(a). As per the facts of that case, notices of penalty u/s 271D and 271E were issued by JCIT for all the three yeas involved in that case on 21.01.2000. In that case, it was the claim of the revenue that for the purpose of computation of limitation period for imposition of penalty u/s 271D and 271E, the provisions of Section 275(1)(a) are applicable and hence the date of receipt of appellate order has to be considered to work out the limitation period. It was held by the Hon'ble High Court of Rajasthan that the penalty proceedings for violation of provisions u/s 269SS and 269T are not related to the assessment proceedings but are independent of it and therefore, the completion of appellate proceedings arising out of the assessment proceedings or other proceedings during which the penalty proceedings u/s 271D and 271E may have been ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 initiated, have no relevance for sustenance and not pertaining to the penalty proceedings u/s 271D & 271E and, therefore, clause (a) in the sub-section (1) of section 275 cannot be applicable to such proceedings. It was held that the provisions of section 275(1)(c) are attracted in such cases and hence if the penalty order passed by the department is after the completion of 6 months from the end of the month in which the penalty proceedings were initiated, such penalty order will be barred by limitation. Hence, this judgement of Hon'ble High Court of Rajasthan also does not support the case of the assessee. The 3rd judgment relied upon by the Ld. counsel for the assessee is the judgement of Hon'ble Karnataka High Court rendered in the case of Sanbag Restaurant Vs DCIT (supra). In that case also, sit was held that for the purpose of finding the limitation period in connection with imposition of penalty u/s 271D and 271E, the period of 6 months has to be allowed from the end of the month in which penalty proceedings were initiated. The assessment had been completed on 25.02.1994 and the notice for initiation of penalty proceedings was issued on 08.06.1994 but the penalty order was passed only on 28.03.1995. Since the penalty order was passed after the expiry of the period of 6 months from the end of the month in which the notice was issued, it was held that such penalty order is time barred. Because the period of 6 months form the date of issue of notice on 08.06.1994 expired on 31.12.1994 and the penalty order was passed on 28.03.1995 and hence this judgement of Hon'ble High Court of Karnataka also does not support the case of the assessee. The last judgement cited by the Ld. counsel for the assessee is the judgement of Hon'ble High Court of Delhi rendered in the case of CIT Vs N H K Japan Broadcastings Corporation (supra). This judgement is in connection with the proceedings initiated under Section 201(1) or 201(1A) which is not even in the chapter XXI and hence this judgement of Hon'ble High Court of Delhi is not relevant in the present case because in the present case we are concerned with the limitation period for imposition of penalty u/s 271D which falls under Chapter XXI and the limitation period as per Section 275(1) is prescribed only for imposition of penalty under this chapter XXI and, therefore, for the purpose of deciding the limitation period as per section 275(1)(c), this judgement ACIT V Sahara India Financial corporation Limited to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10 rendered in connection with the provisions of Section 201(1) and 201(1A) is not relevant.
11. As per the discussion in above paragraphs, it is seen that in the present case, the penalty order passed by the Additional Commissioner of Income tax is not barred by limitation as per the provisions of Section 275(1)(c) and hence this issue raised by the assessee in the cross objections filed in all the four years is decided against the assessee. Before parting, we would like to mention that there is one more argument of Ld. counsel of the assessee that Special Bench decision should not be followed because it has disproved the Tribunal decision rendered in the case of Hissaria Brothers (supra) and that Tribunal decision was upheld by Hon'ble Rajasthan High Court. On this aspect also, we do not find any merit in the argument of Ld. counsel because the issue in present cross objections are not only covered against the assessee by this decision of Special Bench of the Tribunal only but we have noted that as per three judgements of various High courts of Bombay, Rajasthan and Karnataka also, cited by the Ld. counsel for the assessee, this issue is covered against the assessee under identical facts and hence this argument is also rejected because ultimate finding of the Special /Del/2009 C.O.No.294-297/Del/2009 Bench is in line with these judgements of various High Courts.
In the result, all the four cross objections of the assessee are dismissed.
Regarding the four appeals of the revenue, the same are to be decided separately after further hearing both the sides on merit and hence we direct the registry to fix those appeals for hearing on a suitable date in due course as a part heard matter and notices should be issued to both the sides well in time.
In the result, all the four cross objections are dismissed and for all the four appeals of the revenue, separate order will be passed after hearing both the sides on merit.‖ 23. Ld Authorised Representative could not point out that how assessee‟s case is now different then the issue decided by the coordinate bench in CO No. 294 to 297/Del/2009 in assessee‟s own ACIT V Sahara India Financial corporation Limited ITA No 3310 to 3313/Del/2009 , 3131/to 3138/Del/2011 and 62/Del/2014 Sahara India Financial corporation Limited V ACIT Co No :- 301 to 304/ Del/2009 and 251 to 258/del/2011 A Y 1993-94 , 1999-2000 to 2005-06 and 2009-10