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Income Tax Appellate Tribunal, BENCH ‘C’ KOLKATA
Before: Hon’ble Shri N.V.Vasudevan, JM & Shri M.Balaganesh, AM ]
ORDER
PER N.V.VASUDEVAN, JM:
This is an appeal by the Revenue against the order dated 18.03.2015 of CIT(A)-XIII, Kolkata cancelling the order of AO imposing penalty on the assessee u/s 271D of the Income Tax Act, 1961 (Act.) 2. The Assessee is an individual. In the course of assessment proceedings u/s 143(3) of the Act for A.Y.2010-11, the AO noticed that the assessee had accepted loan otherwise by account payee cheque/draft in excess of Rs.20,000 contrary to the provision of section 269SS of the Act. Penalty was therefore levied u/s 271D of the Act of an amount equal to the loan accepted in cash in violation of the provision of section 269SS of the act namely loan of Rs.13,37,035/-. 3. Before CIT(A) the assessee raised a preliminary issue on the validity of the order passed by JCIT, Range-44 u/s 271D of the Act. The objection was as follows :- “In this case penalty proceeding was initiated by DC1T, Cir - 44, Kol. during the course of assessment as is evident from the assessment order dated 14.03.2013 and show cause letter dated 14.03.2013.
Later. Ld. .JCIT, R-44, Kolkata issued a letter dated 21.08.2013 which is reproduced herewith :-
Sub: Penalty Proceeding U/s 27/ D for the A. Y. 2010-11- Regarding ITA N0.864/Kol/2015-Ram Singh Rathore Prop. Of Maruti Air Couriers-A.Y.2010-11 2
In connection with the penalty proceeding u/s 271 D for the A. Y. 2010-11, you are hereby requested to appear before the undersigned personally or through your authorized representative on 29.08.2013 at 3.00 P.M.
Please note that this letter is not a show cause for imposition of penalty u/s 271 D but a recognition to the proceeding initiated by DCIT, Cir-44 on 14.03.2013. (emphasis supplied)
The Assessee submitted that the Hon’ble Kolkata ITAT decision dated 09.08.20I2 in in the case of Bishwanath Dutta v. Add! CIT Range, Bunkum and the Special Bench Chandigarh ITAT in the case of Dewan Clutnd Amrit Lal v. DCIT (2006)283 ITR (AT) 203 (Chd) (SB) have taken the view that the authority competent to impose penalty under section 271D and 271E is vested with Dy.CIT (now Jt.CIT) and the A.O. does not have the power either to initiate the penalty proceedings or impose the same. There is no procedure for reference by the A. O to the competent authority for imposition of penalty under section 271 D or 271 E. Therefore, if the JCIT imposes penalty without issuing show cause notice and initiating penalty proceedings u/s.271D or 271 E of the Act, then the imposition of such penalty is liable to be cancelled on the ground that there was no show cause notice issued and therefore no valid initiation of penalty proceedings. The Assessee highlighted the fact that even in the letter 28.3.2014 issued by the JCIT, he had specifically mentioned that it is not a show cause notice and this being the only notice issued by him prior to imposing penalty u/s.271D of the Act, the same has tobe held as null and void. The Assessee pointed out the following observations of the Kolkata ITAT in the case of Bishwanath Dutta (Supra) under similar facts:
”We have considered the rival submissions. A perusal of the show-cause notice dated 30.12. 2009 shows that the penalty has been initiated by the ITO, ward 4, Bankura. A perusal of the penalty order passed by the learned Addl. CIT, Range - Bankura shows that he has recognized the initiation of penalty proceedings by the Assessing Officer. It is further noticed that the learned Addl. CIT had not issued any further show-cause notice or done anything to initiate penalty proceedings. A perusal of the decision of the Hon 'ble Special Bench [ITAT, Chandigarh] of this Tribunal in the case of Dewan Chand Amritlal (supra) shows that it has been categorically held that the validity of ITA N0.864/Kol/2015-Ram Singh Rathore Prop. Of Maruti Air Couriers-A.Y.2010-11 3 penalty proceedings has to be seen with reference to authority empowered to impose penalty on the relevant date. 1t is also noticed that the Special Bench, ITAT, Chandigarh in the case of Dewan Chand Amrit Lal (supra) has categorically held that there is no procedure for reference by the Assessing Officer to the competent authority for imposition of penalty u/s 271 D or 271 E. In the present case, as it is noticed that the penalty proceeding has been initiated by the Assessing Officer and not by the Addl. CIT/Jt. CIT, who was tire competent authority, in view of the said decision of the Special Bench, ITAT, Chandigarh in the case of Dewan Chand Amritlal (supra), the penalty as confirmed by the learned Commissioner a/Income-tax (Appeals) stands deleted".
The Assessee submitted that ratio laid down as above, will squarely apply to the facts of the Assessee’s case as penalty proceeding was initiated by authority (DCIT, Cir - 44), who was not competent to initiate and impose and it was imposed by a competent authority (JCIT. Range - 44) who has not initiated the valid penalty proceeding. The Assessee therefore submitted that the penalty imposed u/s 271 D is liable to be deleted.
On the above submission the CIT(A) held that the judgment of jurisdictional ITAT was squarely applicable to the case of the Assessee where in penalty has been initiated by Assessing Officer but the authority competent to levy penalty viz., JCIT did not initiate penalty proceedings but only issued a notice fixing the case for hearing. Penalty proceeding was initiated by DCIT and not by JCIT who was the competent authority for imposition of penalty. In view of the judgment of Hon'ble ITAT, Kolkata Bench - A , he held that the penalty imposed is liable to be cancelled and he cancelled the penalty imposed.
Aggrieved by the order of CIT(A) the revenue has preferred the present appeal before the Tribunal.
We have heard the rival submissions. The ld. AR relied on the order of CIT(A) and the ld. DR relied on the order of AO. We are of the view that in the light of clear finding of the fact that JCIT who was the authority competent to impose penalty and he had not initiated penalty proceedings u/s 271D of the Act and on a conjoint reading ITA N0.864/Kol/2015-Ram Singh Rathore Prop. Of Maruti Air Couriers-A.Y.2010-11 4 of ITAT, Kolkata Bench in the case of Bishwanath Dutta v. Addl. CIT, range, Bankura (supra) it is clear that the ratio laid down therein was clearly applicable. The ratio laid down in the decision of ITAT, Chandigarh Special Bench in the case Dewan Chand Amritlal vs. DCIT (surpa) was also clearly applicable to the facts of the case. In the light of the ratio laid down in these decisions order imposing penalty passed by JCIT without initiating penalty proceedings u/s 271D of the Act is to be held as bad in law. We therefore do not find any merit in this appeal by the revenue and the same is accordingly dismissed.
In the result the appeal by the revenue is dismissed. Order pronounced in the Court on 04.10.2017.