PRAVIN NILKANTH BORODE,NAGPUR vs. THE INCOME TAX OFFICER WARD-1 AKOLA, AKOLA

Date of Hearing – 09/12/2024 Date of Order – 20/12/2024

O R D E R PER K.M. ROY, A.M.

Aforesaid appeal by the assessee is against the impugned order dated 01/05/2024, passed by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2019–20.

– “1. The learned CIT(A) NFAC has passed ex-parte penalty order u/s. 271D is illegal, invalid and bad in law;

2. On the facts and circumstances of the case the learned CIT(A) NFAC failed to consider penalty U/s. 271D is levied without any assessment proceedings, therefore ex-parte penalty order passed by CIT(A) NFAC is illegal, invalid and bad in law;

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3. On the facts and circumstances of the case the learned CIT(A) NFAC erred in confirming and imposing penalty U/s. 271D at Rs. 11,50,000/- the penalty imposed is unjustified, unwarranted and excessive; 4. On the facts and circumstances of the case the learned CIT(A) NFAC ought to have considered that the contention of the assessee that the purchaser was agriculturist and done first time in transaction with assessee and insisted on cash payment, therefore imposition of penalty U/s. 271D is unjustified, unwarranted and excessive; 5. On the facts and circumstances of the case the learned CIT(A) NFAC ought to have considered that assessee falls under exception as purchaser is new to the seller, therefore without giving opportunity to being heard and without reasonable cause imposed U/s. 271D is unjustified, unwarranted and excessive; 7. The appellant craves leave to amend, add or take a new ground or grounds at the time of hearing.”

“Order under section 271D of the Income Tax Act, 1961 The information shared by Pr.CIT-1, Nagpur which received from DIT(I&CI) to this office and after verification of information available, it was found that assessee has entered into a transaction of immovable property as Agricultural land situated at Kalwadi, Mauje Kalwadi, Akot, Dist. Akola with Sau Shalini Sanjay Shegokar, Akot for sale consideration of Rs 11,51,000/- document no.641/2019 and registered before the Sub-Registrar Class-1, Akot dt.14.02.2019. Assessee has accepted the amount of Rs 11,51,000/-in cash which is above Rs. 20,000/- and more otherwise than by account payee cheque(s) or bank draft(s) in contraventions of Provision u/s 269SS of the Income Tax Act, 1961. Accordingly show cause notice u/s 274 r.w.s 271D of the Income Tax Act, 1961 was issued on 21.01.2020 and served on the assessee. In response to notice issued, the assessee himself attended on 29.01.2020 in office and stated that he has exchanged the Agricultural land, Mauje Kalwadi against the plot sold to Sau Shalini Sanjay Shegokar.

3 Pravin Nilkanth Barode The assessee furnished the written submission and a sale/purchase deed dt. 13.02.2020. He also pleaded that actual cash is not accepted against the sale of property, it is only the exchange of property of Lay-out Plot No. 6,7,8, of total 147 sq.mtr. In Mauje Akot, Survey No. 629 Nazul No.

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Pravin Nilkanth Barode (b) in a case where the relevant assessment or other order is the subject- matter of revision under section 263, after the expiry of six months from the end of the month in which such order of revision is 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.] (IA) In a case where the relevant assessment or other order is the subject- matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253 or an appeal to the High Court under section 260A or an appeal to the Supreme Court under section 261 or revision under section 263 or section 264 and an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty is passed before the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the "Principal Chief Commissioner or] Chief Commissioner or the "[Principal Commissioner or] Commissioner or the order of revision under section 263 or section 264 is passed, an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the Commissioner (Appeals) or, the Appellate Tribunal or the High Court, or the Supreme Court or order of revision under section 263 or section 264: Provided that no order of imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty shall be passed- (a) unless the assessee has been heard, or has been given a reasonable opportunity of being heard; (b) after the expiry of six months from the end of the month in which the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the "[Principal Chief Commissioner or] Chief Commissioner or the "[Principal Commissioner or] Commissioner or the order of revision under section 263 or section 264 is passed; Provided further that the provisions of sub-section (2) of section 274 shall apply in respect of the order imposing or enhancing or reducing penalty under this sub-section] 2. The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988 ), shall apply to and in relation to any action initiated for the imposition of penalty on or before the 31st day of March, 1989 .] 2 Explanation.- In computing the period of limitation for the purposes of this section,- (i) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129; (ii) any period during which the immunity granted under section 245H remained in force; and (iii) any period during which a proceeding under this Chapter for the levy of penalty is stayed by an order or injunction of any court, shall be excluded.]]”

Pravin Nilkanth Barode before the Hon’ble High Court or Hon’ble Supreme Court. Thus, it is clear that section 275, pre supposes the existence of assessment proceedings/revision proceedings or appeal proceedings arising from the assessment order or revision order and the limitation is provided as per outcome of these proceedings. In absence of assessment in the case of the assessee the initiation of penalty is not valid and further when the satisfaction for initiation of the penalty on the part of the AO is absent in the case of the assessee then the penalty levied u/s 271D is not valid. The Hon’ble Supreme Court in case of CIT vs. Jain Laxmi Rice Mills (supra) has held as under: “The Tribunal as well as the High Court has held that it could not be so for the simple reason that when the original assessment order itself was set aside, the satisfaction recorded therein for the purpose of initiation of the penalty proceeding Under Sec. 271E would also not survive. This, according to us, is the correct proposition of law stated by the High Court in the impugned order. As pointed out above, insofar as, fresh assessment order is concerned there was no satisfaction recorded regarding penalty proceeding under Section 271E of the Act, though in that order the Assessing Officer wanted penalty proceeding to be initiated under Section 271(1)(c) of the Act. Thus, Insofar as penalty under Section 271E is concemed, it was without any satisfaction and, therefore, no such penalty could be levied.”

4. The only point for consideration in this appeal is whether the assessee had contravened the provisions of Section 269T of the Act by making repayment of loan/deposits of Smt. Kusum Lata Thakral, through account payee cheque or account payee drafts to M/s. Babyloan Builders Pvt. Ltd., Gurgaon and, therefore, penalty under Section 271E was leviable.

Pravin Nilkanth Barode "Having heard the parties and having perused the material on record, we find the grievance of the assessee to be correct. In this case, the return of the assessee was processed u/s. 143(l)(a) of the Income-tax Act, on 31.12.2003. Notice u/s. 274 read with 271E of the Act was issued to the assessee on 12.06,2007. It being a case of processing the return of income, there is no finding in the AO's order with regard to the applicability or otherwise of section 269T of the IT Act to the assessee's case. It was within the purview of the AO to bring the assessee's case to scrutiny and to make regular assessment u/s. 143(3) of the Act. It was also within the power of the AO at the appropriate stage to initiate proceedings u/s. 147 of the Act against the assessee. No such action was taken. Rather, the penalty was imposed on the basis of the finding in the case of assessee's wife."

6. No error or perversity could be shown in the aforesaid findings recorded by the Tribunal. Moreover, the assessee had taken a plea before the Assessing Officer that there was a reasonable cause for the assessee to have made direct payment of Rs. 14,02,600/- to M/s. Babyloan Builders Private Ltd., Gurgaon. It was pleaded that some of the repayments made by the assessee were inter company transfer for group housing and purchase of flat and at times payments were made after closure of banking hours. It was further submitted that the payments made were genuine and no tax evasion was involved and the default, if any, was of technical nature. The explanation being plausible one, it cannot be said that there was no reasonable cause within the meaning of Section 273B of the Act. No substantial question of law arises in this appeal.

9. Having regard to the facts and circumstances of the case and the ratio laid down in the order passed by the Punjab and Haryana High Court we do not hesitate to hold that the impugned penalty under Section 271E is not permissible in the absence of regular assessment framed against the assessee by the Revenue. Hence, the same is not found to be sustainable in the eye of law and, thus, quashed. The appeal preferred by the assessee is, therefore, allowed.”

5. The case is the opposite to the matter before us and the ratio decidendi is squarely applicable. Placing our respectful reliance to the decision of the Co–ordinate Bench as aforesaid as well as other celebrated jurisprudence, the imposition of penalty of ` 11,51,000, is directed to be deleted.