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Income Tax Appellate Tribunal, “ C” BENCH, KOLKATA
Before: Shri M. Balaganesh
SHRI M.BALAGANESH, AM
These appeals of the assessee arise out of the orders of the Learned CIT(A), Jalpaiguri in Appeal Nos. 26 & 27/JAL/CIT(A)/JAL/11-12 dated 06-11-2012 & 12- 11-2012 for the Asst Year 2008-09 against the separate orders of penalty levied by the Learned JCIT/ learned AO u/s. 271D & u/s 271E of the Income Tax Act, 1961 (hereinafter referred to as the ‘Act’) respectively.
The only issue to be decided in these two appeals of the assessee is as to whether the penalty u/s. 271D and 271E of the Act could be levied in the facts and circumstances of the case.
The brief facts of this issue are that the assessee is a distributor of goods like BPL rice, wheat, kerosene oil etc. and supplies the same to its various dealers in and & 238/Kol/2013-C-AM 1 Binod Kumar Agarwal around the locality allotted to the assessee. The assessee had received advances received from 11 parties in cash. Against these advances, the assessee had actually supplied the goods to those parties. The assessee collected advances from various dealers in cash, which are to be adjusted against the supply of goods. The assessment was completed u/s. 143(3) of the Act on 10/12/2010 accepting the returned income. In the assessment no adverse comments were recorded by the ld.AO and not even any whisper was made with regard to advances received in cash by the assessee from various dealers and repayment made thereon in cash thereby violating the provisions of section 269SS and 269T of the Act. The ld.AO did not record any satisfaction in the assessment order with regard to violation of provisions of section 269SS and 269T of the Act. The ld.AO, however, on completion of assessment proceedings sought to pass on the information to the ld.JCIT, who in turn issued show cause notices u/s. 271D and 271E of the act for initiating the penalty proceedings for violation of provisions of section 269SS and 269T respectively. The ld. JCIT ignoring the submissions of the assessee proposed to levy the impugned penalties u/s. 271D and 271E of the Act amounting to Rs. 4,68,000/- each. This action of the ld. JCIT was upheld by the ld. CIT(A). Aggrieved, the assessee is in appeal before us on various grounds.
We have heard the rival submissions and perused the material available on record. Though the assessee has raised several grounds in respect of aforesaid appeals, we find that the central ground revolves only on levy of penalty u/s. 271D and 271E of the Act. We find from the facts that the assessee has merely collected advances in cash from various dealers for supply of rice and wheat during the course of business. Hence, it can safely be concluded that the said receipts pertained the character of revenue receipts in the hands of the assessee. It is not in dispute that the said advances were duly adjusted by supply of goods by the assessee before the end of previous year. In these circumstances, we hold that the advance receipt on sale of & 238/Kol/2013-C-AM 2 Binod Kumar Agarwal goods from dealers as deposit and invoking the provisions of section 269SS and 269T is not warranted.
5. We also find that the ld.AO has not recorded any satisfaction in the assessment order for violation of provisions of section 269SS and 269T of the Act, which is sine qua non before the ld. JCIT proceeded to initiate penalty proceedings u/s. 271D and 271E of the Act. In support of our submission we rely on the recent decision of the Hon’ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills Ambala City reported in (2015) 379 ITR 521(SC)/64 taxmann.com 75(SC), wherein it has been held as under:-
“4. 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 Section 271E would also not survive. This according to us is the correct proposition of law stated by the High Court in the impugned 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 concerned, it was without any satisfaction and, therefore, no such penalty could be levied. These appeals are, accordingly, dismissed. “
In view of aforesaid facts and findings given thereon and respectfully following the aforesaid decision of the Hon’ble Apex Court in the case (referred to supra), we have no hesitation in directing the ld. JCIT to delete the impugned penalty levied u/s. 271D and 271E of the Act. The grounds raised by the assessee in these appeals are allowed.
& 238/Kol/2013-C-AM 3 Binod Kumar Agarwal
In the result, the appeals of the assessee are allowed as stated above.
THIS ORDER IS PRONOUNCED IN OPEN COURT ON 04 -02- 2016