SUNIL DANDRIYAL,DEHRADUN vs. JCIT, CENTRAL RANGE, MEERUT

As identical issue is involved in both the appeals challenging the levy of penalty u/s 271D of the Act, they are taken up together and disposed of by this common order for the sake of convenience.

We have heard the rival submissions and perused the materials available on record. The assessee had received Rs.10,00,000/- and Rs.1,17,50,000/- in cash in Asst. Years 2009- 10 and 2010-11 respectively from Sh. Sanjay Bansal. The Ld. AO completed quantum assessment proceedings for AY 2009-10 u/s 153A r.w.sec.143(3) of the Act on 30/03/2015. The Ld. CIT(A) while disposing of the appeal for AY 2011-12 in his order dated 28/02/2018 had directed the Ld. AO to recommend the JCIT for initiation of the proceedings of penalty u/s 271D r.w.sec 269SS of the Act in respect of cash receipt of loans from Mr. Sanjay Bansal in AY 2009-10 and 2010-11 by the assessee. Accordingly, the Ld. AO made a reference to Ld. JCIT for initiation of the penalty proceedings on 25/03/2017. The Ld. JCIT passed the penalty order u/s 271D of the Act levying penalty in the sums of Rs.10,00,000/- Page 2 of 9 & 8070/Del/2019 Sunil Dandriyal vs. JCIT and Rs.1,17,50,000/- for AY 2009-10 and 2010-11 respectively for violation of provisions of section 269SS of the Act. Now, the short for question that arises for our consideration is as to whether the said penalty order passed by the Ld. JCIT on 29/11/2017 is within the time prescribed under the statute. For this purpose, it would be relevant to reproduce the provisions of section 275(1) of the Act:- 275. 15[(1)] No order imposing a penalty under this Chapter shall be passed— 16[(a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the 17[***] Commissioner (Appeals) under section 246 18[or section 246A] or an appeal to the Appellate Tribunal under section 253, 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 completed19, or six months from the end of the month in which the order of the 20[***] Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later : 21[Provided that 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, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Chief Commissioner or Commissioner, whichever is later;] (b) in a case where the relevant assessment or other order is the subject-matter of revision under section 263 21[or section 264], 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.]

The assessee’s case herein falls u/s 275(1)(c) of the Act wherein penalty order should be passed on or before 30/09/2017 ie. 6 months from the end of the month in which penalty proceedings were initiated by the Ld. AO by recommending to Ld. Page 3 of 9 & 8070/Del/2019 Sunil Dandriyal vs. JCIT JCIT. We find that the lower authorities had proceeded on the basis that the time limit had to be reckoned from the date of issuance of first notice by Ld. JCIT which was done on 11/08/2017. We find that the law is very clear that penalty proceedings u/s 271D and 271E of the Act are to be initiated by the Ld. AO by recommending the same to Ld. JCIT and, thereafter, the Ld. JCIT shall issue show cause notice to the assessee and pass penalty orders thereon u/s 271D and 271E of the Act. Hence, the due date had to be reckoned only from the date of triggering of the proceedings from the side of the Ld. AO to Ld. JCIT. Admittedly, the Ld. AO had made reference to Ld. JCIT on 25/03/2017 for initiating penalty proceedings in the instant appeals. Six months from the end of the month in which the action for imposition of penalty is initiated expired on 30/09/2017.

Our aforesaid view is further fortified by the decision of Hon’ble Jurisdictional High Court in the case of PCIT vs. Rishikesh Buildcon (P) Ltd. reported in 451 ITR 108 (Delhi), wherein the following facts were prevalent:- Page 4 of 9 & 8070/Del/2019 Sunil Dandriyal vs. JCIT (a) Quantum Proceedings were completed in December 2008

In terms of the above provision, there are two distinct periods of limitation for passing a penalty order, and one that expires later will apply. One is the end of the financial year in which the quantum proceedings are completed in the first instance. In the present case, at the level of the Assessing Officer, the quantum proceedings was completed on December 28, 2007. Going by this date, the penalty order could not have been passed later than March 31, 2008. The second possible date is the expiry of six months from the month in which the penalty proceedings were initiated. With the Assessing Officer having initiated the penalty proceedings in December 2007, the last date by which the penalty order could have been passed is June 30, 2008. The later of the two dates is June 30, 2008.' (Emphasis Supplied) 10. The contentions urged by the learned counsel for the Revenue in the present appeals are therefore reiteration of pleas which have been categorically rejected by the predecessor bench of this Court in the aforesaid judgments.

In the present appeals, a perusal of the assessment order(s) shows that the penalty proceedings were initiated by the AO in the assessment order(s) itself. Illustratively, the direction contained in the assessment order dated 17th December, 2008, pertaining to Rishikesh Buildcon Pvt. Ltd. may be referred to, which reads as under:- "… Initiate penalty proceedings u/s, 271(1)(c) for concealment of income & 27l(1)(b) for non-compliance of statutory notices, & 271 D for violating the provisions of Section 269 SS as discussed above."

The predecessor bench of this Court in the aforesaid judgments has held that where the AO has initiated the penalty proceedings in his/her assessment order, the said date is to be taken as the relevant date as far as the section 275(1)(c) of the Act is concerned. In these cases, the quantum proceedings were completed by the AO on 17th/18th December, 2008, and the AO initiated the penalty proceedings in December, 2008, thus, the last date by which the penalty order could have been passed is 30th June, 2009. The six months from the end of the month from which action of imposition of penalty was initiated would expire on 30th June, 2009. However, in this case, admittedly, the penalty order(s) were passed on 29th September, 2009, and therefore, the ITAT rightly concluded that the order(s) were barred by limitation.

Consequently, we answer the question of law against the Revenue and in favour of the Assessee by holding that, in the facts and circumstances of the present appeals, the ITAT was correct in law in deleting the penalty imposed by the Additional Commissioner of Income Tax, under section 271D of the Act, on the ground that the penalty order(s) dated & 8070/Del/2019 Sunil Dandriyal vs. JCIT 29th September, 2009, was passed beyond the time period prescribed by Section 275(1)(c) of the Act, the same having been passed after the lapse of six months from the end of the month in which the penalty proceedings were initiated by the AO.

Accordingly, the present appeals are dismissed.

In view of the above observations and respectfully following the judicial precedent relied upon herein above, we have no hesitation to conclude that the penalty orders framed on 29/11/2017 for both the assessment years are barred by limitation and, hence, liable to be quashed. Since the entire penalty order is quashed on limitation, no opinion is hereby given on merits. Accordingly, grounds raised by the assessee are allowed.

In the result, both the appeals of the assessee are allowed.