DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR V. M/S KIRAN FINE JEWELLERS PVT LTD. , JAIPUR

ITA 271/JPR/2025

AI Insights

The case involves multiple appeals by the revenue against Kiran Fine Jewellers Pvt. Ltd. concerning penalties imposed under sections 271D and 271E of the Income Tax Act, 1961, for alleged contraventions of section 269T. The primary issue was whether the penalties were imposed within the permissible time limits. The CIT(A) had deleted the penalties on the grounds that they were time-barred, a decision which the Tribunal upheld, referencing the judicial precedents and the specific provisions of section 275 of the Act regarding the limitation period for penalty proceedings.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 669294 (ITAT-JAIPUR)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2025
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2017-2018
• Other Referred Cases: Grihalaxmi Vision v Addl.Commissioner of Income Tax, Range-1, Kozhikode, CIT Vs. Hissaria Bros, CIT Vs. Noida Toll Bridge Col. Ltd, CIT Vs. Sunil Kumar Goel, M/s Lodha Builders P Ltd Vs. ACIT, CIT Vs. Triumph International Finance (I) Ltd, Principal Commissioner of Income-tax v. GovindkripaBuildmart (P.) Ltd., Principal Commissioner of Income-tax-5 v. JKD Capital &Finlease Ltd., Ram Kishan Verma v. Additional Commissioner of Income-tax, Jagdish Chandra Suwalka v. Joint Commissioner of Income-tax
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALKA GAUTAM
• Assessee Lawyers: R.K. BHATRA
• Keywords: Reasonable cause; Period of limitation; Search and seizure; Competent authority; Initiation of penalty proceedings; Cancellation of registration; Time period of passing order
• Section: 132; 153A; 246

Judgement Text

"vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”B” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, vk;dj vihy la-@ITA Nos. 268, 270, 271 & 274/JP/2025 fu/kZkj.k o\"kZ@Assessment Years : 2013-14, 2014-15 & 2017-18 Dy. Commissioner of Income Tax, Central Circle-02, Jaipur cuke Vs. Kiran Fine Jewellers Private Limited F-19, Gautam Marg, Vaishali Nagar, Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AADCK7512P vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@ Assessee by : Shri R. K. Bhatra, CA jktLo dh vksj ls@ Revenue by : Mrs. Alka Gautam, CIT-DR lquokbZ dh rkjh[k@ Date of Hearing : 04/06/2025 mn?kks\"k.kk dh rkjh[k@Date of Pronouncement: 26/06/2025 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These four appeals are filed by the revenue and are arising out of the separate four orders of Commissioner of Income Tax (Appeals), Jaipur-4 [ for short CIT(A) ] dated 30/12/2024 for Assessment Years 2013-14, 2014- 15 & 2017-18 which in turn arise from the order dated 30.08.2022 passed under section 271E & 271D of the Income Tax Act, 1961 [ for short Act ] by Addl./Jt. CIT, Central Range, Jaipur. 2 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. 2. Since the issues involved in these appeals are almost identical on facts and are almost common, except the difference in figure of dispute. Thus, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. 3. At the outset, the ld. DR has submitted that the matter in ITA No. 268/JP/2025 for A.Y 2013-14 may be taken as a lead case for discussions as the issues involved in the lead case are common and inextricably interlinked or in fact interwoven and the facts and circumstances of other cases are identical except the difference in the amount of penalty levied. The ld. AR did not raise any specific objection against taking that case as a lead case. Therefore, for the purpose of the present discussions, the case of ITA No. 268/JP/2025 for A.Y 2013-14 is taken as a lead. 4. Before moving towards the facts of the case we would like to mention that the revenue has assailed the appeal for assessment year 2013-14 in ITA No. 268/JP/2025 on the following grounds; “1. (i) Whether on the facts and circumstances of the case the Id. CIT(A) has erred in deleting levy of penalty by JCIT/Addl.CIT only on technical ground without giving any finding on the merits of levy of penalty? (ii) Whether on the facts and circumstances of the case the Id. CIT(A) has erred in holding that the relevant date for determining the limitation period for imposing penalty u/s 271E is the date when the reference was made by the A.O to the JCIT/Addl.CIT and not the date when show cause notice issue by the 3 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. JCIT/Addl.CIT ignoring the legal aspect that the A.O is not allowed to imposed penalty u/s 271E and therefore reference made by A.O has no bearing on deciding the limitation date for imposing penalty u/s 271E? (iii) Whether on the facts and circumstances of the case, the Id. CIT(A) has erred ignoring the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v Addl.Commissioner of Income Tax, Range-1, Kozhikode in ITA No 83 & 86 of 2014. Where in it was held that limitation of penalty proceeding u/s 271D and 271E start from the issue of show cause notice by the Addl.CIT? (iv) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appeal proceeding. 4.1 In ITA No. 270/JP/2025, revenue has raised following grounds: - 1 (i) Whether on the facts and circumstances of the case, the Id.CIT(A) has erred in deleting levy of penalty by JCIT/AddI.CIT only on technical ground without giving any finding on the merits of levy of penalty? (ii) Whether on the facts and circumstances of the case, the Id.CIT(A) has erred in holding that the relevant date for determining the limitation period for imposing penalty u/s 271E is the date when the reference was made by the A.O to the JCIT/Addl.CIT and not the date when show cause notice issue by the JCIT/Addl.CIT ignoring the legal aspect that the A.O is not allowed to imposed penalty u/s 271E and therefore reference made by A.O has no bearing on deciding the limitation date for imposing penalty u/s 271E? (iii) Whether on the facts and circumstances of the case, the Id.CIT(A) has erred ignoring the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v Addl.Commissioner of Income Tax, Range-1, Kozhikode' in ITA No 83 & 86 of 2014. Where in it was held that limitation of penalty proceeding u/s 271D and 271E start from the issue of show cause notice by the Addl.CIT? 4 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. (iv) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appeal proceeding. 4.2 In ITA No. 271/JP/2025, revenue has raised following grounds: - 1. (i) Whether on the facts and circumstances of the case, the Id.CIT(A) has erred in deleting levy of penalty by JCIT/Addl.CIT only on technical ground without giving any finding on the merits of levy of penalty? (ii) Whether on the facts and circumstances of the case, the Id.CIT(A) has erred in holding that the relevant date for determining the limitation period for imposing penalty u/s 271E is the date when the reference was made by the A.O to the JCIT/Addl.CIT and not the date when show cause notice issue by the JCIT/AddI.CIT ignoring the legal aspect that the A.O is not allowed to imposed penalty u/s 271E and therefore reference made by A.O has no bearing on deciding the limitation date for imposing penalty u/s 271E? (iii) Whether on the facts and circumstances of the case, the Id.CIT(A) has erred ignoring the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v Addl.Commissioner of Income Tax, Range-1, Kozhikode' in ITA No 83 & 86 of 2014. Where in it was held that limitation of penalty proceeding u/s 271D and 271E start from the issue of show cause notice by the Addl.CIT? (iv) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appeal proceeding. 4.3 In ITA No. 274/JP/2025, revenue has raised following grounds: - 1.(i) Whether on the facts and circumstances of the case, the Id.CIT(A) has erred in deleting levy of penalty by JCIT/Addl.CIT only on technical ground without giving any finding on the merits of levy of penalty? 5 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. (ii) Whether on the facts and circumstances of the case, the Id.CIT(A) has erred in holding that the relevant date for determining the limitation period for imposing penalty u/s 271E is the date when the reference was made by the A.O to the JCIT/Addl.CIT and not the date when show cause notice issue by the JCIT/Addl.CIT ignoring the legal aspect that the A.O is not allowed to imposed penalty u/s 271D and therefore reference made by A.O has no bearing on deciding the limitation date for imposing penalty u/s 271D? (iii) Whether on the facts and circumstances of the case, the Id. CIT(A) has erred ignoring the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v Addl.Commissioner of Income Tax, Range-1, Kozhikode in ITA No 83 & 86 of 2014. Where in it was held that limitation of penalty proceeding u/s 271D and 271E start from the issue of show cause notice by the Addl.CIT? (iv) The appellant craves leave or reserves right to amend, modify, alter, add or forego any ground(s) of appeal at any time before or during the hearing of this appeal. 2. The appellant craves leave to add, amend or withdraw any of the ground of appeal during the course of appeal proceeding. 5. Succinctly, the facts as culled out from the records are that the assessment in the case of M/s Kiran Fine Jewellers Pvt. Ltd. for the A.Y. 2013-14 was completed u/s 143 r.w.s. 153A of the Act was completed on 30.12.2019. During the assessment proceedings it was found that the assessee company has received unsecured loan of Rs. 11,75,72,781/- from related party M/s Mohit Jewellers and made re-payment of Rs. 57,00,000/- during the year under consideration. Further, the assessee has filed copy of loan confirmation account of M/s Mohit Jewellers which reveals that there was opening un-secured loan of Rs. 11,04,37,506/- and 6 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. the assessee further took loans amounting to Rs. 71,35,275/- on different dates during the year and made re-payment of Rs. 71,35,275/- from 8 January, 2013 to 21 January, 2013 by cheques. In the confirmation account of M/s Mohit Jewellers it is found that re-payment of loan has been shown by way of sale amounting to Rs. 9,36,57,733/- on 31st March, 2013 against un-secured loan. Hence, it is evident that the assessee has repaid loan amounting to Rs. 9,36,57,773/- by other than account payee cheques which is contravention to the provisions of section 269T of the Act. The Assessing Officer, i.e., ACIT, Central Circle-2, Jaipur referred the matter to Addl. CIT, Central Range, Jaipur vide his office letter No. 3333 dated 20.01.2020 for initiation of penalty proceedings under section 271E of the Act. Accordingly, a notice under section 274 r.w.s. 271E of the Act was issued on 24.02.2022 fixing the case for hearing on 27.03.2022. But on the date of hearing neither any reply from the assessee is received nor anyone from the assessee company appeared for hearing. Thereafter, a show cause notice for imposing penalty under section 271E of the Act was issued on 16.06.2022 and the assessee was asked to show cause as to why the penalty may not be imposed u/s 271E of the Act for violation of provisions of section 269T of the Act. In compliance to this, an on-line reply dated 28.06.2022 was received from the assessee. 7 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. In response to the show-cause notice issued, the assessee vide its Authorized Representative's letter dated 28/06/2022 has stated that the assessee company had taken loan of Rs. 11,75,72,781/- from M/s Mohit Jewellers and during the year, the assessee also made sale of gold bar to M/s Mohit Jewellers and at the end of the financial year on 31.3.2013, the assessee debited the loan account of M/s Mohit Jewellers by passing transfer/journal entry of Rs 9,36,57,733/- for the outstanding amount due from M/s Mohit Jewellers. It has further been stated that repayment of loan through journal entry would not tantamount to contravention of provisions of Section 269T of the Act. In support of this contention, the assessee has relied upon various case-laws(1) CIT Vs. Noida Toll Bridge Col. Ltd 262 ITR 260 (Del), (2) CIT Vs. Sunil Kumar Goel (2009) 315 ITR (P&H), M/s Lodha Builders P Ltd Vs. ACIT (2014) ITR 34 ITR 157 (ITAT, Bombay). Alternatively, it is also stated that the penalty proceedings are barred by limitation as the same have not been passed after expiry of financial year in which the quantum proceedings were completed. The assessee has also cited certain case-laws to support this contention. Having considered the submissions, records and the contentions raised ld. Addl./Jt.CIT stated in his order that the Assessing Officer had 8 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. only sent a proposal/reference for initiating proceedings u/s 271E in this case to the Additional Commissioner. The Assessing Officer is not empowered to initiate the penalty proceedings u/s 271E. In fact, the penalty proceedings u/s 271E were initiated by him only on 24/02/2022 by issuance of show-cause notice. Thus, the penalty proceedings were concluded within six months from the Initiation of proceedings and, therefore, the plea taken with regard to limitation was not tenable. As regards the merits of the contention he stated that the assessee had only debited the loan account of M/s Mohit Jewellers by passing journal entry of Rs.9,36,57,733/ for the outstanding amount due from the said concern on account of sales, it is to be stated that such repayment is in clear contravention of the provisions of Section 269 T of the Act. Therefore, considering that provision of the section the contention of the assessee that the repayment of loan by way of adjustment through journal entries would not come within the ambit of Section 269T and the said contention was not acceptable as per his contention. As Section 269T requires the entities specified therein not to make repayment of loan/deposit together with interest, if any, otherwise than by, an account payee cheque/bank draft if the amount of loan/deposit with interest, if any, exceeds the limits prescribed therein. Therefore, the contention of the assessee that there is no violation of the loan has been 9 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. repaid by debiting the account through journal entries was not considered as tenable. Ld. AO placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Triumph International Finance (I) Ltd ITA No.5746/2010 (Bom), wherein the Hon'ble High Court held that where the loan/deposit has been repaid by debiting the account through journal entries, it must be held that the assessee has contravened the provisions of Section 269T of the Income Tax Act, 1961. Further, the assessee has not cited any reasonable cause for violation of the provisions of section 269T of the Act. In view of these facts, it is a case where the assessee, without any reasonable cause, has contravened the provisions of section 269T of the Act. Therefore, ld. AO hold that the assessee has violated the provisions of section 269T of the Act, which puts an embargo on re-payment of loans except by the modes specified therein and, therefore, penalty u/s 271E is clearly exigible in this case. Consequently, he ordered to levy penalty of Rs. 9,36,57,733/- i.e., equal to the amount of repayment of loan other than account payee cheque, is imposed on the assessee in terms of section 271E of the Act. 10 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. 6. Aggrieved from the said order passed by the Addl./Jt. CIT levying penalty the assessee preferred an appeal before the ld. CIT(A). Apropos to the grounds so raised the relevant finding of the ld. CIT(A) is reiterated here in below: 4.2 I have considered the facts of the case and written submissions of the appellant as against the observations/findings of the AO in the penalty order for the year under consideration. The contentions/submissions of the appellant are being discussed and decided as under:- The brief facts of the case on the issue as per the penalty order are that the assessment in the case of M/s Kiran Fine Jewellers Pvt. Ltd. for the A.Y. 2013-14 was completed u/s 143 (153A of the IT Act, 1961 on 30.12.2019. During the assessment proceedings it was found that the assessee company has received unsecured loan of Rs. 11,75,72,781/- from related party M/s Mohit Jewellers and made re-payment of Rs. 57,00,000/- during the year under consideration. It is further noted by the Id. Addl. Commissioner in the penalty order that the Assessing Officer, i.e., ACIT, Central Circle-2, Jaipur referred the matter to him vide his office letter No. 3333 dated 20.01.2020 for initiation of penalty proceedings under section 271E of the Act. And that a notice under section 274 r.w.s. 271E of the IT Act, 1961 was issued on 24.02.2022 fixing the case for hearing on 07.03.2022 The appellant contended before the Id. Addl. Commissioner that the penalty proceedings are barred by limitation as the same have not been passed within after expiry of financial year in which the quantum proceedings were completed. In this regard it is noted in the penalty order that the penalty proceedings u/s 271E were initiated by the Id. Addl. Commissioner only on 24.02.2022 by issuance of show-cause notice. The penalty proceedings were being concluded within six months from the date of the show cause notice by the Addl. Commissioner and, therefore, the plea taken with regard to limitation was rejected. The penalty order has been passed on 30.08.2022. In the appeal the appellant has again taken this ground that the penalty order is barred by limitation as the penalty order has been passed after a delay of 30 months in imposing of the penalty after making a reference by the leamed AO. The appellant has relied upon and quoted several judgements in this regard. In the case of Jagdish Chandra Suwalka v. Joint Commissioner of Income-tax [2023] 154 taxmann.com 504 (Jaipur - Trib.) it is held as under:- 11 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. \"Thus, a penalty u/s 271D could not be imposed after the expiry of the larger period of limitation. In this case, we find that the Id. JCIT in the impugned penalty order has clearly observed that the assessment for A.Y 2015-16 was completed by the AO (ACIT Tonk) vide assessment order dated 28-12-2017 u/s 147/143(3) of the Act. The Id. JCIT also referred to the observation made by the AO that the assessee had received cash payment of Rs. 47,50,000/- from various persons as per details given, which are in contravention of Sec.269SS of the IT Act. Thus, the relevant proceedings were the assessment proceedings during the course of which, the default of accepting cash over the prescribed limit was noted by the AO and since the assessment proceedings were completed on 28-12-2017, the related financial year ended on 31-3-2018. Accordingly, the first time limit thus expired on 31-3-2018. For the second time limit, an action for imposition of penalty was taken on 28-12-2017 by the AO, when the assessment was completed and six months from end of that month expired on 30-6-2018 which time limit clearly expires later. Hence, the penalty u/s 271D could have been validly imposed only on before 30-6- 2018 as against which, in this case, the impugned penalty was imposed much later on 28-5-2019 hence, the same is clearly barred by limitation. The Id. D/R however, contended that for this period of 6 months has to be reckoned from the date of issue of show cause notice by the Id. JCIT, who was the competent Authority to impose a penalty u/s 271D and since he issued the notice on dated 6-11-2018 and imposed the penalty on 28-5-2019 itself, which was well within the period of 6 month from the month in which 28-5-2018 action for imposition of penalty was taken. The Id. A/R however, strongly contended that for this purpose the observation made by the AO in the assessment order has to be considered and the date of the assessment order being 28-12-2017 was relevant and therefore, the period of 6 months has to be reckoned from that date. Consequently, the limitation from that date the limitation had already expired. 7.2 After careful consideration, I find that the issue involved in the present case is fully covered by the decision of Hon'ble Jurisdictional High Court in the case of Hissaria Bros. (supra). The same has been affirmed by the Hon'ble Apex Court in the case of Hissaria Brothers [2016] 74 taxmann.com 22/243 Taxman 174/386 ITR 719 holding as under. \"Penalty under ss. 271D and 271E-Limitation under s. 275-Computation-Penalty orders under ss. 271D and 271E passed beyond six months from the end of the month in which the assessments were completed were barred by limitation-CIT v. Hissaria Bros. (2007) 211 CTR (Raj) 156 affirmed.\" Similar view was taken again by the Hon'ble Rajasthan High Court in the CIT v. Jitendra Singh Rathore [2013] 31 taxmann.com 52/352 ITR 327 wherein it was held under: \"Penalty under s. 271D-Limitation under s. 275-Applicability of d (a) or cl. (c) of s. 275(1)- Show-cause notice was served on the assessee by AO on 27th March, 2003-Thereafter, the matter was referred to the Jt. CIT on 22nd March, 2004-Penalty levied by Jt. CIT by order dt. 28th May, 2004 was clearly barred by limitation-Sec. 275(1)(c) was applicable to 12 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. the case Even when the authority competent to impose penalty under s. 271D was the Jt. CIT, the period of limitation for the purpose of such penalty proceedings was not to be reckoned from the issue of show cause by the Jt. CIT, but the period of limitation was to be reckoned from the date of issue of first show cause for initiation of such penalty proceedings\". Since there is no dispute on the facts stated above, hence respectfully applying the binding judicial precedents, I hold that the penalty imposed u/s 271D, under challenge, is barred by limitation u/s 275(1)(c) of the Act. Hence, the same is hereby quashed. The additional ground of appeal taken by the assessee is therefore, allowed. 8. Since I have already quashed the penalty on the short ground of limitation, we do not propose to adjudicate the other grounds on merits.\" In the case of Ram Kishan Verma v. Additional Commissioner of Income-tax [2023] 157 taxmann.com 7 (Jaipur-Trib.)[03-07-2019) it is held as under:- \"In the case in hand, the AO has not satisfied himself during the assessment proceedings or any other proceedings under the IT Act but this satisfaction of the AO as revealed from the reference letter is based on the information and document received from the Investigation Wing, Jaipur. Therefore, even if the said correspondence is considered as part of the proceedings of investigation carried out by the Jaipur Investigation Wing in case of Shri DP Sehgal, the limitation will reckon when the said investigation proceedings were completed and thereafter the information was sent by the Investigation Wing to the AO of the assessee. The Hon'ble Jurisdictional High Court in case of M.A. Press tressed Works (supra), has considered the aspect of initiation of penalty proceedings as under :- ……………… ………………. The Hon'ble High Court has observed that the words in which the proceedings in course of which the action for imposition of penalty has been initiated, are completed\" used in section 275 indicate the proceedings in which the Income-tax Authorities satisfied about the default which attracts the penalty and not with respect to any other proceedings in which the order, like cancellation of registration has been passed. In the case in hand, the taxing authority has exhibited his satisfaction about the default of section 269SS in the investigation proceedings carried out by the Investigation Wing in case of Shri DP Sehgal and finally the said satisfaction was communicated to the AO of the assessee vide letter dated 23rd October, 2015. Hence what is relevant is the said letter dated 23rd October, 2015 whereby it was communicated to the AO and based on the said information and material, the AO further made a reference to the Additional CIT for levy of penalty. Thus the limitation for passing the order for levy of penalty under section 271D would reckon from the end of the October, 2015 and shall expire on 30th April, 2016 being the period of 6 months from the end of the said month of October, 2015. The penalty order passed under section 271D in the case of assessee is dated 11-10-2017 which is barred by limitation and, therefore, the same is liable to be quashed. We make it clear that the subsequent search and seizure action under section 132 of the IT Act conducted in the case of assessee on 7th September, 2017 would not extend the period of limitation when the penalty proceedings were already initiated by issuing show cause notice dated 1-9- 13 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. 2017 which is based on the satisfaction vide letter dated 23rd October, 2015. It is not understandable as to why the AO has not initiated the proceedings under section 271D after receiving the said information and documents vide letter dated 23rd October, 2015 till he has made the reference on 9-8-2017. Accordingly, we hold that the impugned penalty order passed under section 271D dated 11-10-2017 is illegal being barred by limitation.\" It is held by the Hon'ble Rajasthan High Court in the case of Principal Commissioner of Income-tax v. GovindkripaBuildmart (P.) Ltd. [2018] 99 taxmann.com 441 (Rajasthan)/[2017] 397 ITR 650 (Rajasthan) [19-10 2016] as under:- \"8. Taking into consideration that under section 275(1)(c) of the Act, it is no doubt that the Commissioner is the competent authority and other contention that the notice was within limitation, in our view is misconceived inasmuch as the Assessing Officer on December 30,2009 issued notice to the assessee and he was clear that no penalty proceedings required to be initiated. We ought to have held that the Department has taken advantage of any wrong. 9. We are of the opinion that the issues are squarely covered therefore. In both the appeals we answer the questions raised in favour of the assessee and against the Department.\" It is held by the Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax-5 v. JKD Capital &Finlease Ltd. [2017] 81 taxmann.com 80 (Delhi)/[2015] 378 ITR 614 (Delhi) (13-10-2015] as under:- \"10. Considering that the subject matter of the quantum proceedings was the non- compliance with Section 269 T of the Act, there was no need for the appeal against the said order in the quantum proceedings to be disposed of before the penalty proceedings could be initiated. In other words, the initiation of penalty proceedings did not hinge on the completion of the appellate quantum proceedings. This position has been made explicit in the decision in Worldwide Township Projects Ltd. (supra) in which the Court concurred with the view expressed in CIT v. Hissaria Bros. [2007] 291 ITR 244/[2008] 169 Taxman 262 (Raj.) in the following terms: \"The expression other relevant thing used in s. 275(1)(a) and cl. (b) of Sub-s. (1) of S. 275 is significantly missing from cl. (c) of s. 275(1) to make out this distinction very clear. We are, therefore, of the opinion that since penalty proceedings for default in not having transactions through the bank as required under ss. 269SS and 269T are not related to the assessment proceeding but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under ss. 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, cl. (a) of sub-s. (1) of s. 275 cannot be attracted to such proceedings. If that were not so cl. (c) of s. 275(1) would be redundant because otherwise as a matter of fact every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default e.g. penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through 14 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if cl. (a) was to be invoked, no necessity of cl. (c) would arise.\" (emphasis supplied) 11. In fact, when the AO recommended the initiation of penalty proceedings the AO appeared to be conscious of the fact that he did not have the power to issue notice as far as the penalty proceedings under Section 271-E was concerned. He, therefore, referred the matter concerning penalty proceedings under Section 271-E to the Additional CIT. For some reason, the Additional CIT did not issue a show cause notice to the Assessee under Section 271-E (1) till 20th March 2012. There is no explanation whatsoever for the delay of nearly five years after the assessment order in the Additional CIT Issuing notice under Section 271-E of the Act. The Additional CIT ought to have been conscious of the limitation under Section 275 (1) (c), i.e., that no order of penalty could have been passed under Section 271-E after the expiry of the financial year in which the quantum proceedings were completed or beyond six months after the month in which they were initiated, whichever was later. In a case where the proceedings stood initiated. with the order passed by the AO, by delaying the issuance of the notice under Section 271- E beyond 30th June 2008, the Additional CIT defeated the very object of Section 275 (1) (c).” It is held by the Hon'ble Delhi High Court in the case of Principal Commissioner of Income-tax (Central)-2 v. Mahesh Wood Products (P.) Ltd. [2017] 82 taxmann.com 39 (Delhi)/[2017] 394 ITR 312 (Delhi) (05-05-2017] as under.- \"9. However, this question came up for consideration in JKD Capital &Finlease Ltd. (supra). The date on which the AO recommended the initiation of penalty proceedings was taken to be the relevant date as far as Section 275(1)(c) was concerned. There was no explanation for the delay of nearly five years in the ACIT acting on the said recommendation. The Court held that the starting point would be the 'initiation of penalty proceedings. Given the scheme of Section 275(1)(c) it would be the date on which the AO wrote a letter to the ACIT recommending the issuance of the SCN. While it is true that the ACIT had the discretion whether or not to issue the SCN, If he did decide to issue a SCN, the limitation would begin to run from the date of letter of the AO recommending 'initiation' of the penalty proceedings. 10. In the present case, the limitation in terms of Section 275 (1) (ii) of the Act began to run on 23rd July, 2012 and the last date for passing the penalty orders was 31st January, 2013. Therefore, the penalty orders issued on 26th February 2013 were clearly barred by limitation.\" In view of the ratio of the above judgements, the relevant date for determining the limitation period is the date when the reference was made by the Id. AO to the Id. Joint Commissioner / Addl. Commissioner and not the date when the show cause notice was issued by the Id. Addl. Commissioner. In the present case the reference was made by the Id. AO to the Id. Addl. Commissioner on the date of 20.01.2020. Accordingly considering the time period provided under section 275 of the Act, the penalty order should have been passed on or before 31.07. 2020. However the order has been passed on 30.08.2022 15 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. In view of the above, the penalty order is found to have been passed beyond the date of limitation and thus the same cannot be sustained and due to this position the penalty levied is directed to be deleted. Accordingly, ground no. 1 of the appeal is allowed. Further, with respect to the ground no. 2 of the appeal, since the penalty has been directed to be deleted on the technical ground that the order is passed after the date of limitation, the ground of appeal on the merits of such penalty is rendered academic and does not require detailed adjudication. Accordingly ground no. 2 of the appeal is hereby treated as disposed off 5. Ground of Appeal No. 3 is as under:- Ground No. 3: That appellant craves permission to add to or amend to any of grounds of appeal or to withdraw any of them. 5.1 The appellant has not added or altered any of the above mentioned grounds of appeal. Accordingly such mention by the appellant in its ground is treated as general in nature, not needing any specific adjudication and is accordingly treated as disposed off. 6. In the result, the appeal of the appellant is allowed. 7. Aggrieved with the above finding of the ld. CIT(A), revenue preferred the present appeal on the grounds as stated herein above. Ld. DR vehemently argued that the ld. Addl./Jt. CIT considered the legal as well as the technical aspect raised by the assessee and a speaking order is passed considering both the aspect of the matter and therefore, the action of the ld. CIT(A) dealing with only the technical aspect of the matter and has not dealt with the merits of the issue and therefore, the revenue preferred the present appeal. As regards the technical aspect of the matter ld. DR relied upon the 16 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. finding recorded in the order of the ld. Addl./Jt. CIT wherein he has held that the time limit be counted from the date of issue of notice and not from the date when the reference was made. Based on that argument ld. DR supported the order of the Addl./Jt. CIT. 8. Per contra, ld. AR of the assessee supported the order of the ld. CIT(A) and the decision of our Rajasthan High Court [ CIT Vs. Hissaria Bros 169 Taxman 262 (Rajasthan) ] which was followed by the ld. CIT(A) and as discussed at page 18 of the order of the ld. CIT(A). He also submitted that the revenue challenged that order before the apex court and the appeal of the revenue against that finding was dismissed by the apex court and therefore, that finding becomes final as well by the apex court [ 74 taxmann.com 22 (SC) ]. The ld. AR of the assessee vehemently argued that when the penalty levied is time barred the order rightly quashed by the ld. CIT(A). As regards the merits of the case he also supported the submission made in the penalty proceeding. 9. We have heard the rival contentions and perused the material placed on record. Vide ground no. 1 revenue contend that the ld. CIT(A) has directed to delete the penalty in this case only on technical ground and not 17 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. decided the merits of the case. Vide Ground no. 2 & 3 the revenue contend as to why that technical ground decision rendered is incorrect. Ground no. 4 is general. Having gone through the grievance of the revenue we would like to take up ground no. 2 & 3 first. The brief facts related to the dispute are that in this case for the A.Y. 2013-14 assessment was completed u/s 143 r.w.s. 153A of the Act on 30.12.2019. During the assessment proceedings it was found that the assessee company has received unsecured loan of Rs. 11,75,72,781/- from related party M/s Mohit Jewellers and made re- payment of Rs. 57,00,000/- during the year under consideration. Record reveals from the copy of loan confirmation filed of M/s Mohit Jewellers it reveals that there was opening un-secured loan of Rs. 11,04,37,506/- and the assessee further took loans amounting to Rs. 71,35,275/- on different dates during the year and made re-payment of Rs. 71,35,275/- from 8 January, 2013 to 21 January 2013 by cheques. In the confirmation account of M/s Mohit Jewellers it is found that re-payment of loan has been shown by way of sale amounting to Rs. 9,36,57,733/- on 31st March 2013 against un-secured loan. Hence, it is evident that the assessee has repaid loan amounting to Rs. 9,36,57,773/- by other than account payee cheques which is contravention to the provisions of section 269T of the Act. Therefore, ld. 18 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. AO i.e., ACIT, Central Circle-2, Jaipur referred the matter to Addl. CIT, Central Range, Jaipur vide letter No. 3333 dated 20.01.2020 recommending for initiation of penalty proceedings under section 271E of the Act. Accordingly, a notice under section 274 r.w.s. 271E of the Act was issued on 24.02.2022 fixing the case for hearing on 27.03.2022. The assessee filed on-line reply on 28.06.2022 where in it was contended that the assessee company had taken loan of Rs. 11,75,72,781/- from M/s Mohit Jewellers and during the year, the assessee also made sale of gold bar to M/s Mohit Jewellers and at the end of the financial year on 31.3.2013, the assessee debited the loan account of M/s Mohit Jewellers by passing transfer/journal entry of Rs 9,36,57,733/- for the outstanding amount due from M/s Mohit Jewellers. It has further been stated that repayment of loan through journal entry would not be tantamount to contravention of provisions of Section 269T of the Act. In support of this contention, the assessee has relied upon various case-laws(1) CIT Vs. Noida Toll Bridge Col. Ltd 262 ITR 260 (Del), (2) CIT Vs. Sunil Kumar Goel (2009) 315 ITR (P&H), M/s Lodha Builders P Ltd Vs. ACIT (2014) ITR 34 ITR 157 (ITAT, Bombay). The assessee alternatively also stated that the penalty proceedings are barred by limitation as the same have not been passed after expiry of financial year in which the quantum proceedings were 19 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. completed. The assessee has also cited certain case-laws to support this contention. The ld. Addl./Jt. CIT having considered the submissions, records and the contentions raised he contended in his order that the Assessing Officer had only sent a proposal/reference for initiating proceedings u/s 271E in this case to the Additional Commissioner. The Assessing Officer is not empowered to initiate the penalty proceedings u/s 271E. In fact, the penalty proceedings u/s 271E were initiated by him only on 24/02/2022 by issuance of show-cause notice. Thus, the penalty proceedings were concluded within six months from the Initiation of proceedings and, therefore, the plea taken regarding limitation was not tenable. As regards the merits of the contention he stated that the assessee had only debited the loan account of M/s Mohit Jewellers by passing journal entry of Rs.9,36,57,733/ for the outstanding amount due from the said concern on account of sales, it is to be stated that such repayment is in clear contravention of the provisions of Section 269 T of the Act. Therefore, considering that provision of the section the contention of the assessee that the repayment of loan by way of adjustment through journal entries would not come within the ambit of Section 269T and the said contention was not acceptable as per his contention. As Section 269T requires the entities specified therein not to make repayment of loan/deposit together with 20 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. interest, if any, otherwise than by, an account payee cheque/bank draft if the amount of loan/deposit with interest, if any, exceeds the limits prescribed therein. Therefore, the contention of the assessee that there is no violation of the loan has been repaid by debiting the account through journal entries was not considered as tenable. For that contention he placed reliance on the decision of the Hon'ble Bombay High Court in the case of CIT Vs. Triumph International Finance (I) Ltd ITA No.5746/2010 (Bom), wherein the Hon'ble High Court held that where the loan/deposit has been repaid by debiting the account through journal entries, it must be held that the assessee has contravened the provisions of Section 269T of the Income Tax Act, 1961. Further, the assessee has not cited any reasonable cause for violation of the provisions of section 269T of the Act. In view of these facts, it is a case where the assessee, without any reasonable cause, has contravened the provisions of section 269T of the Act. Therefore, ld. AO holds that the assessee has violated the provisions of section 269T of the Act, which puts an embargo on re-payment of loans except by the modes specified therein and, therefore, penalty u/s 271E is clearly exigible and consequently, he ordered to levy penalty of Rs. 9,36,57,733/- i.e., equal to the amount of repayment of loan other than account payee cheque, is imposed on the assessee in terms of section 271E of the Act. 21 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. When the matter carried before the ld. CIT(A), considered the binding precedent of our Rajasthan High Court in the case of CIT Vs. Hissaria Bros 169 Taxman 262 (Rajasthan). The said decision has been affirmed by the Hon'ble Apex Court in the case of Hissaria Brothers [2016] 74 taxmann.com 22/243 Taxman 174/386 ITR 719 wherein our High Court held that “\"Penalty under ss. 271D and 271E-Limitation under s. 275-Computation- Penalty orders under ss. 271D and 271E passed beyond six months from the end of the month in which the assessments were completed were barred by limitation. Therefore, based on that binding precedent he held that the relevant date for determining the limitation period is the date when the reference was made by the Id. AO to the Id. Joint Commissioner / Addl. Commissioner and not the date when the show cause notice was issued by the Id. Addl. Commissioner. He thereby noted that in the present case the reference was made by the Id. AO to the Id. Addl. Commissioner on the date of 20.01.2020. Accordingly considering the period provided under section 275 of the Act, the penalty order should have been passed on or before 31.07. 2020. However, the order has been passed on 30.08.2022 and therefore, the penalty order is found to have been passed beyond the date of limitation and thus the same cannot be sustained and due to this position, he directed that the penalty levied is to be deleted. 22 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. Before us ld. DR relied upon the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v Addl.Commissioner of Income Tax, Range-1, Kozhikode' and submitted that the ld. CIT(A) has erred in directing to delete the penalty merely on the technical ground and thus as held Grihalaxmi Vision’s case (Supra) he should not only decide the technical ground in revenue’s favour but would have decided the merits also. The bench noted that the ld. DR relied on the decision in the case of Grihalaxmi Vision’s case (Supra) wherein the Hon’ble Kerala High Court held that “Question to be considered is whether proceedings for levy of penalty, are initiated with the passing of the order of assessment by the Assessing Officer or whether such proceedings have commenced with the issuance of the notice issued by the Joint Commissioner. From statutory provision, it is clear that the competent authority to levy penalty being the Joint Commissioner. Therefore, only the Joint Commissioner can initiate proceedings for levy of penalty. Such initiation of proceedings could not have been done by the Assessing Officer. The statement in the assessment order that the proceedings under Section 271D and E are initiated is inconsequential. On the other hand, if the assessment order is taken as the initiation of penalty proceedings, such initiation is by an authority who is incompetent and the proceedings thereafter would be proceedings without jurisdiction. If that be so, the initiation of the penalty proceedings is only with the issuance of the notice issued by the Joint Commissioner to the assessee to which he has filed his reply.” Whereas in the case of the Commissioner of Income Tax Vs. Hissaria Bros [169 Taxman 262 (Rajasthan) ] has decided this issue thread bear and confirmed that the initiation of penalty has linked with the assessment proceeding and thereby the detailed finding of our Hon’ble High Court reads as under : 23 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. 12. In the facts and circumstances noticed above, the Tribunal has held the penalty orders to be barred by time in terms of section 275(1)(c). 13. The revenue contends that the provisions of section 275(1)(a) are attracted so far as limitation in the present case is concerned and if section 275(1)(a) is applicable, the limitation for completing the penalty proceedings is extended up to six months from the date of expiry of the month in which the order has been passed in appeal or other proceedings arising out of the assessment in the course of which penalty proceedings have been initiated and the order imposing penalties under sections 271D and 271E had been passed within such extended period from the date of the appellate decision against the assessment order for the assessment year during which notice under sections 271D and 271E was issued. 14. It would be apposite here to refer to section 275 in its fullness : \"275. Bar of limitation for imposing penalties.—(1) No order imposing a penalty under this Chapter shall be passed— (a) 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 an appeal to the 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 completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later; (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. (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. 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 24 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. of penalty is stayed by an order or injunction of any Court.\" 15. It would not be out of place to consider the relevant legislative history of the provision in question for the present purposes. 16. Under the Income-tax Act, 1961, as originally enacted, no limitation was prescribed for completion of the penalty proceedings. However, considering that there should not be any inordinate delay in imposing penalty and to streamline the levy of penalty within reasonable time in the Act of 1961, section 275 was enacted as a new provision for regularising imposition of penalty. It is pertinent to notice that if at the relevant time when the scheme for levy of penalty was enacted in the 1961 Act, the case in which the penalty was envisaged under Chapter XXI, the penalty proceedings were required to be initiated during the course of relevant assessment proceedings or its appellate proceedings by the appellate authority. Attention may be invited to the provisions contained in sections 271 and 273 which were the principal provisions for imposing penalty. The simple provision which was enacted was that no order in this chapter shall be passed after the expiration of two years from the completion of proceedings, in the course of which the proceedings for imposition of penalty have been commenced. Thus, the limitation for imposing penalty under section 275 as originally enacted was directly linked with the completion of proceedings in the course of which the penalty proceedings were initiated in terms of section 271 or section 273 which were the principal provisions for imposing penalty under Chapter XXI. Since the initiation of penalty proceedings was linked with assessment proceedings and the orders in such assessments were subject to appeal, the findings in such proceedings ordinarily became the foundation for initiating proceedings for penalty and remained relevant evidence to reach a final conclusion in penalty proceedings which were otherwise independent. Where assessment proceedings in the course of which penalty proceedings were initiated became the subject-matter of appeal and there was modification or reversal of findings, it affected final result of penalty proceedings also. 17. Section 275 was substituted by the Taxation Laws (Amendment) Act, 1970, which came into effect from 1-4-1971. The change was explained by the Board vide Circular No. 56, dated 19-3-1971. Significantly, it postulated that section 275 of the Income-tax Act which specified the time-limit for completion of penalty proceedings has been substituted by a new section. Under the existing section, penalty proceedings for concealment of income or defaults in furnishing the return or accounts called for by notice or failure to pay advance tax on the taxpayer's own estimate, etc., are required to be completed within two years from the date of completion of the proceedings in the course of which the penalty proceedings were commenced. The operation of this time-limit has resulted in practical difficulties in cases where the AAC remands the appeal against the assessment for further enquiry by the ITO or deletes or reduces the addition made on account of concealed income and the Department takes up the matter in further appeal before the Tribunal. Sometimes, a final decision on the quantum of the concealed income becomes available only after the expiry of the two years time- limit. 18. Section 275 as substituted aims at obviating difficulties in such cases, reducing avoidable work and avoiding hardship to the assessees. It provides that the time- 25 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. limit for making an order imposing a penalty under the provisions of Chapter XXI of the Income-tax Act will, ordinarily, be two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed. However, in a case where the relevant assessment or other order is the subject-matter of an appeal to the AAC or an appeal by the ITO to the Tribunal, the time-limit for completing the penalty proceedings will be either the two years' period as stated above or a period of six months from the end of the month in which the order of the AAC or, as the case may be, of the Tribunal is received by the CIT, whichever period expires later. It may be noted that the two years period will henceforth expire at the end of a financial year, instead of on different dates during the financial year, and the six months period will expire at the end of a calendar month. This facilitates the exercise of vigilance by the tax administration on the expiry of the limitation period and ensures that penalty proceedings are completed in all cases in time. 19. Secondly, the Direct Tax Laws (Amendment) Act, 1987, which came into effect from 1-4-1989, section 275 was amended. Vide amendment, the time-limit for completion of penalty proceedings which was generally two years from the end of financial year in which such proceedings were completed or six months from the end of the month in which action for imposition for penalty was initiated, whichever period expires later. 20. By these amendments, the three categories were made for applying limitation for completing the penalty proceedings taking into consideration the various penalty proceedings for default of certain provisions of the Income-tax Act which are not necessarily linked with proceedings for any particular assessment year in the course of which only penalty proceedings were required to be initiated. Such consequences of default were not linked with the principal assessment proceedings for any specific assessment year but were independent of it. 21. By substituting section 275(1), which became operative from 1-4-1989, the provision of divided cases for the purpose of prescribing limitation for completing penalty proceedings into three categories : (i) Category I covers cases where the assessment to which the proceedings for imposition of penalty relate is the subject-matter of an appeal to the Dy. CIT(A) or the CIT(A) under section 246 or with effect from 1-6-2000, section 246A or an appeal to the Tribunal under section 253; (ii) Category II covers cases where the relevant assessment is the subject-matter of revision under section 263; and (iii) Category III covers all other cases not falling within category I and category II which is governed by clause (c). By dividing into three categories the period of limitation for cases falling under category (i), i.e., clause (1)(a) is 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 the order of the Dy. 26 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. CIT(A) or the CIT(A) or, as the case may be, the Tribunal is received by the Chief CIT or CIT, whichever period expires later. 22. The period of limitation for the cases falling under category II is six months from the end of the month in which such order on revision is passed and the period of limitation for the cases falling under the above category III is 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. In the last category, filing of appeal in respect of order passed in proceedings during which penalty proceedings were initiated is not relevant. To this effect, a Circular No. 551, dated 23-1-1990 [(1990) 82 CTR (St.) 325] and another Circular No. 554, dated 13-2-1990 [(1990) 82 CTR (St.) 280] were issued by the CBDT. 23. A close scrutiny of section 275 which is reproduced hereinabove shows that clause (1)(a) covers those cases where the penalty proceedings are in respect of a default related to principal assessment for a particular assessment year and the penalty proceedings are required to be initiated in the course of that proceedings only. In such cases where the relevant assessment order or other orders are the subject-matter of an appeal to the CIT(A) under section 246 or an appeal to the 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 completed, or six months from the end of the month in which the order of CIT(A) or, as the case may be, of the Tribunal is received by the Chief CIT or CIT, whichever period expires later. Apparently, clause (a) governs the categories which are integrally related to the assessment proceedings and are not independent of it. 24. We have also noticed that this provision was brought into effect in 1970 with effect from 1-4-1971, so that proceedings may not require rectification or modification depending on the outcome of the appeal against the orders passed in the relevant assessment proceedings or the other proceedings in the course of which the penalty proceedings are required to be initiated. 25. We have also noticed that sections 271 and 273 were the two original penalty provisions, which require the penalty proceedings to be initiated during the course of relevant assessment proceedings or the other relevant proceedings, as the case may be. The penalty proceedings could also be initiated during the appellate proceedings arising out of the relevant assessment proceedings. It is only where the assessment proceedings are independent and not directly linked to the assessment proceedings that the result of such proceedings in the course of which the penalty proceedings were initiated does not affect the levy of penalty. On such penalty proceedings, independent of the assessment proceedings, clause (c) has been made applicable. In this category, the period of limitation for completing the penalty proceedings is linked with the initiation of the penalty proceedings itself. In such cases, the penalty proceedings can be initiated independent of any proceedings but obviously, the penalty proceedings can be initiated only when the default is brought to the notice of the concerned authority which may be during the course of any proceedings and, therefore, for this type of cases where the penalty 27 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. proceedings have been initiated in connection with the defaults for which no statutory mandate is there about any particular proceedings during the course of which only such penalty proceedings can be initiated, a different period of limitation has been prescribed under clause (c) as a separate category. In cases falling under clause (c), penalty proceedings are to be completed within six months from the end of the month in which the proceedings during which the action for imposition of penalty is 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. There is no provision under clause (c) for the extended period of limitation commensurating with completion of the appellate proceedings, if any, arising from the proceedings during the course of which such penalty proceedings are initiated as in the case where the penalty proceedings are linked with the assessment proceedings or the other relevant proceedings. 26. The expression 'other relevant thing' used in section 275(1)(a) and clause (b) of sub-section (1) of section 275 is significantly missing from clause (c) of section 275(1) to make out this distinction very clear. 27. We are, therefore, of the opinion that since penalty proceedings for default in not having transactions through the bank as required under sections 269SS and 269T are not related to the assessment proceedings but are independent of it, therefore, the completion of appellate proceedings arising out of the assessment proceedings or the other proceedings during which the penalty proceedings under sections 271D and 271E may have been initiated has no relevance for sustaining or not sustaining the penalty proceedings and, therefore, clause (a) of sub-section (1) of section 275 cannot be attracted to such proceedings. If that were not so, clause (c) of section 275(1) would be redundant because otherwise, as a matter of fact every penalty proceeding is usually initiated when during some proceedings such default is noticed, though the final fact finding in this proceeding may not have any bearing on the issues relating to establishing default, e.g., penalty for not deducting tax at source while making payment to employees, or contractor, or for that matter not making payment through cheque or demand draft where it is so required to be made. Either of the contingencies does not affect the computation of taxable income and levy of correct tax on chargeable income; if clause (a) was to be invoked, no necessity of clause (c) would arise. 28. Thus, both on the ground that the transaction in question of retention of sale price by the Kachcha Arhatiya did not amount to deposit and its utilisation and dealing with it at the instance of farmer constituents did not amount to repayment of loan or deposits within the meaning of section 269SS or section 269T, and on the ground that limitation under section 275(1)(c) applies to such proceedings, we hold in favour of the respondent. 29. Accordingly, these appeals fail and are hereby dismissed. No order as to costs. 28 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. Since, we have binding precedent over the other High Court decision cited by the revenue and we are also of the considered view that our High Court view is further confirmed by the apex court and even the revenue has accepted this fact has changed the provision in the Act w.e.f. 01.04.2025 wherein the power to levy this penalty has been given to the assessing officer, the relevant amended provision reads as under: Penalty for failure to comply with the provisions of section 269SS. 271D. (1) If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner: 14-18[Providedthat any penalty under sub-section (1), on or after the 1st day of April, 2025, shall be imposed by the Assessing Officer.] Thus, the reading of the amended provision of the law and the view of our High Court in the case of Hissaria Bros supra we are of the considered view that there is no infirmity in the finding of the ld. CIT(A) and thereby ground no. 2 & 3 raised by the revenue stands dismissed. Since we have confirmed the view of the ld. CIT(A) on technical grounds we are of the considered view that the ld. CIT(A) has rightly not decided the merits of the dispute as the proceeding were barred by limitation and therefore, ground no. 1 raised by the revenue stands dismissed. 29 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. Ground no. 4 being general does not require any finding. In terms of these observations, the appeal of the revenue in ITA no. 268/JP/2025 stands dismissed. 10. The facts of the case in ITA Nos. 270, 271 & 274/JP/2025 are similar to the case in ITA No. 268/JP/2025 and we have heard both the parties and perused the materials placed on record. The bench has noticed that the issues raised by the revenue in this appeal Nos. ITA Nos. 270, 271 & 274/JP/2025 are equally similar on set of facts and grounds as that of with 268/JP/2025. Therefore, it is not imperative to repeat the facts and various grounds raised by the revenue and the decision taken by us in ITA No. 268/JP/2025 for Assessment Year 2013-14 shall apply mutatis mutandis in the case of M/s Kiran Fine Jewellers Pvt. Ltd. in ITA Nos. 270, 271 & 274/JP/2025 for the Assessment Years 2014-15 & 2017-18. In the result, all the appeals of the revenue are dismissed. Order pronounced in the open court on 26/06/2025. 30 ITA Nos. 268, 270, 271 & 274-JP-2025 /JP/2024 DCIT vs. Kiran Fine Jewellers Pvt Ltd. Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkbZ ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judicial Member ys[kk lnL;@Accountant Member Tk;iqj@Jaipur fnukad@Dated:- 26/06/2025 *Ganesh Kumar, Sr. PS vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Dy. Commissioner of Income Tax, Central Circle-02, Jaipur 2. izR;FkhZ@ The Respondent- M/s Kiran Fine Jewellers Pvt. Ltd., Jaipur 3. vk;dj vk;qDr@ The ld CIT 4. vk;dj vk;qDr¼vihy½@The ld CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 6. xkMZ QkbZy@ Guard File (ITA Nos. 268, 270, 271 & 274/JP/2025) vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar "