Assistant Commissioner of Income-tax, V. Shri Danawade Kutubuddin Shahabuddin,

ITA 1238/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7171 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 09-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Period of limitation; Question of law; Initiation of penalty proceedings; Competent authority
• Section: 143(3); 153A; 131; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A , PUNE , , BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO. 1 2 38 /P U N/201 5 / ASSESSMENT YEAR : 20 05 - 06 THE ASST. COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KOLHAPUR . / APPELLANT VS. SHRI DANAWADE KUTUBUDDIN SHAHABUDDIN, PLOT NO.545, 17 TH LANE, NEW MARATHA BANK, JAYSIN GPUR . / RESPONDENT PAN: A IRPD4710D / APPELLANT BY : S HRI ACHAL SHARMA, JCIT / RESPONDENT BY : SHRI M.K. KULKARNI / DATE OF HEARING : 01 . 11 . 2017 / DATE OF PRONOUNCEMENT: 24 . 11 .201 7 / ORDER PER SUSHMA CHOWLA, J M : TH E APPEAL FILED BY THE REVENUE IS AGAINST THE ORDER OF CIT (A) - 1 &2 , KOLHAPUR , DATED 12 .0 6 .2015 RELATING TO ASSESSMENT YEAR 20 05 - 06 AGAINST DELETION OF PENALTY LEVIED UNDER SECTION 271E OF THE INCOME - TAX ACT , 1961 (IN SHORT THE ACT) . 2 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : - 1 ) ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY U/S 271E OF THE INCOM E TAX ACT, 1961 LEVIED BY THE AO BY IGNORING THE FACTS OF THE CASE THAT ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 2 THE ENTRIES IN THE INVENTORY SEIZED DURING THE COURSE OF SEARCH AND SEIZED PROCEEDINGS DID NOT PERTAIN TO CURRENT ACCOUNT HELD BY THE ASSESSEE BUT THAT OF REPAID IN CASH WHICH IS A VIO LATION OF SECTION 269T AND LIABLE FOR PENALTY U/S. 271E. 2) ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) WAS NOT JUSTIFIED IN DELETING THE PENALTY U/S 271E OF THE INCOME TAX ACT, 1961 BY ACCEPTING THE CONTENTION OF THE ASSESSE E THAT THE TRANSACTION IN QUESTION DID NOT BELONG TO HIM, IGNORING THE STATEMENT OF EMPLOYEE OF AMAN CHOTE VYAPARI SAHAKARI PATSANSTHA SHRI ALLABAKSH M. HUSSAIN RECORDED U/S 131 OF THE INCOME TAX ACT, 1961 WHEREIN HE HAD ACCEPTED THAT HE HAD HIMSELF MADE E NTRIES REGARDING THE LOAN AND THE INTEREST THEREOF AND THE SAID ENTRIES BELONGED THE ASSESSEE. 3) THE ORDER OF THE LD. CIT(A) MAY BE VACATED AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. THE REVENUE IS IN APPEAL AGAINST THE ORDER OF CIT(A) IN DELETIN G THE PENALTY LEVIED UNDER SECTION 271E OF THE ACT. 4. THE LEARNED AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE AT THE OUTSET POINTED OUT THAT THE ISSUE RAISED IN THE PRESENT APPEAL IS COVERED BY THE ORDER OF TRIBUNAL IN SHRI DEVIDAS RAMCHANDRA KULKARNI VS. JCIT IN ITA NO.444/PN/2013, RELATING TO ASSESSMENT YEAR 2009 - 10, ORDER DATED 29.07.2016 AND ALSO BY THE CIRCULAR NO.09/DV/2016, DATED 26.04.2016 PASSED BY THE CBDT. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, FILED WRITT EN SUBMISSIONS AND POINTED OUT THAT THE ISSUE STANDS COVERED AGAINST THE ASSESSEE BY EARLIER ORDER OF PUNE BENCH OF TRIBUNAL AND PLACED RELIANCE ON DIFFERENT DECISIONS WHICH WE SHALL REFER TO WHILE DECIDING THE ISSUE. HE ALSO POINTED OUT THAT THE CBDTS C IRCULAR WHICH WAS ISSUED ON 26.04.2016 IS ONLY ADVISORY IN NATURE AND SUCH ADVISORY COULD NOT BE INTERPRETED TO MEAN THAT IF THE ASSESSING OFFICER DOES NOT MAKE REFERENCE TO THE DCIT WITH REGARD TO VIOLATION OF PROVISIONS OF SECTION 269SS AND 269T OF THE A CT, BEFORE THE CLOSE OF ASSESSMENT PROCEEDINGS, THEN THE ASSESSING OFFICER CANNOT PASS ON ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 3 THE INFORMATION REGARDING THE SAID VIOLATIONS TO THE JCIT / ADDL.CIT AND HE LOSES HIS POWER TO INITIATE PENALTY PROCEEDINGS. SINCE THE POWER TO INITIATE PENALTY UNDE R SECTION 271D AND 271E OF THE ACT HAS BEEN GIVEN UNDER THE STATUTE, THE SAME IS NOT DEPENDENT ON THE ASSESSMENT PROCEEDINGS. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE JURISDICTIONAL ISSUE WHICH ARISES IN THE PRESENT APPEAL IS AG AINST THE ORDER PASSED UNDER SECTION 271E OF THE ACT BY THE ADDL.CIT. BRIEFLY, IN THE FACTS OF THE CASE, SEARCH AND SEIZURE ACTION UNDER SECTION 132 OF THE ACT WAS CONDUCTED ON 18.05.2005 IN THE BAGWAN GROUP OF CASES AND ALSO UPON THE ASSESSEE. THE ASSES SMENT WAS COMPLETED UNDER SECTION 153A R.W.S. 143(3) OF THE ACT ON 30.11.2007. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD TAKEN CASH LOAN OF RS.23,28,690/ - FROM AMAN CHOTE VYAPARI SAHAKARI PAT SANSTHA, I CHALKARANJI DURING THE YEAR AND HAD REPAID RS.23,03,690/ - IN CASH. THIS FACT WAS CONFIRMED BY THE EMPLOYEE OF PAT SANSTHA IN THE STATEMENT RECORDED UNDER SECTION 131 OF THE ACT ON 06.08.2007. THE ASSESSEE THUS, WAS FOUND TO HAVE VIOLATED THE PROVISIONS O F SECTION 271D AND 271E OF THE ACT AND PENALTY PROCEEDINGS UNDER SECTION 271D AND 271E OF THE ACT WERE INITIATED. THE ADDL.CIT ISSUED SHOW CAUSE NOTICE TO THE ASSESSEE ON 11.03.2010 AND IN REPLY, THE ASSESSEE POINTED OUT THAT THERE WAS INORDINATE DELAY IN INITIATION OF PENALTY PROCEEDINGS. THE ADDL.CIT WAS OF THE VIEW THAT THERE WAS NO REQUIREMENT OF SEPARATE INITIATION OF PENALTY BY THE ASSESSING OFFICER WHICH HAD TO BE INITIATED BY THE JOINT / ADDL. CIT. ANOTHER POINT NOTED BY THE ADDL.CIT WAS THAT THE ASSESSMENT ORDER WAS PASSED ON 30.11.2007 AND AS PER RECORDS, IT WAS SEEN THAT THE ASSESSEE HAD PREFERRED AN APPEAL BEFORE THE CIT(A). HENCE, AS PER ADDL.CIT, WHERE THE ASSESSMENT ORDER WAS SUBJECT ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 4 MATTER OF APPEAL, THE PROVISIONS OF SECTION 275(1)(C) OF THE ACT DID NOT COME INTO CONSIDERATION, T HEREFORE, NO RELEVANCE OF THE ORDER OF PUNE BENCH OF TRIBUNAL IN THE CASE OF SHRI GAJANAN MAHADEO CHIMANKAR IN ITA NO.1702/PN/2004, DATED 27.12.2006. THE ADDL. COMMISSIONER WAS OF THE VIEW THAT THE LEGISLATURE HA D ALLOWED THE ASSESSING OFFICER TO GO BACK SIX YEARS FROM THE RELEVANT ASSESSMENT YEAR AND FURTHER, IT WAS HELD THAT THE NOTICE WAS SERVED WELL WITHIN THE TIME PERIOD AND HENCE, IT COULD NOT BE SAID THAT THERE WAS INORDINATE DELAY IN ISSUE OF NOTICE. THE ADDL. CIT HELD THE ASSESSEE TO HAVE REPAID THE LOAN OF RS.23,03,690/ - IN CASH IN THE INSTANT ASSESSMENT YEAR AND LEVIED PENALTY UNDER SECTION 269T OF THE ACT AT RS.23,03,690/ - . 7. THE CIT(A) REJECTED INITIAL ISSUE RAISED BY THE ASSESSEE THAT PENALTY PRO CEEDINGS WERE BARRED BY LIMITATION UNDER SECTION 275(1)(C) OF THE ACT. THE CIT(A) HOWEVER, DELETED ADDITION ON MERITS HOLDING THAT THE TRANSACTION WAS OF DAILY RUNNING CURRENT ACCOUNT AND NOT OF A LOAN OR DEPOSIT AND OUTSIDE THE PURVIEW OF SECTION 269SS A ND 269T OF THE ACT. CONSEQUENTLY, PENALTY LEVIED UNDER SECTION 271E OF THE ACT WAS CANCELLED. 8. THE ASSESSEE BEFORE US HAS RAISED TECHNICAL ISSUE OF NON - MAINTAINABILITY OF PENALTY PROCEEDINGS SINCE THE INFORMATION TO LEVY PENALTY WAS NOT PASSED ON BY THE ASSESSING OFFICER , WHO I S BELOW THE RANK OF ADDL. CIT BEFORE THE COMPLETION OF ASSESSMENT PROCEEDINGS AS IN THE PRESENT CASE THE PENALTY PROCEEDINGS HAD TO BE INITIATED AND COMPLETED BY THE RANGE HEAD AND NOT BY THE ASSESSING OFFICER. ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 5 9. THE LEARNED AUT HORIZED REPRESENTATIVE FOR THE ASSESSEE FILED WRITTEN SUBMISSIONS AND POINTED OUT THAT THOUGH THE ASSESSEE HAD NOT FILED ANY CROSS OBJECTIONS , BUT AS PROVIDED IN RULE 27 OF THE ITAT RULES, IN DEFENSE, HE WAS ENTITLED TO ARGUE ON QUESTION OF LAW INVOLVED IN THE MATTER. REFERENCE WAS MADE TO THE DECISION OF THE HONBLE HIGH COURT OF ALLAHABAD IN CIT AND ANOTHER VS. JINDAL POLYSTER LTD. (2017) 397 ITR 282 (ALL). 10. THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON THE OTHER HAND, PLACED RELIANCE O N WRITTEN SUBMISSIONS AND ALSO POINTED OUT THAT FOR INITIATION OF PENALTY PROCEEDINGS, THERE IS NO LIMIT PRESCRIBED. RELIANCE IN THIS REGARD WAS PLACED ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF RAJASTHAN IN CIT VS. HISSARIA BROS. (2007) 291 ITR 244 (RAJ). 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE FIRST ISSUE WHICH ARISES IS WHETHER THE ASSESSEE IN AN APPEAL FILED BY THE REVENUE AGAINST THE ISSUE WHICH HAS BEEN DECIDED IN FAVOUR OF ASSESSEE, CAN ARGUE AGAINST THE JURISD ICTIONAL GROUND WHICH WAS DECIDED BY THE CIT(A), AGAINST THE ASSESSEE? IN THIS REGARD, THE CASE OF ASSESSEE BEFORE US IS THAT UNDER RULE 27 OF THE ITAT RULES, HE IS SO EMPOWERED. REFERRING TO THE SAID RULE, WE FIND THAT THE RULE PERMITS THE ASSESSEE TO S UPPORT THE ORDER OF CIT(A) ON ANY GROUNDS, THAT HAVE BEEN DECIDED AGAINST HIM EVEN THOUGH HE HAD NOT APPEALED AGAINST IT. RULE 27 OF THE ITAT RULES PROVIDES THAT THE ASSESSEE WITHOUT HAVING FILED ANY CROSS APPEAL OR CROSS OBJECTIONS CAN SUPPORT THE IMPUGN ED ORDER ON ANY GROUNDS DECIDED AGAINST HIM. ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 6 12. THE HONBLE HIGH COURT OF ALLAHABAD IN CIT AND ANOTHER VS. JINDAL POLYSTER LTD. (SUPRA) HAS ALSO LAID DOWN THE SAID PROPOSITION, WHICH IS AS UNDER: - 16. IN THE PRESENT CASE THE ASSESSEE HAS TAKEN THIS GR OUND BEFORE THE COMMISSIONER (APPEALS) AND IF HE HAS NOT FURTHER CHALLENGED THE FINDING ON THIS GROUND THEN AS PER RULE 27 OF THE INCOME - TAX (APPELLATE TRIBUNAL) RULES, THE ASSESSEE CAN ADVANCE HIS ARGUMENTS EVEN THOUGH HE HAS NOT FILED CROSS OBJECTION AGA INST THE FINDING ON THE ASSESSEE AGAINST HIM. SO THE LEARNED INCOME - TAX APPELLATE TRIBUNAL DID NOT COMMIT ANY MISTAKE IN PERMITTING THE ASSESSEE TO SUPPORT THE ORDER OF THE COMMISSIONER OF INCOME - TAX (APPEALS) ON THE GROUND THAT HAVE BEEN DECIDED AGAINST HIM. CONSEQUENTLY, THIS QUESTION OF LAW IS ALSO DECIDED AGAINST THE REVENUE AND IN FAVOUR OF THE RESPONDENT - ASSESSEE. 13. IN VIEW THEREOF, WE FIND MERIT IN THE PLEA OF ASSESSEE AND PROCEED TO DECIDE THE ISSUE RAISED BY THE ASSESSEE BY WAY OF HIS ARGUMEN TS UNDER RULE 27 OF THE ITAT RULES. 14. THE ISSUE RAISED IS WITH REGARD TO INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271E OF THE ACT, WHEREIN PENALTY PROCEEDINGS WERE INITIATED BY THE ADDL.CIT AFTER COMPLETION OF ASSESSMENT ORDER. THE ASSESSEE HA S PLACED RELIANCE ON THE RATIO LAID DOWN BY THE PUNE BENCH OF TRIBUNAL IN SHRI DEVIDAS RAMCHANDRA KULKARNI VS. JCIT (SUPRA) , WHEREIN IT WAS HELD AS UNDER: - 10. UNDER THE PROVISIONS OF SECTION 272A(3)(C) OF THE ACT, IT IS PROVIDED THAT ANY PENALTY IMPOSABL E UNDER SUB - SECTION (1) OR (2) OF THE SAID SECTION SHALL BE IMPOSED BY THE JOINT DIRECTOR OR JOINT COMMISSIONER IN RESPECT OF CASES OTHER THAN THE CASES COVERED IN CLAUSES (A) & (B) OF SUB - SECTION (3). THE ISSUE WHICH ARISES BEFORE THE TRIBUNAL IS THAT WH ERE THE ASSESSMENTS HAVE BEEN COMPLETED BY A PERSON OTHER THAN JOINT COMMISSIONER, THEN AT WHAT JUNCTURE, THE ASSESSING OFFICER MAKING A REFERENCE TO THE JCIT, FOR INITIATING PENALTY PROCEEDINGS UNDER SECTION 271D OF THE ACT SHOULD SEND THE INTIMATION IN T HIS REGARD. THE INFORMATION THAT THE ASSESSEE HAD ACCEPTED THE CASH LOAN FROM HIS WIFE HAD ADMITTEDLY COME TO THE KNOWLEDGE OF ASSESSING OFFICER, WARD 1(3), NASHIK DURING THE COURSE OF ASSESSMENT PROCEEDINGS ITSELF, WHICH IS CLEARLY MENTIONED IN THE ORDER PASSED UNDER SECTION 271D OF THE ACT. ONCE SUCH INFORMATION HAD COME TO HIS KNOWLEDGE, THEN IT WAS INCUMBENT UPON THE ASSESSING OFFICER TO HAVE FORWARDED THE SAID INFORMATION TO THE JCIT I.E. RANGE HEAD BEFORE COMPLETION OF ASSESSMENT, SINCE AFTER THE CO MPLETION OF ANY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER BECOMES NON GRATA TO SAID PROCEEDINGS. THIS POSITION AND STATUS OF THE ASSESSING OFFICER TO MAKE A REFERENCE TO THE JCIT FOR INITIATING PROCEEDINGS UNDER SECTION 271D OF THE ACT HAS FURTHER BEE N EXPLAINED BY THE AFORESAID CIRCULAR OF CBDT. THOUGH THE SAID CIRCULAR HAS BEEN PASSED ON 26.04.2016 BUT IT EXPLAINS LAW WHICH IS TO BE APPLIED. AS PER THE SAID CIRCULAR, IT IS INCUMBENT ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 7 UPON THE ASSESSING OFFICER OTHER THAN THE JCIT TO MAKE A REFERENCE TO THE JCIT WITH REGARD TO VIOLATION OF PROVISIONS OF SECTION 269SS AND 269T OF THE ACT BEFORE CLOSE OF ASSESSMENT PROCEEDINGS. IT IS VERY CLEARLY PROVIDED SO IN THE SAID CIRCULAR. IT HAS ALSO BEEN CONSIDERED BY THE CBDT THAT THE STATUTORY PROVISIONS CL EARLY STATE THAT THE COMPETENT AUTHORITY TO LEVY PENALTY IS THE JOINT COMMISSIONER, THEREFORE, ONLY THE JOINT COMMISSIONER CAN INITIATE PROCEEDINGS TO LEVY PENALTY AND SUCH INITIATION OF PENALTY PROCEEDINGS COULD NOT BE DONE BY THE ASSESSING OFFICER. THE CBDT HAS FURTHER ACKNOWLEDGED THAT STATEMENT IN THE ASSESSMENT ORDER THAT THE PROCEEDINGS UNDER SECTION 271D AND 271E OF THE ACT ARE INITIATED IS CONSEQUENTIAL SINCE THE INITIATION IS BY AN AUTHORITY WHO IS INCOMPETENT. THE PROCEEDINGS IN THIS REGARD CAN BE INITIATED ONLY BY ISSUANCE OF NOTICE BY THE JCIT AND THE SAME HAS TO BE INITIATED IN THE COURSE OF ASSESSMENT PROCEEDINGS OR ANY OTHER PROCEEDINGS UNDER THE ACT. IN THE ABOVE SAID CIRCUMSTANCES, PENALTY ORDER PASSED IN THE PRESENT CASE BY WAY OF REFERE NCE MADE BY THE ASSESSING OFFICER TO JCIT VIDE LETTER DATED 03.05.2012 IS BEYOND LIMITS PRESCRIBED, WHERE THE ASSESSMENT ORDER WAS COMPLETED ON 28.12.2011. HENCE ON THIS COUNT, PENALTY ORDER MERITS TO BE DISMISSED AND THE SAME IS SO DISMISSED. 1 5 . THE C ASE OF THE REVENUE ON THE OTHER HAND, IS THAT THERE IS NO LIMIT FOR INITIATION OF PENALTY PROCEEDINGS AND HAD PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HONBLE HIGH COURT OF RAJASTHAN IN CIT VS. HISSARIA BROS. (SUPRA). THE RELEVANT FINDINGS OF THE HON BLE HIGH COURT ARE AS UNDER: - 35. WE HAVE ALSO NOTICED THAT SECTIONS 271 AND 273 WERE THE TWO ORIGINAL PENALTY PROVISIONS, WHICH REQUIRE THE PENALT Y 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 PE NALTY. 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 ITS ELF. 36. 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 COURS E OF ANY PROCEEDINGS AND, THEREFORE, FOR THIS TYPE OF CASES WHERE THE PENALTY 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 PENA LTY 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 6 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 ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 8 ARE INITIATED AS IN THE CASE WHERE THE PENALTY PROCEEDINGS ARE LINK ED WITH THE ASSESSMENT PROCEEDINGS OR THE OTHER RELEVANT PROCEEDINGS. 37. 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. 38. WE ARE, THEREFORE, OF THE OPINION THAT SINCE PENALTY PROCEED INGS FOR DEFAULT IN NOT HAVING TRANSACTIONS THROUGH THE BANK AS REQUIRED UNDER SECTIONS 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 SECTIONS 271D A ND 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 I NITIATED 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 EMP LOYEES, 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 C LAUSE (A) WAS TO BE INVOKED, NO NECESSITY OF CLAUSE (C) WOULD ARISE. 39. THUS, BOTH ON THE GROUND THAT THE TRANSACTION IN QUESTION RETENTION OF SALE PRICE BY THE KACHHA ADHATIYA DID NOT AMOUNT TO DEPOSIT AND ITS UTILISATION AND DEALING WITH IT AT THE INST ANCE 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 TH AT LIMITATION UNDER SECTION 275(1)(C) APPLIES TO SUCH PROCEEDINGS WE HOLD IN FAVOUR OF THE RESPONDENTS. 40. ACCORDINGLY, THESE APPEALS FAIL AND ARE HEREBY DISMISSED. NO ORDER AS TO COSTS. (UNDERLINE PR OVIDED FOR EMPHASIS) 1 6 . THE HONBLE HIGH COURT FIRST TALKS ABOUT INITIATION OF PENALTY PROCEEDINGS WHICH ARE INDEPENDENT OF ANY PROCEEDINGS BUT OBVIOUSLY, PENALTY PROCEEDINGS CAN BE INITIATED ONLY WHEN THE DEFAULT IS BROUGHT TO THE NOTICE OF THE CONCERNE D AUTHORITY, WHICH MAY BE DURING THE COURSE OF ANY PROCEEDINGS , BUT DIFFERENT PERIOD OF LIMITATION HAS BEEN PRESCRIBED. SO, EVEN THE HONBLE HIGH COURT TALKS ABOUT INITIATION OF PENALTY PROCEEDINGS DURING THE COURSE OF PROCEEDINGS , WHEN THE DEFAULT IS DE TECTED . T HEN IT GOES ON TO TALK ABOUT THE TIME LIMIT WITHIN WHICH THE PROCEEDINGS HAVE TO BE COMPLETED AND HAS OBSERVED THAT IT HAS NO RELEVANCE TO COMPLETION OF ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 9 APPELLATE PROCEEDINGS ARISING OUT OF SUCH ASSESSMENT PROCEEDINGS. IT CLEARLY TALKS ABOUT INI TIATION OF PROCEEDINGS UNDER SECTION 271D AND 271E OF THE ACT WHICH HAVE BEEN INITIATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS OR OTHER PROCEEDINGS. IN VIEW THEREOF, WE FIND NO MERIT IN THE RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTAT IVE FOR THE REVENUE, WHO HAS ONLY REPRODUCED THE PART OF PARA AND HAS NOT REFERRED TO THE JUDGMENT IN TOTAL. FURTHER THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE HAS PLACED RELIANCE ON DECISION OF SPECIAL BENCH OF CHANDIGARH TRIBUNAL IN DEWAN C HAND AMRITLAL VS. DCIT REPORTED IN 98 ITD 200 (CHANDIGARH). 17. THE ISSUE RAISED IN THE PRESENT APPEAL IS SQUARELY COVERED BY THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL AND ALSO BY THE HONBLE HIGH COURT OF RAJASTHAN IN CIT VS. HISSARIA BROS. (SUPR A) AND CONSEQUENTLY, THERE IS NO MERIT ON THE RELIANCE PLACED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE ON SPECIAL BENCH DECISION. FURTHER, EVEN THE CBDT CIRCULAR ISSUED ON 26.04.2016 HAS CLARIFIED THE POSITION THAT REGARDING ANY VI OLATION OF PROVISIONS OF SECTIONS 269SS AND 269T OF THE ACT, AS THE CASE MAY BE, THE ASSESSING OFFICERS BELOW THE RANK OF JOINT COMMISSIONER OF INCOME TAX WERE ADVISED TO MAKE A REFERENCE TO THE RANGE HEAD, IN THE COURSE OF ASSESSMENT PROCEEDINGS. IT WAS ALSO CLARIFIED THAT THE RANGE HEAD WILL ISSUE PENALTY NOTICE AND SHALL DISPOSE / COMPLETE THE PROCEEDINGS WITHIN LIMITATION PRESCRIBED UNDER SECTION 275(1)(C) OF THE ACT. THE SAID CIRCULAR ISSUED BY THE CBDT IS ADVISORY AND HAS ONLY CLARIFIED THE POSITION AND CANNOT BE SAID TO BE PROSPECTIVE IN APPLICATION. BEFORE PARTING, WE MAY ALSO REFER TO CERTAIN FACTUAL ASPECTS. THE ASSESSMENT UNDER SECTION 153A R.W.S. 143(3) OF THE ACT WAS COMPLETED ON 30.11.2007. THE NOTICE FOR INITIATION OF PENALTY PROCEEDINGS WAS ISSUED ON 11.03.2010 AND ORDER LEVYING PENALTY WAS PASSED ITA NO. 12 38 /P U N/20 1 5 SHRI DANAWADE KUTUBUDDIN S 10 ON 24.09.2010. THERE IS INORDINATE DELAY IN INITIATION OF PENALTY PROCEEDINGS UNDER SECTION 271E OF THE ACT, WHICH OTHERWISE ALSO CANNOT BE CONDONED. CONSEQUENTLY, WE HOLD THAT INITIATION OF P ENALTY PROCEEDINGS IS BEYOND THE LIMITATION PROVIDED IN THE ACT AND THE PENALTY ORDER ON THIS ACCOUNT MERITS TO BE DISMISSED. SINCE IT IS DISMISSED ON JURISDICTIONAL ISSUE, THE APPEAL FILED BY THE REVENUE BECOMES ACADEMIC. 1 8 . IN THE RESULT, THE APPEAL O F REVENUE IS DISMISSED. ORDER PRONOUNCED ON THIS 24 TH DAY OF NOVEMBER , 201 7 . SD/ - SD/ - (ANIL CHATURVEDI ) (SUSHMA CHOWLA ) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE ; DATED : 24 TH NOVEMBER , 201 7 . GCVSR / COPY OF THE ORDER IS FORWARDED TO : 1. / THE APP ELLANT ; 2. / THE RESPONDENT; 3. ( ) / THE CIT (A) - 1 &2 , KOLHAPUR ; 4. / THE CIT - I/II, KOLHAPUR / CIT (CENTRAL), PUNE ; 5. , , / DR A , ITAT, PUNE; 6. / GUARD FILE . / BY ORDER , // TRUE COPY // / SR. PRIVATE SECRETARY , / ITAT, PUNE