The Income Tax Officer-I, Moga V. Sh. Harbans Singh, Moga

ITA 745/ASR/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0525 (ITAT-AMRITSAR)
• Duration Of Justice: 2 year(s) 6 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-07-2016
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 23-05-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 24-12-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A N MISHRA
• Keywords: Period of limitation; Question of law; Initiation of penalty proceedings; Competent authority
• Section: 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. A.D. JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO.745(ASR)/2013 ASSESSMENT YEAR:2009-10 PAN: AIZPS6299L THE INCOME TAX OFFICER-1, VS. SH. HARBANS SINGH MOGA. S/O SH. AJIT SINGH KHERA, VPO SMADH BHAI, BAGHAPURANA (MOGA). (APPELLANT) (RESPONDENT) APPELLANT BY: SH.A.N. MISHRA, DR RESPONDENT BY: WRITTEN SUBMISSIONS DATE OF HEARING: 23/05/2016 DATE OF PRONOUNCEMENT: 16/07/2016 ORDER PER A.D. JAIN, JM: THIS IS THE ASSESSEES APPEAL FOR THE ASSESSMENT Y EAR 2009-10, AGAINST THE ORDER DATED 14.10.2013, PASSED BY THE LD. CIT(A)-II, LUDHIANA. THE ASSESSEE HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL: 1. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE BY IGNORING THE DECISION OF THE HONBLE ITAT, SPECIAL BENCH (CHANDIGARH), 98 ITD 20 0 IN THE CASE OF DEWAN CHAND AMRIT LAL VS. DCIT WHEREIN THE HONBLE ITAT RELIED UPON THE DECISION OF THE HONBL E SUPREME COURT IN THE CASE OF VARKEY CHACKO VS. CIT (1993), 203 ITR 885 AND ALSO IN THE CASE OF CIT VS. DHADI S AHU, 199 ITR 610. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN NOT ALLOWING THE DECIS ION OF SPECIAL BENCH WHICH IS THE DECISION OF JURISDICTION AL TRIBUNAL. ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 2 3. THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS AND CIRCUMSTANCES OF THE CASE IN NOT ALLOWING THE DECIS ION OF HONBLE RAJASTHAN HIGH COURT WHEREAS SPECIAL BENCH FOLLOWED THE DECISIONS OF THE HONBLE SUPREME COURT . 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, AN INDIVIDUAL, HAD ACCEPTED CASH DEPOSIT OF RS.10.35 LACS FROM HIS CLO SE RELATIVES. THE AO NOTED THAT THE ASSESSEE HAD ACCEPTED CASH LOAN/DEPO SITS EXCEEDING THE LIMITS U/S 269SS AND THE SAME WAS IN CONTRAVENTION OF SECTION 269SS. THE AO, ACCORDINGLY, INITIATED PENALTY PROCEEDINGS US/ 271D OF THE ACT, BY ISSUING SHOW CAUSE NOTICE TO THE ASSESSEE. THE A O, THEREAFTER REFERRED THE MATTER TO THE ADDL. CIT, MOGA RANGE, MOGA, WHO WAS THE COMPETENT AUTHORITY TO IMPOSE PENALTY U/S 271D OF THE ACT ON THE ASSESSEE. THE ADDL. CIT HELD THAT THE ASSESSEE WAS LIABLE TO PENA LTY U/S 271D OF THE ACT AND IMPOSED THE PENALTY OF RS.10.35 LACS, BEING THE SUM EQUAL TO LOAN/DEPOSIT ACCEPTED IN ALLEGED CONTRAVENTION OF SECTION 269SS. 3. ON APPEAL, THE LD. CIT(A) CANCELLED THE PENALTY HOLDING THAT THE PENALTY ORDER ISSUED ON 26.12.2012 WAS BARRED BY LI MITATION. 3. THE LD. DR CONTENDED THAT THE LD. CIT(A) HAS E RRED IN IGNORING THE DECISION OF THE ITAT, SPECIAL BENCH (CHANDIGARH), I N THE CASE OF DEWAN CHAND AMRIT LAL VS. DCIT, 98 ITD 200 (SB) (CHD.) W HEREIN, THE ITAT RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF VARKEY CHACKO VS. CIT, 203 ITR 885 (SC) AND ALSO THAT IN THE CASE OF CIT VS. DHADI SAHU, 199 ITR 610. HE FURTHER SUBMI TTED THAT THE LD. CIT(A) HAS AGAIN ERRED IN FOLLOWING THE DECISION OF THE HONBLE RAJSTHAN HIGH COURT, WHEREAS THE SPECIAL BENCH FOLLOWED THE DECISIONS OF THE ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 3 HONBLE SUPREME COURT. IN VIEW OF THE ABOVE SUBMISS ION, HE PLEADED THAT THE ORDER OF THE A.O. MAY BE RESTORED AND THAT OF THE LD. CIT(A) BE REVERSED. 4. NONE APPEARED ON BEHALF OF THE ASSESSEE. HOWEVER , THE ASSESSEE HAS SUBMITTED WRITTEN SUBMISSIONS DATED 08.12.201 4, WHICH ARE PLACED ON RECORD. IN THE WRITTEN SUBMISSION, THE ASSESSEE HAS CONTENDED THAT THE PENALTY PROCEEDINGS WERE BARRED BY LIMITATION SINCE THE FIRST SHOW CAUSE NOTICE FOR INITIATION OF PROCEEDINGS WAS ISSU ED BY THE AO ON 26.12.2011 AND SERVED UPON THE ASSESSEE ON 30.12.20 11; THE ORDER PASSED BY THE ADDL. CIT, MOGA RANGE FOR PENALTY U/S 271D ON 26.12.2012 WAS CLEARLY HIT BY THE BAR OF LIMITATION . THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS. JITENDRA SINGH RATHORE, 311 TAXMA N.COM 52, WHEREIN IT HAS BEEN HELD THAT EVEN THOUGH THE AUTHORITY COMPET ENT FOR THE PURPOSE OF PENALTY U/S 27ID IS THE JOINT COMMISSIONER OF IN COME TAX, THE PERIOD OF LIMITATION FOR THE PURPOSE OF PENALTY PROCEEDING S CANNOT BE RECKONED FROM THE ISSUE OF FIRST SHOW CAUSE BY THE JOINT COM MISSIONER OF INCOME TAX, BUT FROM THE DATE OF ISSUE OF THE FIRST SHOW C AUSE NOTICE (EVEN BY ASSESSING OFFICER) FOR INITIATION OF PENALTY PROCEE DINGS. 5. THE ASSESSEE HAS FURTHER SUBMITTED THAT THE PERS ON FROM WHOM CASH DEPOSITS OF RS.6 LACS HAVE BEEN ACCEPTED IS A CLOSE RELATIVE, NAMELY SH. RAGHBIR SINGH S/O GURBAKSH SINGH, VPO SAMADH BH AI, FROM WHOM, THE ASSESSEE HAS TAKEN THE AFORESAID AMOUNT THAT W AS URGENTLY REQUIRED ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 4 FOR APPLYING RESIDENCE VISA FOR CANADA OF HIS SON, SH. SANDEEP SINGH KHERA. THE ASSESSEE HAD TO SHOW BANK DEPOSITS IN TH E SHAPE OF FDR AND SAVINGS BANK ACCOUNT IN HIS NAME TO SHOW HIS CREDIT WORTHINESS TO THE CANADIAN EMBASSY FOR GETTING THE RESIDENCE VISA OF HIS SON. THEREFORE, IT WAS A GENUINE AND BONAFIDE TRANSACTION AND THE TAX PAYER COULD NOT GET THE LOAN OR DEPOSIT THROUGH PAYEE ACCOUNT CHEQUES O R DRAFT FOR SOME BONAFIDE REASONS, I.E., THE DEPOSITOR, SH. RAGHBIR SINGH DID NOT HAVE ANY BANK ACCOUNT. THIS FACT WAS BROUGHT TO THE NOTICE OF THE ADDL. CIT ON 18.12.2012. IN HIS STATEMENT, SH. RAGHBIR SINGH ADM ITTED THAT HE HAD GIVEN A LOAN OF RS. 6 LAC IN CASH TO SH. HARBANS SI NGH, THE ASSESSEE. HE FURTHER SUBMITTED THAT HE IS AN AGRICULTURIST AND DOES NOT HAVE ANY BANK ACCOUNT. HE FURTHER SUBMITTED THAT WHEN A PER SON DOES NOT HAVE ANY BANK ACCOUNT HE CAN NOT POSSIBLY ADVANCE MONEY THROUGH PAYEES ACCOUNT CHEQUES OR BANK DRAFTS. 6. THE ASSESSEE HAS FURTHER SUBMITTED THAT HE HAS A CCEPTED CASH DEPOSITS OF RS.4.35 LACS FROM SH. KULWAINDER SINGH, WHO IS A CLOSE RELATIVE AND SON OF THE ASSESSEES WIFES SISTER, S MT. KULWINDER KAUR. SINCE, SH. KULWINDER SINGH HAD TO DEPOSIT HIS FEE F OR STUDY IN UK AND HE DID NOT HAVE ANY PAN CARD IN HIS OWN NAME, IT WAS N OT POSSIBLE FOR HIM TO DEPOSIT A SUM OF RS.4.25 LACS IN HIS BANK ACCOUN T WITHOUT MENTIONING HIS PAN AND HE WAS URGENTLY REQUIRED TO SEND HIS FE E TO UK. THEREFORE, HE HAD USED THE BANK ACCOUNT OF THE ASSESSEE TO SEN D HIS FEE. THIS FACT HAD BEEN DULY EXAMINED BY THE AO AND HE HAD NOT DOU BTED THE ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 5 GENUINENESS OF THIS TRANSACTION. THE MONEY WAS DEPO SITED IN THE BANK ACCOUNT OF THE ASSESSEE ON 18.03.20098 AND IT WAS I MMEDIATELY TRANSFERRED, WITHIN NO TIME, ON THE SAME DATE, I.E. , ON 18.03.2009 TO THE FOREIGN BANK ACCOUNT OF SH. KULWINDER SINGH. THEREF ORE, THE ASSESSEE HAS NOT TAKEN ANY LOAN OR ACCEPTED ANY DEPOSIT FROM SH. KULWINDER SINGH. IT WAS FURHER SUBMITTED THAT SH. KULWANT SIN GH, FATHER OF S. KULWINDER SINGH, WAS AN AGRICULTURIST AND THE FAMIL Y HAD NO OTHER SOURCE OF INCOME, EXCEPT AGRICULTURAL INCOME. 7. THE ASSESSEE HAS PLACED RELIANCE ON THE DECISION IN THE CASE OF CIT VS. LAKSHMI TRUST CO., 303 ITR 99 (MAD.), WHEREIN, IT HAS BEEN HELD THAT IF THERE WAS GENUINE AND BONA FIDE TRANSACTION AND THE TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT PAYEE CHEQUES OR DEMAND DRAFT FOR SOME BONA FIDE REASON, THE AUTHORITY VESTED WITH TH E POWER TO IMPOSE PENALTY HAS A DISCRETION NOT TO LEVY PENALTY. THE CIT(A) AND THE TRIBUNAL FOUND ON THE FACTS THAT THE TRANSACTIONS WERE GENUI NE AND THE IDENTITY OF THE LENDERS WAS ALSO SATISFIED. THE TRIBUNAL ALSO U PHELD THE ORDER OF THE CIT(A) THAT THERE WAS NO INTENTION ON THE PART OF T HE ASSESSEE TO EVADE THE TAX. IT WAS HELD THAT THE FINDING RECORDED BY T HE TRIBUNAL IN THIS REGARD WAS A FINDING OF FACT AND NO QUESTION OF LAW , MUCH LESS A SUBSTANTIAL QUESTION OF LAW, WOULD ARISE. 7.1. AS PER THE ASSESSEE, THERE WAS A VERY REASONAB LE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269SS THAT THE LENDER WHO IS AN AGRICULTURIST DID NOT HAVE ANY BANK ACCOUNT WHICH C OMPELLED THE ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 6 ASSESSEE TO ACCEPT THE LOAN IN CASH. THE FOLLOWING JUDGMENTS HAVE ALSO BEEN CITED TO SUPPORT THE CASE OF THE ASSESSEE THAT NO PENALTY IS CALLED FOR U/S 271D: I. BALAJI TRADERS VS. DCIT, 73 TTJ (PUNE) 2. RAIANA KHETI STORE VS. ITO, 99 TTJ (ASR)576 3. ITO VS. GANESH WOODEN INDUSTRIES, (2002) 7 TM I 413 8. THE ASSESSEE HAS ALSO RELIED ON THE DECISION OF THE HONBLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. BHAGWATI PARSHAD BAJORIA HUF, 183 CTR (GAU) 484, IN WHICH, THE HIGH COURT HELD THAT PENALTY WAS NOT LEVIABALE FOR THE REASONTHAT THE IMPUGNED TRANSACT ION OF LOAN FINDS PLACE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS WELL AS THE LENDER, AND NONE OF THE AUTHORITIES FOUND THAT THE TRANSACTION WAS NOT GENUINE OR IT WAS A SHAM TRANSACTION TO COVER UP UNACCOUNTED MONEY. A SIMILAR VIEW IS TAKEN BY THE HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. BALAJI TRADERS, 313 ITR 312 (MAD.) 9. THE ASSESSEE HAS ALSO SUBMITTED THAT THE PROCEE DINGS U/S 271D FOR LEVY OF PENALTY FOR FAILURE TO COMPLY WITH THE PROVISIONS ARE PENAL IN NATURE AS HELD IN SUKHDEV RATHI, 211 ITR 157 (GUJ .) AND NATIONAL SURGICAL CORPORATION, 242 ITR 667 (AP). IT IS CONT ENDED THAT SINCE THE PROCEEDINGS ARE PENAL PROCEEDINGS, THE FOLLOWING CO NDITIONS LAID DOWN IN HINDUSTAN STEEL, 83 ITR 126 (SC) WOULD APPLY: I) PENALTY CAN BE LEVIED ONLY IF ASSESSEE ACTED DEL IBERATELY, I.E., MENS REA, A GUILTY MIND IS ESSENTIAL BEFORE PENALT Y CAN BE LEVIED. ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 7 II) POWER TO LEVY PENALTY IS DISCRETIONARY AND PENA LTY CANNOT BE LEVIED MERELY BECAUSE IT IS LAWFUL TO DO SO. III) NO PENALTY CAN BE LEVIED FOR TECHNICAL OR VENIAL BR EACH OF THE PROVISIONS, AND IV) NO PENALTY CAN BE LEVIED WHERE BREACH OF PROVISIONS FLOWS FROM BONA FIDE BELIEF OF THE ASSESSEE. 10. THE ASSESSEE HAS FURTHER SUBMITTED THAT IF THE BONAFIDES OF THE ASSESSEE STR PROVED, THAT THERE IS NO TAX EVASION, PENALTY U/S 271D OR 271E CANNOT BE IMPOSED. RELIANCE HAS BEEN PLACED ON THE DECISION OF THE ITAT, MUMBAI BENCH IN THE CASE OF KARNATAKA GINNIN G & PRESSING FACTORY VS. JT. CIT, (2001) 72 TTJ (MUM) 307, WHE REIN, IT HAS BEEN OBSERVED: AS REGARDS THE GENUINENESS OF THE BORROWINGS (I.E. LOANS & DEPOSITS) IN THE PRESENT CASE THERE DOES NOT APPEAR TO BE ANY DOUBT. THE INCOME TAX AUTHORITIES HAS RAISED NO DOUBT ABO UT ITS GENUINENESS, AS IT CLEAR FROM THE FACT THAT NO ADDI TION OF THE AMOUNTS RECEIVED HAS BEEN MADE BY INVOKING THE SECT ION 68 OF THE ACT. 11. THE ASSESSEE HAS ALSO SUBMITTED THAT IN THE CAS E OF M/S. BHIKABHAI DHANJIBHAI PATEL VS. ACIT, 127 TTJ (AHD. ) 479 IT HAS BEEN HELD HAT IT IS NECESSARY TO SHOW THE MOTIVE TO EVAD E TAX IN ORDER TO JUSTIFY THE LEVY OF PENALTY U/S 271D OF THE ACT. ACCORDINGL Y, THE ASSESSEE HAS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE UPHELD AND THE APPEAL OF THE REVENUE MAY BE DISMISSED. 12. WE HAVE HEARD THE RIVAL CONTENTIONS IN THE LIGH T OF THE MATERIAL PLACED ON RECORD. WE HAVE ALSO GONE THROUGH THE WRI TTEN SUBMISSIONS, DATED 08.12.2014, FILED BY THE ASSESSEE, AS WELL AS THE ORDER OF THE LD. ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 8 CIT(A). WE FIND THAT WHILE CANCELING THE PENALTY IM POSED BY THE A.O., THE RELEVANT FINDINGS OF THE LD. CIT(A) ARE AS FOLLOWS: 4.8 I HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IT MAY BE RELEVANT TO NOTE THE CHRONOLOGY OF EVENTS LEADING T O THE LEVY OF PENALTY IN THIS CASE. THE SAME IS AS UNDER: (I) DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOT ED THAT THE APPELLANT HAS ACCEPTED CASH LOAN / DEPOSITS EXC EEDING THE LIMITS U/S 269SS AND THE SAME WAS IN CONTRAVENT ION OF SECTION 269SS. (II) THE LD AO INITIATED THE PENALTY PROCEEDINGS U/S 27I D OF THE ACT VIDE NOTICE DATED 26.12.2011. (III) THE SHOW CAUSE NOTICE DT. 26.12.2011 FOR 09.01.2012 WAS SERVED UPON THE APPELLANT ON 30.12.2011. (IV) THEREAFTER, THE MATTER WAS REFERRED TO THE ADDL. CI T, MOGA RANGE, MOGA WHO WAS THE COMPETENT AUTHORITY U/S 271 D TO IMPOSE SUCH PENALTY. (V) THE ADDL. CIT VIDE HIS ORDER DT. 26.12.2012 IMPOSED THE PENALTY OF RS. 10.35 LAC U/S 271D OF THE ACT. IT IS APPARENT FROM THE AFORESAID CHRONOLOGY THAT T HE FIRST NOTICE FOR LEVY OF PENALTY U/S 271D WAS ISSUED ON 26.12.2011 B Y THE AO. THE PENALTY WAS LEVIED ON 26.12.2012, I.E., 12 MONTHS AFTER THE ISSUE OF FIRST SHOW-CAUSE NOTICE INITIATING THE PENALTY P ROCEEDINGS. AS PER THE PROVISIONS OF SECTION 275(1 )(C) OF THE I.T. AC T., NO ORDER IMPOSING A PENALTY UNDER CHAPTER XXI OF THE I.T. AC T CAN BE IMPOSED AFTER THE EXPIRY OF 6 MONTHS FROM THE END OF THE MONTH IN WHICH ACTION FOR IMPOSITION OF PENALTY IS INITIATED . IN THIS CASE THE FIRST NOTICE FOR INITIATION OF PENALTY WAS ISSUED O N 26.12.201 D THE PENALTY ORDER COULD HAVE BEEN ISSUED UPTO ORDER ISS UED ON 26.12.2012 IS THEREFORE BARRED BY LIMITATION. THE C OVERED BY DECISION OF HONBLE RAJASTHAN HIGH COURT IN THE JIT ENDER SINGH RATHORE (2013) 311 TAXMAN.COM 52 (RAJ). THE HONBLE HIGH COURT HELD AS UNDER:- EVEN THOUGH AUTHORITY COMPETENT FOR PURPOSE OF PEN ALTY U/S 27ID IS JOINT COMMISSIONER OF INCOME TAX, PERIOD OF LIMI TATION FOR PURPOSE OF PENALTY PROCEEDINGS CANNOT BE RECKONED FROM ISSU E OF FIRST SHOW CAUSE BY JOINT COMMISSIONER OF INCOME TAX, BUT FROM DATE OF ISSUE ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 9 OF FIRST SHOW CAUSE NOTICE (EVEN BY ASSESSING OFFIC ER) FOR INITIATION OF PENALTY PROCEEDINGS. THE HONBLE HIGH COURT ALSO REFERRED TO THE CASE OF CIT VS HISSARIA BROS (2007) 291 ITR 244 (RAJ) WHEREIN IT WAS HELD A S UNDER: WE ARE, THEREFORE, OF THE OPINION THAT SINCE PENALT Y PROCEEDINGS FOR DEFAULT IN HAVING TRANSACTIONS THROUGH THE BANK AS REQUIRED UNDER SECTIONS 269SS AND 2T ARE NOT RELATED TO THE ASSESS MENT PROCEEDING BUT ARE INDEPENDENT OF IT, THEREFORE THE COMPLETION OF APPELLATE PROCEEDINGS ARISING OUT OF THE ASSESSMENT PROCEEDIN G OR THE OTHER PROCEEDINGS DURING WHICH THE PENALTY PROCEEDINGS UN DER SECTION 27ID AND 27IE MAY HAVE BEEN INITIATED HAS NO RELEVA NCE FOR SUSTAINING OR NOT SUSTAINING THE PENALTY PROCEEDING S AND, THEREFORE, CLAUSE (A) OF SUB-SECTION (1) O) 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 FIN AL FACT FINDING IN THIS PROCEEDING MAY NOT HAVE ANY BEARING ON THE ISS UES RELATING TO ESTABLISHING DEFAULT E.G. PENALTY FOR NOT DEDUCTING TAX AT SOURCE WHILE MAKING PAYMENT TO EMPLOYEES, OR CONTRACTOR, O R FOR THAT MATTER NOT MAKING PAYMENT THROUGH CHEQUE OR DEMAND DRAFT W HERE IT IS SO REQUIRED TO BE MADE. EITHER OF THE CONTINGENCIES DO ES NOT AFFECT THE COMPUTATION OF TAXABLE INCOME AND LEVY OF CORRECT T AX ON CHARGEABLE INCOME; IF CLAUSE (A) WAS TO BE INVOKED, NO NECESSI TY OF CLAUSE (C) WOULD ARISE. ALTHOUGH THE AO HAS REFERRED TO THE DECISION OF HON BLE ITAT IN THE CASE OF NEPC AGRO FOOD VS. ACIT IN ITA NO. 1759/MDS /2009 DATED 09.09.2011 IN SUPPORT OF HIS, CONTENTION THAT THE P ROCEEDINGS WERE NOT BARRED BY LIMITATION, THE DECISION OF HONBLE H IGH COURT OF RAJASTHAN IN THE CASE OF CIT VS. JITENDER SINGH RAT HORE (2013) 311 TAXMAN.COM 52 (RAJ) SUPPORTS THE APPELLANTS CONTEN TION. UNDER THE PRINCIPLES OF JUDICIAL DISCIPLINE AND AUTHORITA TIVE PERSUASION, IN CASE OF CONFLICTING DECISIONS BETWEEN ORDERS OF ITA T AND HIGH COURT, THE DECISION OF HIGH COURT HAS TO BE FOLLOWE D. KEEPING IN VIEW THE AFORESAID FACTUAL AND LEGAL POS ITION IT IS HELD THAT THE PENALTY ORDER ISSUED ON 26.12.2012 WAS BAR RED BY LIMITATION. THE PENALTY IMPOSED IS THEREFORE CANCEL LED. 13. THUS, THE LD. CIT(A) HELD THAT ALTHOUGH THE AO HAS REFERRED TO THE DECISION OF HONBLE ITAT IN THE CASE OF NEPC AGRO F OOD VS. ACIT IN ITA ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 10 NO. 1759/MDS/2009 DATED 09.09.2011 IN SUPPORT OF HI S, CONTENTION THAT THE PROCEEDINGS WERE NOT BARRED BY LIMITATION, THE DECISION OF HONBLE HIGH COURT OF RAJASTHAN IN THE CASE OF CIT VS. JITE NDER SINGH RATHORE (2013) 311 TAXMAN.COM 52 (RAJ) SUPPORTS THE APPELLA NTS CONTENTION. UNDER THE PRINCIPLES OF JUDICIAL DISCIPLINE AND AUT HORITATIVE PERSUASION, IN CASE OF CONFLICTING DECISIONS BETWEEN ORDERS OF ITAT AND HIGH COURT, THE DECISION OF HIGH COURT HAS TO BE FOLLOWED. 14. CBDT CLARIFIES THAT OFFICER BELOW THE RANK OF J CIT CANT INITIATE PENALTY PROCEEDINGS U/S 271D OR 271E. THE CIRCULAR OF CBDT IS REPRODUCED AS UNDER: CIRCULAR NO.9/DV/2016 [F.NO.279/MISC./M-116/2012-IT J], DATED 26-4-2016 IT HAS BEEN BROUGHT TO THE NOTICE OF THE CENTRAL BO ARD OF DIRECT TAXES (HEREINAFTER REFERRED TO AS THE BOARD) THAT THERE ARE CONFLICTIN G INTERPRETATIONS OF VARIOUS HIGH COURTS ON THE ISSUE WHETHER THE LIMITATION FOR IMPO SITION OF PENALTY UNDER SECTIONS 271D AND 271E OF THE INCOME TAX ACT, 1961 (HEREAFTER REF ERRED TO AS THE ACT) COMMENCES AT THE LEVEL OF THE ASSESSING OFFICER (BELOW THE RANK OF JOINT COMMISSIONER OF INCOME TAX.) OR AT LEVEL OF THE RANGE AUTHORITY I.E. THE JOINT C OMMISSIONER OF INCOME TAX./ADDL. COMMISSIONER OF INCOME TAX. SOME HIGH COURTS HAVE HELD THAT THE LIMITATION COMM ENCES AT THE LEVEL OF THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY I.E. RANGE HEAD WHI LE OTHERS HAVE HELD THAT EVEN THOUGH THE ASSESSING OFFICER IS NOT COMPETENT TO IM POSE THE PENALTY, THE LIMITATION COMMENCES AT THE LEVEL OF THE ASSESSING OFFICER WHE RE THE ASSESSING OFFICER HAS ISSUED SHOW CAUSE NOTICE OR REFERRED TO THE INITIATION OF PROCEEDINGS IN ASSESSMENT ORDER. 2. ON CAREFUL EXAMINATION OF THE MATTER, THE BOARD IS OF THE VIEW THAT FOR THE SAKE OF CLARITY AND UNIFORMITY, THE CONFLICT NEEDS TO BE RE SOLVED BY WAY OF A 'DEPARTMENTAL VIEW'. 3. THE HON'BLE KERALA HIGH COURT IN THE CASE OF GRIHAL AXMI VISION V. ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, KOZHIKODE, VID E ITS ORDER DATED 7-8-2015 IN ITA NOS. 83 & 86 OF 2014, OBSERVED THAT, 'QUESTION TO B E 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 STATU TORY PROVISION, IT IS CLEAR THAT THE COMPETENT AUTHORITY TO LEVY PENALTY BEING THE JOINT COMMISSIONER. THEREFORE, ONLY THE JOINT COMMISSIONER CAN INITIATE PROCEEDINGS FOR LEV Y OF PENALTY. SUCH INITIATION OF ITA NO.745(ASR)/2013 ASSESSMENT YEAR: 2009-10 11 PROCEEDINGS COULD NOT HAVE BEEN DONE BY THE ASSESSI NG OFFICER. THE STATEMENT IN THE ASSESSMENT ORDER THAT THE PROCEEDINGS UNDER SECTION S 271D AND E ARE INITIATED IS INCONSEQUENTIAL. ON THE OTHER HAND, IF THE ASSESSME NT ORDER IS TAKEN AS THE INITIATION OF PENALTY PROCEEDINGS, SUCH INITIATION IS BY AN AUTHO RITY 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.' 4. THE ABOVE JUDGMENT REFLECTS THE 'DEPARTMENTAL VIEW' . ACCORDINGLY, THE ASSESSING OFFICERS (BELOW THE RANK OF JOINT COMMISSIONER OF I NCOME TAX.) MAY BE ADVISED TO MAKE A REFERENCE TO THE RANGE HEAD, REGARDING ANY VIOLAT ION OF THE PROVISIONS OF SECTION 269SS AND SECTION 269T OF THE ACT, AS THE CASE MAY BE, IN THE COURSE OF THE ASSESSMENT PROCEEDINGS (OR ANY OTHER PROCEEDINGS UNDER THE ACT ). THE ASSESSING OFFICER, (BELOW THE RANK OF JOINT COMMISSIONER OF INCOME TAX) SHALL NOT ISSUE THE NOTICE IN THIS REGARD. THE RANGE HEAD WILL ISSUE THE PENALTY NOTICE AND SHALL DISPOSE/COMPLETE THE PROCEEDINGS WITHIN THE LIMITATION PRESCRIBED UNDER SECTION 275( 1)(C) OF THE ACT. 5. WHERE ANY HIGH COURT DECIDES THIS ISSUE CONTRARY TO THE 'DEPARTMENTAL VIEW', THE 'DEPARTMENTAL VIEW' THEREON SHALL NOT BE OPERATIVE IN THE AREA FALLING IN THE JURISDICTION OF THE RELEVANT HIGH COURT. HOWEVER, THE CCIT CONCE RNED SHOULD IMMEDIATELY BRING THE JUDGMENT TO THE NOTICE OF THE CENTRAL TECHNICAL COM MITTEE. THE CTC SHALL EXAMINE THE SAID JUDGMENT ON PRIORITY TO DECIDE AS TO WHETHER F ILING OF SLP TO THE SUPREME COURT WILL BE ADEQUATE RESPONSE FOR THE TIME BEING OR SOME LEG ISLATIVE AMENDMENT IS CALLED FOR. 6. THE ABOVE CLARIFICATION MAY BE BROUGHT TO THE NOTIC E OF ALL OFFICERS. 15. FOR THE ABOVE DISCUSSION, WE CONCUR WITH THE W ELL VERSED AND REASONED FINDINGS GIVEN BY THE LD. CIT(A), IN HIS O RDER, WHILE CANCELING THE PENALTY. WE, ACCORDINGLY, UPHOLD THE ORDER OF T HE LD. CIT(A) AND DISMISS THE APPEAL OF THE REVENUE. 16. IN THE RESULT, THE APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 15/07/ 2016. SD/- SD/- (T.S. KAPOOR) (A.D. JAIN) ACCOUNTANT MEMBER JUDICIAL MEMBER /SKR/ DATED: 15/07/2016 COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: SH. HARBANS SINGH S/O SH. AJIT SINGH KHERA. 2. THE ITO -1, MOGA. 3. THE CIT(A), BATHINDA. 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR.