Rajasthan High Court - Jaipur
Hissaria Brothers vs Joint Cit on 17 August, 2001
Equivalent citations: (2001)73TTJ(NULL)1
ORDER
By the Bench As the above appeals involve common points, so we are disposing them of by this common order for the sake of convenience.
2. ITA Nos. 434/Jdpr/2000, 429/Jdpr/2000 and 432/Jdpr/2000 are appeals by the assessee for assessment years 1993-94, 1994-95 and 1995-96 in respect of penalties under section 271D sustained by the learned Commissioner (Appeals), Udaipur, while ITA Nos. 499/Ju/2000, 504/Ju/2000 and 502/Ju/2000 are appeals by the revenue for assessment years 1993-94, 1994-95 and 1995-96, respectively, in respect of penalties under section 271D cancelled by the learned Commissioner (Appeals), Udaipur, vide his appellate common order, dated 18-8-2000. Similarly, ITA Nos. 433/Jdpr/2000, 430/Jdpr/2000 and 431/Jd/2000 are appeals by the assessee for assessment years 1993-94, 1994-95 and 1995-96 in respect of penalties under section 271E sustained by the learned Commissioner (Appeals), while ITA Nos. 500/Ju/2000, 503/Ju/2000 and 501/Ju/2000 are appeals by the revenue for assessment year 1993-94, 1994-95 and 1995-96 in respect of penalties under section 271E cancelled by the learned Commissioner (Appeals), Udaipur.
3. (i) The facts, in brief, as per the assessee, are that the assessee is a firm doing the business of Kachha Arhatiya, acting as agent for its farmer-constituents, who used to bring their crops to the assessee for sale, and the assessee in this relationship used to sell their crops and keep/retain the sale proceeds of crops so as to be adjusted against their time to time withdrawals and buying of goods. The assessee was catering to their needs like payment in cash, supply of goods like fertilizer (Khad) seeds, pesticides, etc. retaining sale proceeds of crops accepting amounts given by farmers for the purpose of meeting on their time to time needs. The nature of dealings between Kachha Arhatiya and the farmer were fast, frequent and of current nature. No stipulation ever existed in regard to amounts, if any, given by the farmer to the assessee for keeping it for the purpose of making out their time to time needs. The farmer-constituents were hesitant in having dealings through banks, due to time constraints, tedious formalities, etc., etc. The dealings between the assessee and the farmer-constituents were in cash, sometimes they took sums in cash from the assessee-firm and sometimes they gave the sums to assessee firm, so that their prospective requirements might be met.
(ii) In assessment year 1993-94, involved in assessees appeals, being ITA Nos. 434/Apr/2000 and 433/Jdpr/2000 and revenues appeals being ITA No. 499/Ju/2000 and 500/Ju/2000, the assessing officer Joint Commissioner held that instances mentioned in Annexure A and Annexure B of the penalty orders to be in the nature of deposits, violative of section 269SS and liable for penalty under section 271D; and similarly, when amounts were given from those accounts, in cash the repayments were also held to be violative of provisions of section 269T and liable for penalty under section 271E. The learned Commissioner (Appeals) cancelled the penalties in regard to instances of Annexure B known as balancing of accounts under both the provisions of sections 271D and 271E holding that they neither fell in the category of deposit under sections 269SS and 269T, nor was the penalty justified due to reasonable/sufficient cause envisaged under section 273B. However, the learned Commissioner (Appeals) held some instances of cash credits as per Annexure A totalling to Rs. 1,89,000 pertaining to three persons, namely, Shri Prem Prakash, Shri Gangaram, and Shri Shivraj to be in the nature of deposit and violative of section 269SS and in turn withdrawals therefrom in cash violative of section 269T, and so he sustained penalties for these receipts under section 271D and for repayments therefrom under section 271E, not accepting the assessees plea of reasonable cause, in respect thereof.
(iii) In assessment year 1994-95, involved in assessees appeals Nos. 429/Jdpr/2000 and 430/Jdpr/2000 and revenues appeal Nos. 504/Ju/2000 and 503/Ju/2000, the assessing officer/Joint Commissioner levied penalties under sections 271D and 271E in respect of instances specified in Annexure A, Annexure B Annexure C and Annexure D to the penalty orders. But the learned Commissioner (Appeals) cancelled the penalties under sections 271D and 271E in regard to instances specified in Annexure A and Annexure D on the ground of reasonable/sufficient cause envisaged under section 273B and also holding the instances specified in Annexure D as being not in the nature of deposit, whereas the instance specified in Annexure A were held to be in the nature of deposit. The learned Commissioner (Appeals) sustained the penalties under sections 271D and 271E in respect of instances specified in Annexure B and Annexure C, being receipts in cash exceeding Rs. 20,000 as also withdrawals therefrom being in excess of Rs. 20,000, held to be repayments, and thus liable for penalties on both the counts under sections 271D and 271E. However, the learned Commissioner (Appeals) directed the assessing officer/Joint Commissioner for allowing some relief after verification regarding the facts of extent of receipt. The learned Commissioner (Appeals) did not accept the assessees plea regarding the above receipts being not deposits, nor did he accept the assessees plea regarding bona fide belief coupled with genuineness of transactions.
(iv) In assessment year 1995-96, involved in assessees appeals Nos. 432/Jdpr/2000 and 431/Jdpr/2000 and revenues appeals Nos. 502/Ju/2000 and 501/Ju/2000, the assessing officer/Joint Commissioner levied penalties for the instances mentioned in Annexure A, Annexure B and Annexure C to the penalty orders. However, the learned Commissioner (Appeals) cancelled the penalties in respect of instances specified in Annexure A and Annexure C, accepting the assessees plea of there being reasonable cause and bona fide belief. But the learned Commissioner (Appeals) did not accept the assessees contention regarding the receipts of instances mentioned in Annexure A not being in the nature of deposits. The learned Commissioner (Appeals) sustained the penalties under sections 271D and 271E in respect of instances specified in Annexure B which pertained to the amounts found as non-tallying credit entries of the seized notebook.
(v) The assessees plea regarding the penalty proceedings under sections 271D and 271E for all the above three assessment years 1993-94, 1994-95 and 1995-96 being time barred under section 275(1)(c) was not accepted by the authorities below.
4. We have heard the arguments of both the sides and have also perused the records including the w/s/PB furnished on record before us.
From the perusal of record, we find the following fact-situation regarding the penalty under sections 271D and 271E being levied, deleted and sustained up to first appellate authority :
Asst. yr.
assessing officer levied penalty Commissioner (Appeals) deleted penalty Commissioner (Appeals) sustained penalty Remarks under section 271D under section 271E under section 271D under section 271E under section 271D under section 271E 1993-94 1,70,94,000 (Annex. A-2,64,000 + B-1,68,30,000) 1,85,31,963 (Annex. A-2,70,410+B-1.82,61,553) 1,69,05,000 1,82,61,553 1,89,000 1,89,000 CIT (A) deleted penalty of Rs. 75,000 (out of Rs 2,64,000 as per Annexure A) under section 271D and whole of Annexure B. 1994-95 56,23.319 (Annex. A 29,07,876 + B-2,30,536 + C-4,89,907 + D-19,95,000) 60,84,313 (Annex. A-30,29,864+ B-3,01,932 + C-5,28,316 + D-22,24,202) 49,02,876 52,54,066 7,20,443 (Annex. B+C) 8,30,247 (Annex. B+C) 1995-96 56,62,799 (Annex. A-30,31,465+ B-8,99,963+ C-17,31,371 59,22,327 (Annex. A-32,90,993+ B-8,99.963 + C-17,31,371) 47,62,386 50,22,864 8,99,963 (Annex. B) 8,99,963 (Annex. B)
5. The assessee has been aggrieved against the penalty sustained by the learned Commissioner (Appeals) and has preferred its appeals Nos. 429 to 434/Ju/2000 for assessment years 1993-94 to 1995-96 and the revenue has been aggrieved against the relief accorded by the learned Commissioner (Appeals) in respect of the penalties under sections 271D and 271E (levied by the assessing officer) and reflected above under the head of deletion of penalty by Commissioner (Appeals), and so the revenue has preferred its appeals bearing ITA Nos. 499 to 504/Ju/2000.
6. First we take up assessees ground relating to limitation, wherein the penalty orders under sections 271D and 271E passed by Joint Commissioner are stated to be barred by limitation under section 275(1)(c). This issue is contained in ground No. 2 of assessees appeals. The learned authorised representative of assessee has referred to p. 30 of his common w/s for assessment years 1993-94 to 1995-96 being in respect of assessees appeals, being Annexure 1 therein and has contended that in the column third from last in the said chart, the last dates of limitation for imposing penalties as per assessee under section 275(1)(c) have been given and that in the column last but one, the dates on which the penalty orders were passed by Joint Commissioner have been mentioned which clearly show that the said penalty orders under sections 271D and 271E are barred by limitation as prescribed under section 275(1)(c). It has been contended orally as also in writing or, behalf of the assessee that the relevant finding of Joint Commissioner for assessment year 1993-94 have been given in para 5(viii) on p. 4 of the penalty order for assessment year 1993-94 wherein he has held the penalty order to be within limitation applying clause (a) of section 275(1), and that the Joint Commissioner has also held in para 5(ix) on p. 5 of his penalty order for assessment year 1993-94 that even if the clause (c) is applicable, the penalty order is within limitation. It has been contended that the Joint Commissioner has made similar observations in respect of penalties for assessment years 1994-95 and 1995-96. For the sake of convenience and ready reference, we quote the provisions of section 275(1)(a), (b) and (c) as under :
"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 of the Commissioner (Appeals) under section 246 or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are 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 Appellate 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. ,
7. It has been contended on behalf of the assessee that the assessing officer, while framing assessment under section 143(3), initiated the penalty proceedings under section 271D and 271E specifically mentioning the same in the assessment orders that the penalty proceedings have been initiated. This is contained in paras. (ii) and (iii) in the assessment order for assessment year 1993-94, It has also been contended that the fact of initiation of penalty proceedings has also been recorded in para 2 on p. 1 of the penalty order under section 271D for assessment year 1993-94 wherein the Joint Commissioner observed that while passing the assessment order under section 143(3), the assessing officer has duly taken note of this and duly discussed the violation of provisions of section 269SS and initiated penalty proceedings under section 271D along with assessment order forming part of assessment proceedings; and that the Assistant Commissioner issued penalty notice under section 271D vide letter dated 15-3-1996, served on 16-3-1996. A copy of notice is placed on p. 2 of PB for assessment year 1993-94. It has been contended by the learned authorised representative of assessee that the penalty proceedings having been initiated on 15-3-1996, by Issuing specific notice for the purpose, as provided in law by assessing officer, the period of six months from the end of the month in which the penalty notice was issued for initiation of penalty proceedings expired on 30-9-1996. It has also been the contention of the authorised representative of assessee that these penalty proceedings are independent of the assessment proceedings and are accordingly covered by section 275(1)(c). It has also been contended that the initiation of penalty proceedings for all the assessment years involved in appeals under consideration is identical and identical findings were given by assessing officer and Joint Commissioner in respective orders in all the cases. It has also been contended that the gist of assessees contentions has been reproduced by Joint Commissioner in para 4 on pgs. 2 and 3 of the penalty order under section 271D for assessment year 1993-94 wherein the issuance of show-cause notice by Joint Commissioner on 15-3-1996, 12-9-1996,and 20-12-1996, for assessment years 1993-94, 1994-95 and 1995-96 has been mentioned it has been contended that in view of the aforesaid facts, the order of penalty should have been passed within six months from the end of the month wherein assessment was completed. It has also been contended that the provisions of section 275(1)(a) have no application to the facts of the instant cases for the reasons that the penalties under sections 271D and 271E have no dependence on or relevance with the computation of income being done in the assessment and so the decision of the appeals against assessment orders would not have any bearing on the concerned limitation. It has been contended that the Joint Commissioner rejected the assessees contention observing that the provisions of section 275(1)(c) are residuary in nature which can be said applicable only in a case where relevant assessment order is not subject of appeal which is not the case of the appellant. He has contended that the learned Commissioner (Appeals) also held that the nature of penalties and their dependence on or relevance with the issue involved in the relevant order is not relevant aspect and what is required under this clause is that relevant order should be subject-matter of appeal/irrespective of issues involved therein. He has contended that the learned Commissioner (Appeals) accordingly upheld the decision of Joint Commissioner that penalties imposed were within limitation. The learned authorised representative of assessee has contended that his contentions in respect of the issue of limitation are the same as raised by him before the authorities below. He has relied on the following decisions
1. ManoharIal v. Dy. CIT (1995) 53 TTJ (JP-Trib) 105;
2. Manoj Lalwani v. Joint CIT 23 Tax World (Jp-Trib) 434,. and
3. Assistant CIT v. Madan Roller Flour Mills (2000) 13 DTC 753 (Asr-Trib) : (1999) 71 ITD 275 (Asr-Trib).
8. The learned authorised representative of assessee has also theorised an analogy based on section 272A(4) contending that the said section also provides for imposition of penalties under Chapter XXI and in that section other revenue authorities have also been made competent to levy the penalty. He has contended that in section 272A(4), it has been provided that no such penalty shall be levied unless an opportunity of being heard in the matter has been provided by such authority. He has contended that wherever the legislature deemed it proper to provide for issuing of notice by such other competent authority, they have made a specific provision in this Chapter itself as has been made in section 272A(4), but no such provision has been made in sections 271D(2) and 271E(2). He has contended that accordingly, the penalty proceedings in the appeals under consideration will have to be held as having been initiated during the course of assessment proceedings by the assessing officer when he completed the assessment and took cognisance of the fact of violation and issued notices as prescribed under the relevant provisions. He has cited Mansinghka Brothers (P) Ltd. v. CIT (1984) 147 ITR 361 (Raj) and contended that it has been held in the said case that while considering the applicability of any beneficial provision, if two views are possible, then that view should be taken which is beneficial to the assessee.
9. He has contended that the impugned orders of imposition of penalty were barred by limitation and deserve to be cancelled.
10. As against this, the learned Departmental Representative or revenue has contended that Chapter XXI containing sections 270 to 275 deals with penalty. He has contended that learned authorised representative contention that section 275(1)(c) is relevant is not correct. He has contended that the Departments plea is that the provision of section 275(1)(a) is relevant. He has contended that the assessed income includes various additions including cash credits and if cash credit is treated as genuine and addition under section 68 is not tenable, then penalty under section 271D is leviable because there is violation of section 269SS if cash credit is held to be income of assessee under section 68 then section 269SS will not operate and in turn, no penalty leviable under section 271D. He has contended that because assessment was subject-matter of appeal before the Tribunal so the time-limit for levy of penalty is governed by section 275(1)(a), i.e., within six months from the date of receipt of Tribunals appellate order by CIT. He has contended that in these cases the Tribunals appellate orders were received by CIT on 17-9-1999, and so according to section 275(1)(a) the period of limitation for imposing penalty was upto 31-3-2000, and the penalty has been levied on 29-3-2000, and so the levy of penalty is within limitation. He has contended that the provision of section 275(1)(c) does not speak of any appellate proceeding., so this provision of section 275(1)(c) is not applicable here. He has contended that in Income Tax Act, there is no time-limit for initiation of penalty under section 271D/271E but sub-section (2) of section 271D and of section 271E provide jurisdiction to Joint Commissioner for levy of penalty. He has contended that after receipt of Tribunals order, the assessing officer referred the matter to Joint Commissioner for levy of penalty; and the Joint Commissioner then issued notice to assessee on 21-1-2000, and then he levied penalty on 29-3-2000. He has contended that the levy of penalty by Joint Commissioner is also within six months from issue of notice (initiation of penalty proceedings) by Joint Commissioner. He has contended that those penalty proceedings which have no relevance with assessment proceeding alone are needed to be completed within six months from initiation as per time-limit given in section 275(1)(c) because in those cases the appeal against assessment have no effect on penalty proceedings. He has contended that the other category of penalty proceedings which have relevance with assessment proceedings, as quantum of such penalties is determinable only on the final outcome of assessment are governed by section 275(1)(a). He has contended that the citation referred to by the learned authorised representative of assessee are distinguishable on facts and do not apply in the matter.
11. We have considered the rival contentions, the relevant material on record, as also the cited decisions. From the perusal of record, we find the fact-situation for all the three assessment years in respect of the date of issuance of notice for the levy of penalty by assessing officer and by the Joint Commissioner and last date for levy of penalty as per department and as per the assessee as under
Asst. yr.
Notice by assessing officer Notice by Joint Commissioner Last date for levy of penalty as per revenue Last date for levy of penalty as per assessee Date of penalty order under section 271D under section 271E under section 271D under section 271E 93-94 15-3-1996/P2 PB 15-3-1996/P3 PB 21-1-2000 21-1-2000 31-3-2000 30-9-96 29-3-2000 94-95 12-9-1996/P3 PB 12-9-1996/P4 PB 21-1-2000 21-1-2000 31-3-2000 31-3-97 29-3-2000 95-96 20-12-1996/P1 120-12-1996/P3 21-1-2000/P2 21-1-2000/P4 31-3-2000 30-6-97 28-3-2000
12. In (1995) 53 TTJ (Jp-Trib) 105 (supra), Tribunal, Jaipur has held that penalties under sections 271D and 271E are quite independent of the assessment proceedings. It has been observed that the faults under those sections would normally be noticed in the course of assessment proceedings, out once having noticed the defaults, this penalty proceeding will be-independent of the assessment proceedings and the penalties shall be imposable by Deputy Commissioner only. Even initiation of these penalty proceedings can be independent of the assessment proceedings and that section 275 has undergone drastic changes to take care of such proceedings. It has been held that it is clause (c) which takes care of such cases. After quoting the provision of section 275(1)(c), the Tribunal has observed in para 10 of its order as under :
"From the above clause, it will be seen that the later part, that is, commencing from the words "or six months ..............." envisages and takes care of the limitation period in those cases where penalty proceedings can be initiated independent of the assessment proceedings. The earlier part of clause (c) is meant for those penalty proceedings which are initiated in the course of assessment or any other proceedings. Under both the situations, it is contemplated that there will not be any necessity to extend the period of limitation on account of appellate proceedings and, hence, are clubbed together in the same clause. Thus in our view, in the case before us, the limitation prescribed under clause (c) of sub-section (1) of section 275 would be applicable".
13. In 23 Tax World 434 (supra), Tribunal Jaipur, while dealing with the matter of penalty under section 271D, has held that the penalty proceedings under section 271D can be initiated even after completion of assessment. The Tribunal also held that the period of six months can be reckoned from the end of the month during which penalty proceedings were initiated in case these were initiated after the completion of the assessment in view of section 275(1)(c). In (1984) 147 ITR 361 (Raj) (supra) the Honble Rajasthan High Court has held as under :
"While considering the accessibility or applicability of any beneficial provision or any interpretation of facts or inferences to be drawn from facts, if two views are possible, then, that view should be taken which may be beneficial to the assessee."
14. In our considered opinion, the matter is squarely covered by the decision of Tribunal, Jaipur, rendered in the case of Manoharlal v. Dy. CIT (1995) 53 TTJ (Jp-Trib) 105 (supra) discussed above which is further supported by the decision of Tribunal, Jaipur, rendered in the case of Manoj Lalwani v. Joint Commissioner (supra) as also by the above referred decision of the Honble jurisdictional High Court in the case of Mansinghka, Bros. (P) Ltd. v. CIT (supra). As mentioned above, it has been held by the Tribunal, Jaipur, in the case of Manoharlal v. Dy. CIT that the penalties under sections 271D and 271E are quite independent of assessment proceedings and initiation of these penalty proceedings can be independent of the assessment proceedings and that in respect of the penalties under sections 271D and 271E the period of limitation prescribed under clause (c) of sub-section (1) of section 275 would be applicable and not clause (a) of section 275(1). No contrary decision has been brought to our notice. In the circumstances, we need justifiably follow the aforesaid decision of Tribunal, Jaipur. We do not find force in the contention of the learned Departmental Representative of revenue regarding the cash credit being found genuine or otherwise in the assessment proceedings and in turn making the proceedings for penalty under sections 271D and 271E dependent on the assessment. In our considered opinion, even otherwise, even if the genuineness of cash credit was determined in assessment that does not restrain the initiation of proceedings for penalty under section 271D and 271E prior to the conclusion of assessment nor does that make the initiation of proceedings for penalty under sections 271D and 271E depend on the completion of assessment. When the assessee himself comes forward before the Department with the plea of certain borrowings in cash and the payment in cash exceeding the prescribed limits, this fact-situation does make out a prima facie case for levy of penalty under section 271D/271E and does provide basis for the initiation of the aforesaid penalties without depending upon the assessment order. Besides, we may cite an example for illustrative purpose. Suppose X has advanced cash advance/loan of Rs. 30,000 in cash to Y or X has received payment of Rs. 30,000 in cash from Y the cash deposit and the cash repayment exceed the prescribed limit of Rs. 20,000 and so make out a prima facie case for the levy of penalty under sections 271D and 271E. This is noticed during assessment proceedings of X. However, may be that the income of Y is not taxable/assessable for the year. In such an eventual situation, hypothetically though, an assessment of Y will obviously not take place and if the interpretation regarding the initiation of proceedings for penalty under sections 271D and 271E is taken otherwise, that is, depending on completion of assessment, the initiation of penalty proceedings may never take place at all. However, viewed as the initiation of penalty proceedings under section 271D/271E to be independent of assessment, the penalty proceedings under sections 271D and 271E can well be initiated whether the income of Y be taxable/assessable for the year or not. Again, the observation of Joint Commissioner in para 5(ii) on p. 3 of the penalty order, as pointed out by the learned authorised representative of assessee in para. 1.9 on p. 6 of his w/s, that section 275(1)(a) is applicable to the penalty proceedings initiated under Chapter XXI cannot be accepted as correct as rightly pointed out by the learned authorised representative of assessee in his w/s. If that were the situation, and the provision of section 275(1)(a) were to apply to all the penalty proceedings initiated under Chapter XXI then the provisions of clauses (b) and (c) of section 275(1) will be rendered redundant and inapplicable in any case. As such, considering all the facts and circumstances of the case, we respectfully follow the decision of Tribunal, Jaipur, in the case of Manoharlal v. Dy. CIT (supra) and accordingly hold that in respect of the penalty proceedings under sections 271D and 271E, the period of limitation prescribed under section 275(1)(c) is applicable and not that prescribed under section 275(1)(a).
15. As regards the factum of initiation of these penalty proceedings, it is revealed from record that the assessing officer while completing assessment, took cognizance of the default under sections 269SS and 269T, and in turn, of penalties under sections 271D and 271E, and issued notices for the said penalties. The discussion/finding is contained specifically in paras. 16 and 17 on p. 19 and paras 19(ii) and 19(iii) of assessment order for assessment year 1993-94. Similar is the position in assessment year 1994-95 and 1995-96 as well. This discussion/finding of assessing officer regarding taking cognizance of the default under sections 271D and 271E and issuance of notices for the said penalties has also been specifically mentioned in the penalty orders. The above fact-situation regarding the assessing officers taking note of the default, initiation of penalty proceedings, and issuance of notice, and the mentioning of this factum of assessing officers said action in penalty order may be tabulated as under :
Asst. yr.
Assessment order Assessment order Penalty order Remarks Dated Discussion of penalty proceeding and issuance of notice Mention of assessing officers discussion of initiation of penalty under section 271D & 271E under section 271D under section 271E 1993-94 15-3-1996 para 16 page 19 para 19(ii) page 20 para 17 page 19 para 19(iii) page 20 para 5(iii), (v), (vi), (ix) on pages 3 to 5, para 6 on page 5 1994-95 12-9-1996 para 21 page 23 para 24(ii) page 24 para 22 page 23 para 24(iii) page 24 para 5(iii), (vii), (ix) on pages 3 to 5, para 6 on page 5 1995-96 20-12-1996 para 17 page 16 para 19(ii) page 17 para 18 pages 16 & 17 para 19(iii) page 17 para 5(iii), (iv) (x) on pages 3 to 5, para 6 on page 5
16. We find force in the contention of the learned authorised representative of assessee that the issuance of notice of initiation of penalty under sections 271D and 271E may appropriately and validly be by assessing officer without necessitating further issuance of notice for the said penalties by Joint Commissioner, the other authority, competent to levy the penalty. Section 272A also provides for imposing penalty under Chapter XXI and therein other revenue authorities have also been made competent for the levy of penalty. In section 272A, however, provision has been made in sub-section (4) for the essential issuance of notice by such other competent authority. The said provision of law may, for convenience, be quoted as under
"Section 272A(4) No order under this section shall be passed by any income-tax authority referred to in sub-section (3) unless the person on whom the penalty is proposed to be imposed is given an opportunity of being heard in the matter by such authority"
But no such corresponding provision is found in sections 271D(2) and 271E(2). In such a situation, we find substance in the contention of the learned authorised representative of assessee, as made on p. 11 of his w/s that these penalty proceedings will have to be held as having been initiated during the course of assessment proceedings by the assessing officer when he completed the assessment proceedings, took cognizance of the fact of violation and issued the notices prescribed under the relevant sections. In the circumstances, these penalty proceedings are found to have been initiated by assessing officer while completing assessment and issuing notices; and the initiation of these penalty proceedings cannot be said to have been on the dates when the Joint Commissioner issued notices. In that view of the matter, the assessing officer having initiated these penalty proceedings and issued notices under sections 271D and 271E in respect of assessment years 1993-94, 1994-95 and 1995-96 on 15-3-1996, 12-9-1996, and 20-12-1996, respectively, the last day for the levy of penalty as per the period of limitation prescribed under section 275(1)(c) fell on 30-9-1996, 31-3-1997 and 30-6-1997, respectively, but the penalty orders under sections 271D and 271E for the said three assessment years were made on 29-3-2000, 29-3-2000 and 28-3-2000, as detailed above in the table given in para 11. Obviously, the penalty orders under sections 271D and 271E for all the above three assessment years 1993-94, 1994-95 and 1995-96 have been passed after the period of limitation as prescribed under section 275(1)(c). As such, all the aforesaid six penalty orders having been passed beyond the prescribed period of limitation, the same are barred by limitation and so not tenable in law, and liable to be quashed.
17. In view of our conclusion drawn above, regarding all the penalty orders under sections 271D and 271E for the three assessment years 1993-94 to 1995-96 involved in these twelve appeals as being time-barred and so not tenable in law, and liable to be quashed an used hardly enter into discussions on merits of other issues involved in all these appeals of assessee and of revenue., though it may safely be observed that even otherwise the assessee has a good case on merits as well in respect of most of transactions.
18. However, we may also consider the assessees ground of reasonable and sufficient cause as contained in various grounds in various assessment years as tabulated below :
Asst. yr.
271D 271E 1993-94 Ground 5 Ground 5 Bona fide act reasonable and sufficient cause under section 273B + transaction genuine Bona fide act reasonable and sufficient cause under section 273B + transaction genuine 1994-95 Ground 6 Ground 7 Bona fide belief genuineness of transaction and sufficient cause under section 273B Bona fide belief genuineness of transaction and sufficient cause under section 273B 1995-96 Ground 6 Ground 5 Reasonable and sufficient cause regarding Annexure B Reasonable cause and bona fide belief regarding Annexure B under section 273B Note Commissioner (Appeals) accepted reasonable and sufficient cause of bona fide belief reg. Annexs A & C (refer statement of facts and ground-5) Note : Commissioner (Appeals) accepted reasonable and sufficient cause and bona fide belief reg. Annexs 'A' & C (refer statement of facts of ground 5)
19. As has been contended by the learned authorised representative of assessee, the object and intention, with which the provisions of section 269SS and 269T were brought on statute are also relevant/important to be kept in view. The object and intention behind introducing the above provisions have been clarified and explained in CBDTs Circular No. 387, dated 6-7-1984 (pp. 4 and 5 of PB for assessment year 1993-94) as being to stop circulation of black money by countering the acts of taxpayers in explaining away the unaccounted money found during search as representing loans or deposits etc. In the instant case, however, the credits in assessment year 1993-94 on enquiry, were found to be genuine as has been contended by learned authorised representative of assessee. Besides, the returns for assessment years 1993-94 and 1994-95 were filed much earlier to the date of search, based on books of accounts which were complete and closed, as has been pleaded by assessee in para 2.3 to 2.5 on pp. 15 to 17 of common w/s. The CBDTs Circular No. 556, dated 23-2-1990 has also been referred to by the learned authorised representative of assessee and the following extract, quoted in his common w/s on its p. 18 and also available on pp. 4 & 5 of assessees PBI being for assessment year 1993-94 may be reproduced as under :
"4. The Board is of the opinion that where a Kachha Arhatiya sells goods belonging to an agriculturist, the sale proceeds thereof which remain with him cannot regarded as deposit made by the agriculturist with Kachha Arhatiya. Further, where the Kachha Arhatiya remits only a part of sale proceeds to the agriculturist, the unremitted part of the sale proceeds would also not assume the character of a deposit. Therefore, the repayment of such sale proceeds does not fall within the purview of section 269T of the Act."
20. From the perusal of record we find that in assessment year 1993-94, the penalties under sections 271D and 271E were levied by Joint Commissioner in respect of the amount of seven entries pertaining to five farmers (p. 12 CW/s) of Annexure A and amount of Annexure B representing balancing of accounts in respect of one hundred and seventy-five agriculturists (p. 8 Commissioner (Appeals)s order). Commissioner (Appeals) has deleted the penalties in respect of whole amount of Annexure B and in respect of Rs. 75,000 out of Rs. 2,64,000 of Annexure A, and thus sustained in respect of Rs. 1,89,000 of Annexure A only. Simiarly as regards assessment year 1994-95, the Joint Commissioner levied penalties in respect of amounts of Annexures A, B, C & D. The amount of Annexure A pertains to sale of wheat by 14 agriculturists to FCI (p. 5 of w/s) amounts of Annexure B stated to be cash deposits by six farmers (p. 6 of w/s) amounts of Annexure C represent sale of crops by farmers (p. 7 para 12 of Commissioner (Appeals) order). In respect of tallying credit entries. The learned Commissioner (Appeals) has sustained penalties in respect of amount of Annexure B and C being Rs. 7,20,443 (Rs. 2,30,536 + 4,89,907) under section 271D and Rs. 8,30,247 (3,01,931 x 5,28,316) under section 271E. In the same manner, the Joint Commissioner levied penalties in respect of amounts of Annexure A, B & C. The amounts of annexure A represent deposit by farmers of cash receipts from FCI, being sale proceeds of wheat; the amounts of Annexure B represent non-tallied credit entries pertaining to farmers in notebook A-1/11 (p. 5 Commissioner (Appeals)s order and p. 28 CW/s), and the amount of Annexure C represent tallying credit entries. Deposited by farmers out of sale of crops (para 12, p. 7 Commissioner (Appeals)s order). The learned Commissioner (Appeals) sustained the penalties of Rs. 8,99,963 each under sections 271D and 271E representing the amounts of Annexure B and cancelled the penalties in respect of the amounts of Annexures A and C. As such it is revealed from the record that all the transactions, involved in the penalties levied by Joint Commissioner under sections 271D and 271E in the three assessment years 1993-94, 1994-95 & 1995-96, are of assessee-Arhatiya with farmer agriculturist constituents, and there has been no dispute by the department on this point.
21. The contentions of the learned authorised representative of assessee, in this regard, has been as under :
(i) That the assessee a Kachha Arhatiya (K.A.) has to deal with the agriculturists of nearby villages who bring their agricultural produce to K.A. for its sale. These agriculturists do not take to their homes, the money of sale proceeds of their produce at once after the sale and keep the money with K.A. and use it afterwards for their personal or agricultural purposes like purchasing seeds, fertilizers, pesticides, medicines, clothes and may at times also take or receive cash in piecemeal, as per their needs. They generally do not keep the entire money at their homes for the fear of its wasteful spending in avoidable purposes or due to fear of theft, etc. This has been the practice prevalent since long even before coming into force of the provisions of sections 269SS and 269T.
(ii) These agriculturists operate with K.A. as their banker, and in the manner of a current account by numerous and frequent transactions of withdrawals depending on their needs and getting the credits of the sale proceeds in their accounts. The farmers are rough and rustic and are also orthodox in their dealings and by their nature as also as per past practice they feel it seemed too depend on such K.A. and deal with them accordingly, who satisfy their timely needs without paper formalities.
(iii) In such dealings the agriculturists on many occasions bring their other money accumulated with them from their other sources like cattle breeding or farming poultry farming, sale of vegetable or other orchard corp which they sell at places other than grain mandies. They bring such money in cash to be kept by K.A. without any conditions.
(iv) That such violations, if it be held so, has been on account of part unobjected traded practice, which had been in all bona fides, and so followed.
(v) Unobjected past conduct without there being change in facts and law has to be accepted, and principle of res judicata applies Radha Soami Satsang v. CIT (1992) 193 ITR 321 (SC), Sardar Kehar Singh v. CIT (1992) 195 ITR 769 (Raj) and Pukhraj Rikhabdas v. CWT (1993) 203 ITR 770 (Raj) been referred.
(vi) The assessee has bona fide belief of permissibility of transactions by R.A. with farmers. Harpal Singh Jaswant Singh v. ITO (1996) 51 TTJ (Asr-Trib) 383 has been cited. Even mistaken belief about the provision constitutes reasonable cause for cancellation of penalty under section 271D ITO v. Babu Lal Singhvi 23 Tax World 223 (Jod-Trib) has been cited.
(vii) When transactions are not impeached as bogus, no penalty can be levied under sections 271D and 271E. M.M. George Brothers (1993) 47 TTJ (Coch-Trib) 434, Industrial Enterprises v. Dy. CIT (2000) 17 DTC 425 (Hyd-Trib) : (2000) 73 ITD 252 (Hyd-Trib), Vir Sales Corpn. v. Assistant CIT (1994) 50 TTJ (Ahd-Trib) 130 and Dr. Deepak Muchala v. ITO (1997) 58 TTJ (Bom-Trib) 524 have been referred to.
22. (i) In (1992) 193 ITR 321 (SC) (supra) it has been held by Honble Supreme Court that where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent year. In (1992) 195 ITR 769 (Raj) (supra) the Honble Rajasthan High Court has held that a finding reached in assessment proceedings for an earlier year after due enquiry would not be reopened in a subsequent year, if no fresh facts are found in the subsequent assessment year.
(ii) In (1996) 51 TTJ (Asr-Trib) 383 (supra) the assessee Kachha Arhatiya was having dealings with agriculturists and was keeping their money in safe custody. Transactions was not bogus and assessee was also under bona fide belief that dealing with agriculturists could not be held guilty of violation of section 269SS.
(iii) In 23 Tax World 223 (supra), Tribunal, Jodhpur, has held that a mistaken belief can be treated as bona fide belief and reasonable cause. It was a matter of penalty under section 271D.
(iv) In (1993) 47 TTJ (Coch-Trib) 434 (supra) it has been held that bona fide belief coupled with the genuineness of transactions will constitute reasonable cause for not invoking provisions of sections 271D and 271E. It has also been held that the above provisions are directory and not mandatory.
(v) In (1994) 50 TTJ (Ahd-Trib) 30 the penalties under sections 271D and 271E were involved. It was held therein that genuineness of transactions having been accepted by Department and made under bona fide belief, their being no guilty intentions. Constituted reasonable course within the meaning of section 273B.
23. Considering the above-mentioned specific contentions raised on behalf of assessee as also all the facts and circumstances of the case, and taking a circumspect view of the entire fact-situation together with the spirit of Boards Circular No. 387, dated 6-7-1987, and Circular No. 556, dated 23-2-1990 (pp. 4 to 7 PB for assessment year 1993-94) and the legal position emanating from the various judicial pronouncements cited/referred by the learned authorised representative of assessee we find that the assessee acted under bona fide belief and did have reasonable and sufficient cause, as provided under section 273B of the Income Tax Act 1961, so as to exonerate the assessee of the fault/defiance, if considered to be. In that view of the matter we find the penalties under sections 271D and 271E as not sustainable/tenable.
24. However, we may make it clear that in view of our above conclusions/findings we are not discussing the other niceties/details of rival contentions on merits each itemwise for the reason that we do not consider the same to be needed in the circumstances.
25. As such in view of our above discussions/conclusions we find all the penalties under sections 271D and 271E, levied by Joint Commissioner for assessment years 1993-94, 1994-95 and 1995-96 to be barred by limitation and so not tenable in law, and also due to the assessee having reasonable and sufficient cause, the said penalties are not sustainable. In the situation the question as to which item of alleged loan/deposit/repayment the penalty under sections 271D/271E deserves to be sustained/restored/deleted on merits loses significance, and the issue pertaining thereto gets lost. This finding of ours disposes of all the appeals of assessee as also those of revenue, under consideration. Accordingly, in view of our above findings that the orders of penalties passed under sections 271D and 271E for assessment years 1993-94, 1994-95 and 1995-96 are not tenable/sustainable in law, we quash the same.
26. In the result, all the above six appeals of assessee being ITA Nos. 429 to 434/Ju/2000 are allowed whereas all the above six appeals of revenue, being ITA Nos. 499 to 504/Ju/2000, are dismissed.