Imposition of penalty u/s 271E and 271D of the Income Tax Act

IN THE INCOME TAX APPELLATE TRIBUNAL
“A” BENCH : BANGALORE
BEFORE SHRI N. V. VASUDEVAN, VICE PRESIDENT AND
SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER
ITA Nos.2631, 2633 to 2637/Bang/2018
Assessment Years : 2009-10 to 2011-12
The Deputy Commissioner of Income Tax,
Circle – 6(2)(1),
Bangalore.

vs

Shri. C. Gangadhara Murthy,
#322, 3rd A Cross, 2nd Block,
3rd Stage, Basaveshwaranagar,
Bangalore – 560 079.
PAN : AGIPG 2668 N
Revenue by : Ms. Neera Malhotra, CIT(DR)(ITAT), Bangalore
Assessee by : Shri. V. Chandrashekar, Advocate
Date of hearing : 17.09.2021
Date of Pronouncement : 20.09.2021
O R D E R

In terms of the provisions of Sec.271-D of the Act, 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. In the case of the Assessee in the course of assessment proceedings for AY 2009- 10 to 2011-12, the AO noticed that the Assessee had repaid cash loans in violation of the provisions of Sec.269T and hence penalty proceedings u/s.271-E were intiated in the Assessment orders for AY 2009-10 dated 3.11.2014 and for AY 2010-11 & 2011- 12 by orders of assessments both dated 3.11.2014. By order dated 13.11.2014 for AY 2009-10 and orders dated 4.12.2015 for AY 2010-11 & 2011-12, orders imposing penalty were passed imposing penalty on the Assessee of a sum of Rs.7,26,00,000, 9,40,80,000 and 13,84,46,711/- respectively for AY 2009-10 to 2011-12.

3.In Commissioner of Income-tax vs. Hissaria Bros 291 ITR 244 (Raj), the assessee's contention was that the orders of penalty U/s.271D & E of the Act passed in each case for the assessment years 1993-94, 1994-95 and 1995-96 were barred by time in terms of Section 275(1)(c) was not accepted by the Assessing Officer as well as by the Commissioner of Income-tax (Appeals). The Tribunal found on the question of limitation that the order of penalty should have been passed within 6 months from the end of the month in which the assessment was completed. On this premise, it was held that since all the penalty orders were passed beyond 6 months from the end of the month in which assessments were completed the penalty orders were barred by time. It did not agree with the contention of the Revenue that the limitation for completing the penalty proceedings was governed by Section 275(1)(a) and not by Section 275(1)(c) because the assessment proceedings for each of the assessment years in question have been subjected to appeal.

4. In the result, the appeals are allowed for statistical purpose.
Pronounced in the open court on the date mentioned on the caption page.

Please find attached the enclosed file for the full judgement