Sh. Baldev Singh, Machhiwara v. Addl. CIT, Khanna

ITA 1126/CHANDI/2011 | 2005-2006
Pronouncement Date: 28-02-2012 | Result: Allowed

Appeal Details

RSA Number 112621514 RSA 2011
Assessee PAN ACHPS2952C
Bench Chandigarh
Appeal Number ITA 1126/CHANDI/2011
Duration Of Justice 3 month(s) 4 day(s)
Appellant Sh. Baldev Singh, Machhiwara
Respondent Addl. CIT, Khanna
Appeal Type Income Tax Appeal
Pronouncement Date 28-02-2012
Appeal Filed By Assessee
Order Result Allowed
Bench Allotted B
Tribunal Order Date 28-02-2012
Assessment Year 2005-2006
Appeal Filed On 23-11-2011
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE MS SUSHMA CHOWLA JUDICIAL MEMBER AND SHRI MEHAR SINGH ACCOUNTANT MEMBER ITA NOS. 1125 & 1126/CHD/2011 ASSESSMENT YEAR: 2005-06 BALDEV SINGH V. ADDL C.I.T. PROP. M/S GURU NANAK JEWELLERS KHANNA RANGE MACHHIWARA KHANNA PAN NO. ACHPS 2952 C (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUDHIR SEHGAL RESPONDENT BY: SMT. JAISHREE SHARMA DATE OF HEARING: 17.01.2012 DATE OF PRONOUNCEMENT: 28.02.2012 ORDER PER SUSHMA CHOWLA JM: BOTH THE APPEALS BY THE ASSESSEE ARE AGAINST THE OR DERS OF CIT(A)-II LUDHIANA DATED 18.10.2011 RELATING TO ASSESSMENT YE AR 2005-06 AGAINST THE PENALTIES LEVIED UNDER SECTION 271D AND 271E OF THE I.T. ACT 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THAT THE WORTHY CIT(A)-II LUDHIANA HAS ERRED I N CONFIRMING THE LEVY OF PENALTY OF RS. 2 LAKHS U/S 2 71- D/271E OF THE INCOME-TAX ACT 1961. 2. THAT THE CONFIRMATION OF PENALTY BY THE WORTHY C IT(A)- II LUDHIANA IS AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 3. THAT THE CIT(A) HAS FAILED TO CONSIDER THE EXCEP TIONAL CIRCUMSTANCES AS NARRATED BEFORE HIM AS PER CLAUSE (G) OF RULE-6DD AND FOR WHICH HE HAS FAILED TO CONSIDER THE NECESSARY EVIDENCE AS FURNISHED BEFORE HIM 4. NOTWITHSTANDING THE ABOVE GROUND OF APPEALS IT IS SUBMITTED THAT NO PENALTY IS OTHERWISE LEVY ABLE SI NCE THE AMOUNT HAS ALREADY BEEN SURRENDER AS INCOME AND TA X ALREADY PAID ON THE SAME AND THE CIT(A) HAS FAILED TO CONSIDER THAT ASPECT. 2 5. THAT THE APPELLANT CRAVES LEAVE TO ADD OR AMEND ANY GROUND OF APPEAL BEFORE THE APPEAL IS FINALLY HEAR D OR DISPOSED OFF. 3. THE ISSUE RAISED IN THE PRESENT APPEALS IS AGAIN ST THE LEVY OF PENALTY U/S 271-D AND 271-E OF THE INCOME-TAX ACT 1961. BOTH T HE APPEALS OF THE ASSESSEE WERE HEARD TOGETHER AND ARE BEING DISPOSED OFF BY T HIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 4. BRIEF FACTS OF THE CASE ARE THAT SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE BUSINESS PREMISES OF THE ASSESSEE ON 10.12.2 007. DURING THE COURSE OF SURVEY COPIES OF CERTAIN DOCUMENTS WERE IMPOUNDED AND ORIGINAL DOCUMENTS WERE RETURNED TO THE ASSESSEE. PAGE 228 OF THE AFOR ESAID DOCUMENTS REVEALED THAT THE ASSESSEE HAD RECEIVED PAYMENT OF RS. 2.00 LAKHS ON 3.1.2005 FROM SHRI BABU SINGH. THE SAID AMOUNT OF RS. 2.00 LAKHS WAS REPAID IN CASH OF RS. 75 000/- ON 24.1.2005 RS. 25 000/- ON 3.2.2005 RS .50 000/- ON 3.3.2005 RS. 5 000/- ON 9.3.2005 AND RS. 45 000/- ON 15.3.2005 T O SHRI BABU SINGH. FURTHER INTEREST OF RS. 4500/- WAS PAID IN CASH ON 12.3.200 5. SHOW-CAUSE NOTICE WAS ISSUED TO THE ASSESSEE BY THE AO FOR IMPOSING PENAL TY U/S 271-D AND 271-E OF THE ACT. THE PLEA OF THE ASSESSEE BEFORE THE AO WAS THAT THE PROCEEDINGS SHOULD BE DROPPED IN VIEW OF CERTAIN CASE LAWS WHIC H WERE REJECTED BY THE AO IN THE ABSENCE OF ANY REASONABLE CAUSE. THE PLEA O F THE ASSESSEE THAT SHRI BABU SINGH WAS AGRICULTURIST HAVING NO BANK ACCOUNT AND HENCE CASH TRANSACTION WAS ALSO REJECTED BY THE AO. IN THE A BSENCE OF ANY URGENCY THE AO HELD THE ASSESSEE TO HAVE VIOLATED THE PROVISION S OF SECTION 269 SS IN ACCEPTING CASH LOANS ABOVE RS. 20 000/- AND FURTHER PROVISIONS LAID DOWN IN SECTION 269T OF THE ACT IN REPAYING THE LOAN IN CAS H BY AN AMOUNT EXCEEDING RS. 20 000/-. THE ASSESSEE WAS HELD LIABLE FOR LEV Y OF PENALTY OF RS. 2.00 LAKHS EACH U/S 271-D AND 271-E OF THE ACT. THE PLE A OF THE ASSESSEE THAT IT HAD SURRENDERED A SUM OF RS. 30.00 LAKHS PURSUANT TO TH E SURVEY AND THE AMOUNT WAS COVERED IN THE SAID SURRENDER WAS REJECTED BY THE AO AS THE SURRENDER WAS 3 FOR ASSESSMENT YEAR 2007-08 AND THE LOAN WAS TAKEN AND REPAID IN FINANCIAL YEAR 2004-05. 5. THE CIT(A) UPHELD THE ORDERS OF AO IN LEVYING PE NALTY U/S 271-D AND 271E OF THE ACT. THE ASSESSEE IS IN APPEAL AGAINST THE SAID ORDERS OF THE CIT(A). 6. THE LD. AR FOR THE ASSESSEE STATED THAT DURING T HE COURSE OF SURVEY ON 10.1.2007 THE ASSESSEE SURRENDERED RS. 30.00 LAKHS ON ACCOUNT OF THE DOCUMENTS FOUND DURING THE COURSE OF SURVEY AND RS. 14.00 LAKHS EXCESS STOCK FOUND DURING THE SURVEY. THE NEXT PLEA OF THE ASSE SSEE WAS THAT IN RELATION TO ASSESSMENT YEAR 2005-06 NO PROCEEDINGS WERE INITIAT ED U/S 147 OF THE ACT AND CONSEQUENTLY THE AO COULD NOT HAVE INITIATED THE PE NALTY PROCEEDINGS DURING THE PROCEEDINGS BEING COMPLETED FOR ASSESSMENT YEAR 2007-08. OUR ATTENTION WAS DRAWN TO THE ASSESSMENT ORDER PASSED RELATING T O ASSESSMENT YEAR 2007- 08. THE LD. AR FOR THE ASSESSEE FURTHER STRESSED T HAT IN THE ABSENCE OF ANY RE- ASSESSMENT PROCEEDINGS BEING INITIATED FOR ASSESSME NT YEAR 2005-06 THE PENALTY U/S 271-D AND 271-E OF THE ACT RELATING TO ASSESSMENT YEAR 2005-06 WAS NOT WARRANTED IN VIEW OF THE RATIO LAID DOWN B Y THE HON'BLE PUNJAB & HARYANA HIGH COURT IN CIT V. MANOHAR LAL THAKRAL I TA NO. 812 OF 2010 DATE OF DECISION 14.1.2011. THE SECOND PLEA OF THE LD. AR FOR THE ASSESSEE WAS THAT THE TRANSACTION IN QUESTION WAS GENUINE AS THE LOAN WAS TAKEN AND WAS REPAID IN CASH AND THE SAID LOAN WAS FOR AGRICULTURAL PURPOSE S. THE LD. AR FOR THE ASSESSEE FURTHER STRESSED THAT BECAUSE OF REASONABL E CAUSE NO PENALTY U/S 271- D AND 271-E COULD BE LEVIED IN VIEW OF THE RATIO L AID BY THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF CIT V. BHAGWATI PRASAD BA JORIA (HUF) 263 ITR 487 (GAU). 7. THE LD. DR FOR THE REVENUE POINTED OUT THAT THE RATIO LAID DOWN BY HON'BLE PUNJAB & HARYANA HIGH COURT IS NOT APPLICAB LE AS THE FACTS WERE 4 DISTINGUISHABLE. IT WAS POINTED OUT BY THE LD. DR FOR THE REVENUE THAT DURING THE COURSE OF SURVEY CERTAIN DOCUMENTS WERE FOUND WHICH NECESSITATED THE LEVY OF PENALTY U/S 271-D AND 271-E OF THE ACT. OUR ATT ENTION WAS DRAWN TO THE LANGUAGE OF SAID SECTION IN WHICH IT WAS POINTED OU T THAT WHERE IN THE COURSE OF ANY PROCEEDINGS AND THE PROCEEDINGS IN THE PRESENT CASE ARE THE ASSESSMENT PROCEEDINGS RELATING TO ASSESSMENT YEAR 2007-08. FU RTHER IT WAS POINTED OUT BY THE LD. DR FOR THE REVENUE THAT THE EXPLANATION OF THE ASSESSEE IN RESPECT OF PURPOSE OF CASH LOAN TAKEN IS VARYING. 8. THE LD. AR FOR THE ASSESSEE IN REJOINDER STRESSE D THAT THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IS SQUARELY APP LICABLE. 9. WE HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE RECORD. SURVEY U/S 133A OF THE ACT WAS CONDUCTED AT THE PREMISES OF TH E ASSESSEE ON 10/01/2007. DURING THE COURSE OF SURVEY CERTAIN DISCREPANCIES WERE FOUND ON THE PHYSICAL VERIFICATION OF STOCK CASH IN HAND AND CERTAIN DOC UMENTS. EXCESS STOCK OF RS.14 LACS WAS FOUND ON THE DAY OF SURVEY. THE ASSE SSEE OFFERED SUM OF RS.30 LACS AS ADDITIONAL INCOME TO COVER ALL DISCREPANCIE S FOUND IN THE BOOKS OF ACCOUNT AS WELL AS OTHER DOCUMENTS. THE ASSESSEE DE CLARED THE ADDITIONAL INCOME OVER AND ABOVE THE INCOME OF THE YEAR IN THE RETURN OF INCOME FILED RELATING TO ASSESSMENT YEAR 2007-08. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS RELATING TO ASSESSMENT YEAR 2007-08 WH EN CONFRONTED WITH THE DOCUMENTS FOUND EVIDENCING THE RECEIPT AND REPAYMEN T OF CASH LOAN TRANSACTION WITH ON SH. BABU SINGH OF RS. 2 LACS EACH THE STAN D OF THE ASSESSEE WAS THAT ONLY EXCESS STOCK OF RS. 14.37 LACS WAS FOUND AND O UT OF SURRENDER OF RS. 30 LACS BALANCE SURRENDER OF RS. 15.65 LACS COVERED T HE ABOVE SAID LOAN TRANSACTION AND THE PENALTY PROCEEDINGS U/S 271D AN D 271E OF THE ACT SHOULD BE DROPPED. THE ASSESSING OFFICER HOWEVER PASSING THE ORDER OF ASSESSMENT RELATING TO THE ASSESSMENT YEAR OBSERVED AS UNDER: 5 A PERUSAL OF PHOTOCOPY OF DOCUMENTS DULY CERTIFIED (PAGE NO. 228) BY THE PROPRIETOR KEPT BY THE AO REVEALED THAT HE HAS RECEIVED A CASH PAYMENT OF RS. 2 LACS I.E. EXCEEDING RS. 20.000/- O N 03.01.05 FROM SH. BABU SINGH RESIDENT OF VILL. CHADODHI AND HAS REPAID ALSO THE SAME ON 24.01.05 03.02.05 03.03.05 & 12. 03.05 ETC. THUS HE HAS VIOLATED BOTH THE SECTIONS 269SS/269T A ND ACCORDINGLY SHOW CAUSE NOTICE DATED 23.11.09 WAS IS SUED AND SERVED TO THE ASSESSEE ON 26.11.09. 10. FOLLOWING THE SAID OBSERVATION PENALTY PROCEED INGS WERE INITIATED UNDER SECTIONS 271D AND 271E OF THE ACT IN THE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT RELATING TO ASSESSMENT YE AR 2007-08. PENALTIES UNDER SECTIONS 271D AND 271E OF THE ACT WERE LEVIED VIDE SEPARATE ORDERS PASSED RELATING TO ASSESSMENT YEAR 2005-06. 11. PENALTY U/S 271D OF THE ACT IS LEVIABLE WHERE THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS OF THE ACT WHICH P ROVIDES THAT NO PERSON SHALL ACCEPT LOAN OR DEPOSIT EXCEEDING RS. 20000/- OTHERW ISE THAN BY CROSSED CHEQUE OR DEMAND DRAFT. PENALTY U/S 271D OF THE ACT IS LEV IABLE EQUAL TO THE AMOUNT OF SUCH CASH LOAN ACCEPTED. 12. FURTHER PENALTY U/S 271E OF THE ACT IS LEVIABLE FOR VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT WHICH INTER ALIA PROVIDE THAT NO LOAN OR DEPOSIT SHALL BE REPAID EXCEPT BY WAY OF CROSSED C HEQUE OR DEMAND DRAFT WHERE SUCH LOAN OR DEPOSIT EXCEEDS RS. 20000/-. P ENALTY U/S 271E OF THE ACT IS LEVIABLE EQUIVALENT TO THE AMOUNT OF CASH LOAN O R DEPOSIT REPAID. 13. THE ISSUE ARISING IN THE PRESENT APPEALS IS WHE THER WHERE NO PROCEEDINGS WERE INITIATED OR PENDING IN RESPECT OF THE CAPTION ED ASSESSMENT YEAR I.E. ASSESSMENT YEAR 2005-06 PENALTY PROCEEDINGS U/S 27 1D OR 271E OF THE ACT COULD BE INITIATED WHILE COMPLETING THE ASSESSMENT PROCEEDINGS RELATING TO ASSESSMENT YEAR 2007-08. ADMITTEDLY THE DOCUMENTS E VIDENCING THE LOAN TRANSACTION WERE FOUND DURING THE COURSE OF SURVEY PROCEEDINGS ON THE BUSINESS 6 PREMISES OF THE ASSESSEE ON 10/01/2007. THE ASSESSE E HAD OFFERED ADDITIONAL INCOME OF RS. 30 LACS WHICH WAS INCLUDED IN HIS RE TURN OF INCOME. DURING THE COURSE OF ASSESSMENT PROCEEDINGS RELATING TO ASSESS MENT YEAR 2007-08 THE ASSESSEE WAS CONFRONTED WITH THE DOCUMENTS RELATABL E TO FINANCIAL YEAR 2004-05 AND ASKED TO SHOW CAUSE AS TO WHY PENALTY PROCEEDIN GS U/S 271D & 271E OF THE ACT SHOULD NOT BE INITIATED. NO PROCEEDINGS WERE INITIATED OR WERE PENDING IN RELATION TO ASSESSMENT YEAR 2005-06 EXCEPT FOR THE SHOW CAUSE NOTICE GIVEN TO ASSESSEE DURING THE ASSESSMENT PROCEEDING RELATING TO ASSESSMENT YEAR 2007-08 FOR THE ALLEGED VIOLATION OF PROVISIONS OF SECTION 269SS AND 269T OF THE ACT. 14. BOTH THE ASSESSMENT AND PENALTY PROCEEDINGS ARE DISTINCT AND SEPARATE BUT THE PENALTY IMPOSABLE IN GIVEN SET OF FACTS HAS RELEVANCE TO THE PROCEEDINGS CARRIED ON WHILE COMPLETING THE ASSESSMENT IN THE C ASE OF THE ASSESSEE FOR THE RELEVANT ASSESSMENT YEAR. WHERE THE INFORMATION WAS RECEIVED BY THE ASSESSING OFFICER PURSUANT TO THE SURVEY AT THE PRE MISES OF THE ASSESSEE AND ADMITTEDLY THE SAID INFORMATION WAS ACTED UPON BY T HE ASSESSING OFFICER BY CONFRONTING THE SAME TO THE ASSESSEE THE KNOWLEDGE OF THE ASSESSING OFFICER IN SUCH CIRCUMSTANCES COULD NOT BE DOUBTED. THE AS SESSING OFFICER ACTED UPON THE SAID INFORMATION BY ISSUING SHOW CAUSE NOTICE T O THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS RELATING TO ASSESSMENT YEAR 2007-08 THOUGH THE INFORMATION RELATED TO ASSESSMENT YEAR 2005-06. N O PROCEEDINGS BY WAY OF RE- ASSESSMENT OR OTHER WISE WERE TAKEN UP FOR ASSESSME NT YEAR 2005-06 IN THE PRESENT CASE. THE PENALTY PROCEEDINGS FOR VIOLATIO N OF PROVISIONS OF SECTIONS 269SS AND 269T WERE INITIATED VIDE ASSESSMENT ORDER PASSED UNDER SECTION 143(3) OF THE ACT RELATING TO ASSESSMENT YEAR 2007- 08 THOUGH THE TRANSACTION IN QUESTION WAS RELATABLE TO ASSESSMENT YEAR 2005-0 6. 15. CHAPTER-XXI OF THE INCOME TAX ACT DEALS WITH PE NALTY IMPOSABLE/LEVIABLE. PENALTY UNDER VARIOUS SECTIONS ARE IMPOSABLE BY THE REVENUE AUTHORITIES WHERE THEY ARE SATISFIED THAT PARTICULAR DEFAULT DEFINED 7 UNDER THE RESPECTIVE SECTION/S HAS BEEN COMMITTED B Y THE ASSESSEE. THE LANGUAGE OF SECTION IS CLEAR THAT THE PENALTY CAN B E IMPOSED ONLY IF THERE IS VIOLATION OF ONE OR MORE OF THE CIRCUMSTANCES MENTI ONED IN THE SECTION. THE LEVY OF PENALTY FOR FAILURE TO PERFORM STATUTORY OB LIGATION PRESCRIBED UNDER THE ACT IS A MATTER OF DISCRETION OF THE AUTHORITIES TO BE EXERCISED JUDICIALLY AND ON CONSIDERATION OF RELEVANT CIRCUMSTANCES AND THE LAW LAID DOWN BY THE APEX COURT ON THE ISSUE OF LEVY OF PENALTY. IMPOSITION OF PENALTY IN THE GIVEN SET OF CIRCUMSTANCES IS NOT MANDATORY BUT DISCRETIONARY AN D IN ORDER TO EXERCISE ITS POWER ON LEVY OF PENALTY UNDER THE RESPECTIVE SECTI ON/S PRIMARY CONDITIONS IS THAT THE PROCEEDINGS IN RESPECT OF THE SAID ASSESSE E FOR THE CAPTIONED ASSESSMENT YEAR SHOULD BE PENDING BEFORE THE ASSESS ING OFFICER TO COME TO THE CONCLUSION THAT THE GIVEN SET OF FACTS AND CIRCUMST ANCES MERITS THE INITIATION OF PENALTY PROCEEDINGS IN THE CASE. IN THE FACTS OF T HE PRESENT CASE BEFORE US NO PROCEEDINGS WERE INITIATED FOR THE FINANCIAL YEAR 2 004-05 I.E. ASSESSMENT YEAR 2005-06 WHICH IS THE YEAR TO WHICH THE AFORESAID T RANSACTION OF ACCEPTING AND PAYMENT OF THE CASH LOAN RELATES. THE SHOW CAUSE N OTICE WAS ISSUED TO THE ASSESSEE BY THE ASSESSING OFFICER HOWEVER IN THE PROCEEDINGS RELATING TO ASSESSMENT YEAR 2007-08 AND EVEN PENALTY PROCEEDING S WERE IN INITIATED UNDER SECTIONS 271D AND 271E OF THE ACT WHILE COMPLETING ASSESSMENT ORDER RELATING TO ASSESSMENT YEAR 2007-08. WE FIND NO MERIT IN TH E SAID INITIATION OF PENALTY PROCEEDINGS UNDER SECTIONS 271D AND 271E OF THE ACT RELATING TO ASSESSMENT YEAR 2005-06 WHILE COMPLETING ASSESSMENT PROCEEDIN GS RELATING TO ASSESSMENT YEAR 2007-08. 16. WE FIND THAT SIMILAR ISSUE OF LEVY OF PENALTY U NDER SECTION 271E OF THE ACT WHERE NO PROCEEDINGS WERE PENDING BEFORE THE AS SESSING OFFICER CAME UP BEFORE THE HON'BLE PUNJAB & HARYANA HIGH COURT IN C IT VS MANOHAR LAL THAKRAL ITA NO.812 OF 2010 DATE OF DECISION 14.1. 2011. THE QUESTION OF LAW RAISED BEFORE THE HON'BLE HIGH COURT INTER ALIA WAS AS UNDER: 8 (I) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. IT AT WAS RIGHT IN DELETING THE PENALTY IMP OSED U/S 271E OF THE I.T. ACT 1961 ON THE GROUND THAT THE DELETION OF P ENALTY PROCEEDINGS ITSELF WAS ILLEGAL AS NO PROCEEDINGS WERE PENDING B EFORE THE AO DESPITE THE FACT THAT IMPOSITION OF PENALTY U/S 271 E IS NOT SUBJECT TO PENDENCY OF ANY TYPE OF PROCEEDINGS. ( II) WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. ITAT WAS RIGHT IN ACCEPTING THE CONTENTION OF THE ASSESSEE THAT THE PENALTY NOTICE WAS ISSUED WHEN THERE WERE NO PR OCEEDINGS PENDING BEFORE THE AO QUA THE ASSESSEE AND THE ACTION OF PE NALTY MAY BE PERMISSIBLE ONLY AFTER ASSESSMENT WITHOUT TAKING IN TO CONSIDERATION THE DECISION OF LD. ITAT VISHAKAPATNAM BENCH IN THE CA SE OF ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE 4(1) VS. VINMAN FINANCE AND LEASING LIMITED REPORTED IN 115 ITD 115 (120 TTJ 4 26) WHEREIN IT HAS BEEN HELD THAT PENALTY PROCEEDINGS U/S 271E NEE D NOT BE INITIATED DURING THE COURSE OF ASSESSMENT PROCEEDINGS? 17. THE HON'BLE HIGH COURT UPHELD THE FINDINGS RECO RDED BY THE TRIBUNAL WHICH READ AS UNDER: 'HAVING HEARD THE PARTIES AND HAVING PERUSED THE MA TERIAL ON RECORD WE FIND THE GRIEVANCE OF THE ASSESSEE TO BE CORRECT . IN THIS CASE THE RETURN OF THE ASSESSEE WAS PROCESSED U/S 143(1)(A) OF THE INC OME-TAX ACT ON 31.12.2003. NOTICE U/S 274 READ WITH 271E OF THE AC T WAS ISSUED TO THE ASSESSEE ON 12.06.2007. IT BEING A CASE OF PROCESSI NG THE RETURN OF INCOME THERE IS NO FINDING IN THE AO'S ORDER WITH REGARD T O THE APPLICABILITY OR OTHERWISE OF SECTION 269T OF THE IT ACT TO THE ASSE SSEE'S CASE. IT WAS WITHIN THE PURVIEW OF THE AO TO BRING THE ASSESSEE'S CASE TO SCRUTINY AND TO MAKE REGULAR ASSESSMENT U/S 143(3) OF THE ACT. IT WAS AL SO WITHIN THE POWER OF AO AT THE APPROPRIATE STAGE TO INITIATE PROCEEDINGS U/ S 147 OF THE ACT AGAINST THE ASSESSEE. NO SUCH ACTION WAS TAKEN. RATHER THE PEN ALTY WAS IMPOSED ON THE BASIS OF THE FINDING IN THE CASE OF ASSESSEES WIFE . 18. THE DELETION OF PENALTY IN THE AFORESAID CASE W AS FURTHER HELD TO BE NON- LEVIABLE BECAUSE OF THE PLEA OF THE REASONABLE CAUS E RAISED BY THE ASSESSEE. THE ASSESSEE IN THE PRESENT CASE HAS ALSO RAISED TH E PLEA OF REASONABLE CAUSE THAT THE PERSON ADVANCING THE LOAN WAS AGRICULTURIS T AND HAD NO BANK ACCOUNT. IN THE ENTIRETY OF THE FACTS AND CIRCUMSTANCES BEFO RE US AND FOLLOWING THE RATIO LAID DOWN BY THE HON'BLE PUNJAB & HARYANA HIGH COUR T IN CIT VS MANOHAR LAL THAKRAL (SUPRA) WE HOLD THAT THERE IS NOT MERIT IN INITIATION OF PENALTY PROCEEDINGS UNDER SECTIONS271D AND 271E OF THE ACT IN THE PRESENT SET OF FACTS. ACCORDINGLY WE DELETE THE PENALTY LEVIED U NDER SECTIONS 271D AND 271E 9 OF THE ACT. GROUNDS OF APPEAL RAISED BY THE ASSESS EE IN BOTH THE APPEALS ARE ALLOWED. 19. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 28 TH DAY OF FEBRUARY 2012. SD/- SD/- (MEHAR SINGH) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 28.02.2012 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT CHANDIGARH