COMMISSIONER OF INCOME TAX Vs. JITENDRA SINGH RATHORE

JUDGEMENT

(1.) This appeal under s. 260A of the IT Act, 1961 (the Act) has been preferred by the Revenue against the judgment dt. 22nd Sept., 2006 passed by the Income-tax Appellate Tribunal, Jodhpur Bench, Jodhpur ('the Tribunal') relating to the asst. yr. 2001-02. The appeal was admitted on the following question of law:

(2.) Briefly stated the facts are that the assessee, an individual, derives income from his two proprietary concerns. The assessment proceedings under s. 143(3) of the Act were completed on 25th March, 2003. The AO noticed that the assessee had accepted cash loans exceeding the limit specified under s. 269SS to the tune of Rs. 4,00,000, and the same being in contravention of s. 269SS, initiated the penalty proceedings under s. 271D of the Act. The show-cause notice in this regard was served on the assessee on 27th March, 2003. Thereafter, the matter was referred to the Jt. CIT, Range-2, Udaipur on 22nd March, 2004, who was the competent authority under s. 271D to impose such penalty. The Jt. CIT came to the conclusion, by his order dt. 28th May, 2004, that the assessee was liable for penalty under s. 271D of the Act and imposed a penalty of Rs. 4,00,000 being the sum equal to the loan/deposit accepted in contravention of the provisions of s. 269SS of the Act.

(3.) Feeling aggrieved, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), Udaipur ['the CIT(A)'] who, by the order dt. 29th March, 2005, allowed the appeal while holding that the penalty proceedings were barred by limitation. The CIT(A) came to the conclusion that for penalty proceedings under s. 271D of the Act, the period of limitation prescribed under s. 275(1)(c) was applicable and not the limitation prescribed under s. 275(1)(a) because the penalty proceedings were not dependent on the assessment and, therefore, the penalty proceedings stood barred by limitation on 30th Sept., 2003.