The court established that the penalty orders were barred by time and that the transactions in question did not amount to deposit and repayment of loan or deposits within the meaning of section 269SS or section 269T.

1. - Heard learned counsel for the parties.

2. These appeals arise from a common order passed by the Tribunal by which 12 appeals, 6 by the assessee and 6 by the Revenue, were decided by a common order and the 12 appeals detailed above have arisen out of that common order relating to the different assessment years 1993-94, 1994-95 and 1995-96.

3. While admitting the appeals, the following questions have been framed as substantial questions of law inviting consideration in these appeals :

"1. Whether, on the fact and in the circumstances of the case, the Income-tax Appellate Tribunal was right in holding that the penalty proceedings and the order passed by the Joint Commissioner of Income-tax under section 271D are vitiated being time-barred by virtue of the provisions of section 275(1)(c) of the Act held to be applicable whereas the case of the assessee is covered under section 275(1)(a) of the Act since the penalty proceedings pertained to the assessment order under appeal and section 275(1)(c) was not applicable to it ?

2. Whether, on the facts and in the circumstances of the case the notice issued for initiating penalty proceedings and the penalty order passed pursuant thereto by the Joint Commissioner of Income-tax in accordance with the provisions of section 271D(2) of the Act was bad and unlawful though passed within limitation?

3. Whether, on the facts and in the circumstances of the case, the Assessing Officer was empowered to initiate proceedings and pass penalty order under section 271D of the Act for the reason of issuing show cause to the assessee for referring the matter to the Joint Com missioner who else was empowered to impose penalty under section 271D(2) of the Act ?

4. Whether, on the facts and in the circumstances of the case the Income-tax Appellate Tribunal was justified in holding that the asses see acted under bona fide belief and did have reasonable and sufficient cause as provided under section 271D of the Act on account of precedence and trade practise allegedly amounting to res judicata ?"

4. The facts as found by the Tribunal about the assessee in brief are that the assessee is a firm doing the business of kachcha adhatiya 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 withdrawal from time to time and buying the goods. The assessee was catering to their needs like payment in cash, supply of goods like fertilizers, seeds, pesticides etc. retaining sale proceeds of crops, accepting amount given by the farmers for the purpose of meeting of their time to time needs. The nature of dealing between kacha adhatiya 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 meeting time to time needs. The farmer constituents were hesitant in having dealings through banks, due to time constraints, tedious formalities etc. etc. The dealing between the assessee and the farmer-constituents were in cash, some time they took sums in cash from the assessee-firm and some time they gave the sums to the assessee firm, so that their respective requirements might be met.

5. The Assessing Officer found use of the money received by the assessee through sale of crops of his farmers constituents to be in the nature of deposits and invoked the provisions of section 269SS as applicable to the amount received by a person as deposit from the depositors and the amount utilised by the farmers as withdrawal from the deposits by way of repayment inviting operation of section 269T. Finding that such transactions of deposit and repayment were not through the bank, penalty proceedings under sections 271D and 271E respectively concerning the deemed deposits and deemed repayment of loan were initiated during the assessme