Penalty proceedings for cash transaction violations under the Income Tax Act are independent of assessment proceedings. Such proceedings are governed by the limitation period under Section 275(1)(c), requiring the penalty order to be passed within the prescribed timelines calculated from the initiation of the penalty proceedings.

ORDER

PER: RATHOD KAMLESH JAYANTBHAI, AM

These five appeals are filed by the revenue and are arising out of the order of Commissioner of Income Tax (Appeals), Jaipur-4 [ for short CIT(A) ] dated 21/05/2025 for Assessment Years 2012-13, 2016-17 & 2022-23 which in turn arise from the order dated 28.12.2024 & 23.01.2025 passed under section 271D & 271E of the Income Tax Act, 1961 [ for short Act ] by Addl./Jt. CIT, Central, Jaipur.

Since the issues involved in these appeals are almost identical on facts and are almost common, except the difference in figure of the penalty amount disputed. Thus, these appeals were heard together with the agreement of both the parties and are being disposed off by this consolidated order. As agreed between the parties matter in ITA No. 1057/JP/2025 taken as a lead case for discussions and the facts, arguments are taken from that folder.

Before moving towards the facts of the case we would like to mention that the revenue has assailed the appeal for assessment year 2012-13 in ITA No. 1057/JP/2025 on the following grounds;

(1) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in deleting levy of penalty by JCIT/AddL.CIT only on technical ground without giving any finding on the merits of levy of penalty?

(2) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in holding that the relevant date for determining the limitation period for imposing penalty u/s 271D is the date when the assessment order was passed by the A.O and not the date when show cause notice was issued by the JCIT/AddI. CIT & ignoring the legal aspect that the A.O was not allowed to impose penalty u/s 271D and therefore passing of assessment order by A.O and reference by A.O has no bearing on deciding the limitation date for imposing penalty u/s 271D?

(3) Whether on the facts and in circumstances of the case, the Id. CIT(A) has erred in ignoring the decision of Hon'ble Kerla High Court in the case of Grihalaxmi Vision v. Addl. Commissioner of Income Tax , Range-1, Kozhikode in ITA No 83 & 86 of 2014, wherein it was held that limitation of penalty proceeding u/s 271D and 271E start from the issue of show cause notice by the AddI.CIT?

(4) Whether on the facts and in circumstances of the case, Id. CIT(A) has erred in relying on the decision of Hon'ble Apex Court in the case of Hisariya Brothers without appreciating the fact that the facts of the case of Hisariya Brothers were different from the present case as in the case of Hisariya Brothers, the issue was regarding extension of limitation date for imposition of penalty u/s 271D on the ground of pendency of appeal against relevant assessment order but in present case, there is no such issue involved?

(5) The appellant craves leave or reserves right to amend, modify, alter or forego any grounds(s) of appeal at any time before or during the hearing of this appeal.

Succinctly, the facts as culled out from the records are that a reference was received from the ACIT, Central Circle-2, Jaipur vide letter no. 194 dated 18.06.2023 stating that Shri Ashwini Gupta has accepted cash loan aggregating to Rs. 3,73,57,124/- on various dates of F.Y. 2011-12 relevant to A.Y. 2012-13. The action of the assessee was in violation of the provision of section 269SS of the Act. It was also stated that the said assessee also made repayment of Rs. 3,81,68,450/- against the aforesaid carried forward cash loans and cash loans taken during the year, which is also in violation to the provisions of section 269T of the Act. The information was based on the material found during the course of Search and Seizure action conducted on 23.11.2021 by Investigation wing in the case of Radha Mohan Maheshwari (a finance broker) wherein the said information was found. The information so gather