Parin K. Rajwani vs. JCIT (ITAT Mumbai)

DATE: June 30, 2015 (Date of pronouncement)
DATE: July 21, 2015 (Date of publication)
AY: 2007-08, 2008-09
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S. 271D penalty: The limitation period has to be computed from the date of issue of the show-cause notice by the AO. Penalty should not be levied if circumstances show no intention to contravene the law

(i) The original assessment order had been passed on 30.11.2010 on which date the AO proposed to initiate penalty proceedings u/s 271D had been initiated. The notice u/s 271(D) was also issued on the said date. The penalty order u/s 271D has been passed on 08.06.2011. The relevant financial year during which the assessment order was completed ends on 31.03.2011. The period of six months from the end of the month in which the action for initiation of penalty proceedings expires on 30.05.2011. The Hon’ble Rajasthan High Court in the case of ‘CIT vs. Jitendra Singh Rathore [2013] 352 ITR 327 has held that the six month period for the purpose of clause (c) of section 275(1) of the Act is to be computed from the date of issue of first show cause notice by the AO and not from the date of issue of first show cause notice issued by the Joint Commissioner. In the light of the above decision, the order dated 08.06.2011 is hit by the bar of limitation as prescribed in clause(c) of section 275(1) of the Act and the same is accordingly set aside.

(ii) The assessee lady has been engaged in the profession of tailoring. She had no intention to contravene the provisions of the Act. In fact, after receipt of loan from her daughter in law, a very close relative, she had deposited the amount in bank. Both the ladies were unaware of the provisions of law in this respect. Considering the status of the assessee being a small time tailor, her gross total Income mainly from tailoring and interest income and there being no intention to breach the provisions of law while accepting loan of Rs. 40,000/- from her daughter in law, we do not find it a fit case for levy of penalty u/s 271D of the Act. The same is accordingly ordered to be deleted.

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