Vildirect: IncomeTax-caselaws-2005-VIL-367-ITAT-CHD

2005-VIL-367-ITAT-CHD

Equivalent Citation: [2006] 283 ITR (A. T.) 203, ITD 098, 200, TTJ 098, 947,

Income Tax Appellate Tribunal CHANDIGARH

Date: 03.11.2005

DEWAN CHAND AMRIT LAL AND OTHERS

DEPUTY COMMISSIONER OF INCOME-TAX, HISSAR RANGE.

BENCH

Member(s) : M. A. BAKSHI., JOGINDER PALL., N. K. SAINI.

JUDGMENT

Per M.A. Bakshi, Vice President.- The above three appeals of the assessees, directed against the respective orders of the CIT(A), Rohtak, all dated 21-8-1998, confirming levy of penalty under section 271D of the Income-tax Act, 1961 on the assessees for having received loans and deposits in violation of provisions of section 269SS of the Act, 1961, had come up for hearing before the ITAT, Chandigarh Bench.

2. The main ground raised by the assessee against the levy of penalty was that the penalty orders were barred by limitation. The ITAT, Chandigarh Bench felt that there was divergence of opinion amongst various Benches of the Tribunal in regard to the computation of period of limitation. One view was that period of limitation for imposition of penalty under section 271D is to be calculated with reference to the notice issued by JCIT after recording his satisfaction. Another view is that the period of limitation commences from the date of issue of notice by the Assessing Officer. Accordingly, constitution of Special Bench was recommended. The Hon'ble President, ITAT was pleased to constitute the Special Bench for the purposes of a decision in regard to the following issue:

"Having regard to the provisions of sections 271D and 271E and section 275 of the Income-tax Act, whether period of limitations for purposes of section 275 of the Act is to be reckoned from the date when assessment proceedings are completed or from the date when penalty proceedings are initiated by the JCIT?"

3. It may be pertinent to mention that when the matter came up before the Special Bench on 25-7-2003, it was found that in the case of Shri Naresh Kumar, the Assessing Officer had issued intimation under section 143(1)(a) and that had become final as no order under section 143(3) had been passed. In the case of M/s. Bhagwan Dass Lalit Mohan, the return had been filed by the assessee in respect of which the assessee did not receive any intimation under section 143(1)(a) or any order under section 143(3). In the case of M/s. Dewan Chand Amrit Lal, no information was furnished. The Hon'ble Members of the Special Bench, as then constituted, formed an opinion that the Special Bench would not be in a position to answer the reference in view of no assessment orders having been passed in respect of these assessees. The matter was forwarded to the Hon'ble President, ITAT who returned the reference made by the Hon'ble Members of the Bench to decide the issue for which the Special Bench was constituted. Subsequently, the matter came up before the present constitution of the Special Bench.

4. Parties have been heard and record perused.

5. The brief facts giving rise to the issue involved before us are that a search was conducted on 8-9-1993 at the premises of Shri Surinder Kumar, son of Shri Basant Lal, Aggarwal Street, Bhatinda. During the course of search, a receipt dated 1-7-1993 issued by Shri Lalit Mohan, partner of M/s. Bhagwan Dass Lalit Mohan, Rania, Sirsa, was found and seized. As per the said receipt, the firm had taken a loan of Rs. 1,50,000 in cash on 1-7-1993 from Shri Surinder Kumar, s/o Sh. Basant Lal, Aggarwal Stree, Bhatinda on which interest for three months had also been paid in advance. The receipt was executed on the letterhead of the firm and was duly stamped. Information regarding the above-mentioned loan was passed on to the ITO, Ward-2, Sirsa. The Assessing Officer had made inquiries. The report given by the Assessing Officer has been reproduced by the Deputy Commissioner of Income-tax, Hissar Range, Hissar in the order passed under section 271D which is quoted hereunder:

"The Inspector of his office was deputed to collect the copy of account of Shri Surinder Kumar, s/o Sh. Basant Lal, Bathinda from the books of account of the above assessee on 25-1-1995. But the above assessee has denied having any account of Sh. Surinder Kumar vide its letter dated 6-2-1995. Subsequently the books of account of the assessee were also impounded by his predecessor. It is pertinent to submit here that this letter has also been signed by Sh. Lalit Mohan, partner of the firm and apparently signatures of Sh. Lalit Mohan are tallying with those put on the receipt issued to Sh. Surinder Kumar. I am submitting herewith Income-tax return filed by the assessee for the assessment year 1994-95. This return of income has also been verified by Sh. Lalit Mohan and these signatures are also apparently tallying with those on the receipts. A letter was issued to the above assessee on 16-1-1996 and the assessee was asked to explain as to why his case should not be referred to DCIT for considering penalty under section 271D of the Income-tax Act. The assessee was required to submit its reply on or before 29-1-1996. None has attended his office on 29-1-1996 nor any written submission has been filed."

The Assessing Officer referred the matter to the DCIT, Hissar on 5-11-1996 for considering the provisions related to penalty for the default along with copy of the receipt. The DCIT issued a show-cause notice to the assessee on 13-5-1996. The assessee replied to the notice. The reply of the assessee has been considered in the penalty order. We are not at this stage required to consider the merits of the penalty on the basis bf the claim of the assessee and the finding of the DCIT. We are, however, concerned with the objection raised by the assessee that the order passed by the DCIT, Hissar imposing the penalty on 5-11-1996 is barred by limitation. The issue relating to the limitation was also raised before the DCIT who has dealt with the same in para 6 of his order (which is reproduced hereunder) and dismissed the claim of the assessee:

"From the perusal of the receipt, it is very clear that the assessee-firm had accepted the loan of Rs. 1,50,000 in cash. Receipt was issued by Sh. Lalit Mohan partner of the firm on the letter pad of the assessee-firm and rubber stamp of the assessee-firm was also used by Sh. Lalit Mohan while signing the said receipt on 1-7-1993 on revenue stamp worth of forty paise. Even the assessee-firm had paid interest up to 30-9-1993 in cash and in advance. Thus, there is no doubt in my mind that the firm had accepted the cash loan in violation of provisions of section 269SS. The other contentions of the assessee that the limitation to pass penalty order has expired is also legally not correct. Provisions of section 275(1)(c) clearly provide a period of 6 months from the end of the month in which action for imposition of penalty is intimated in any other case. The expression in any other case is a case which have not been mentioned in sections 271(1)(a) and 275(1)(b). The instant case of the assessee relates to imposition of penalty under section 271D for violation of provisions of section 269SS. Thus, the case of the assessee is a case covered under the provisions of section 275(1)(c) for which a period of clear 6 months is available from the end of the month in which penalty proceedings under section 271D were initiated. As already stated proceedings under section 271D were initiated by my predecessor by issuing show-cause notice on 13-5-1996. Limitation to pass penalty order is, therefore, to expire on 30-11-1996. This contention of the assessee is also rejected."

6. In the case of Shri Naresh Kumar, Prop. M/s. Punjab Ram Labh Chand, a similar receipt was found and seized from the premises of Shri Surinder Kumar in the course of search on 8-9-1993, in which it was indicated that a sum of Rs. 1 lakh had been received by the assessee in cash as loan. The Assessing Officer had made inquiries from the assessee. The report of the Assessing Officer has been reproduced by the DCIT in para 2 of his order which is quoted hereunder:

"On receipt of the information necessary enquiry was made and the concerned parties were confronted with the photo copy of the receipt issued by them to Shri Surinder Kumar of Bathinda. The assessee as also required to show cause why the acceptance of deposit of in cash exceeding Rs. 20,000 should not be treated to be in contravention of the provisions of section 269SS of the Income-tax Act, 1961. The assessee was also required to intimate the utilization of the said amount and income if any earned therefrom. In response to the queries Sh. Naresh Kumar, Prop, attended and his statement was recorded. In his statement Shri Naresh Kumar denied having accepted any loan from Shri Surinder Kumar. When the aforesaid receipt was shown to Sh. Naresh Kumar which was on the letter pad of M/s. Punjab Ram Labh Chand and also bear the signatures of Sh. Naresh Kumar and the stamp of M/s. Punjab Ram Labh Chand it was submitted by Sh. Naresh Kumar that the letter pad used was of his firm. However, it was intimated that the signatures appended on the revenue stamps made in the name of Shri Naresh Kumar, were not his signatures. He was further asked to state whether he knows any Naresh Kumar which may be relegated to him or had any business connection or otherwise with him, it was replied that he does not know as to who has signed on the above-said letter pad. Sh. Naresh Kumar also confirmed that there is no person in the name of Shri Naresh Kumar in his relation both business or otherwise. Shri Naresh Kumar was also required to give his signatures in English thrice and on comparison of the signatures as available on the copy of receipt, it was noticed that both the signature tally. Sh. Naresh Kumar, however, stated that these do not tally. Enquiries were also made from PNB, Sirsa, where Sh. Naresh Kumar, Prop, of M/s. Punjab Ram Labh Chand was having a current account No. 6843. In the account opening form dated 29-9-1989 Sh. Naresh Kumar, Prop, has appended specimen signature. This signature also tallies with the signatures appended on the receipt dated 1-4-1993 seized from the premises of Sh. Surinder Kumar of Bathinda. In view of the above, it may be submitted that there is a documentary evidence showing that the assessee has accepted a cash loan of Rs. 1 lakh on 1-1-1993. The plea of picking up of letter seems to be a futile attempt to escape the provisions of section 269SS. A receipt referred to above not only contain the signature of Shri Diwan Chand partner but also has affixed with the rubber stamp of the firm and it is not believable that outsider would pick up both the letter pad as well as rubber stamp of the firm except with the connivance of the assessee. In view of the above, it is clear that the assessee has violated the provisions of section 269SS of the Income-tax Act, 1961."

7. The matter was referred to the DCIT, Hissar Range, Hissar along with copy of the receipt seized on the date of search. Accordingly, a show-cause notice dated 18-10-1996 was issued to the assessee by the DCIT, Hissar Range, Hissar. After considering the objections of the assessee, the DCIT has on the same grounds as in the case of M/s. Bhagwan Dass Lalit Mohan, imposed a penalty of Rs. 1 lakh vide order dated 29-11-1996.

8. In the case of M/s. Dewan Chand Amrit Lal also a receipt for Rs. 1 lakh on account of cash loan taken by the assessee from Shri Surinder Kumar was found on the date of search conducted on the residential premises on 8-9-1993. The information was passed on to the concerned Assessing Officer who made inquiry from the assessee. The report of the Assessing Officer has been reproduced by the DCIT in para 2 of his penalty order which is quoted hereunder:

"On receipt of the information necessary enquiry was made and the concerned parties were confronted with the photo copy of the receipt issued by them to Shri Surinder Kumar of Bathinda. The assessee as also required to show cause why the acceptance of deposit of in cash exceeding Rs. 20,000 should not be treated to be in contravention of the provisions of section 269SS of the Income-tax Act, 1961. The assessee was also required to intimate the utilization of the said amount and income if any earned therefrom. In response to the queries Sh. Dewan Chand attended and his statement was recorded. In his statement Shri Dewan Chand denied knowing Shri Surinder Kumar of Bathinda and also his signature on the receipt referred to above. He also stated that no receipt has ever been given by him. When his attention was drawn to the fact that the receipt had been given on the letter pad of the firm, it was stated that this paper of their letter pad might have been picked up in his absence and used accordingly. He was also required to put his signature in English thrice and on verification, it was noticed that his signature appended on the aforesaid receipt tally with the specimen signatures. Enquiries were also made from bank of Rajasthan where the firm was having a term deposit a/c. On a perusal of account opening form which contain the signature of Shri Diwan Chand, it is clear that the signature of Shri Diwan Chand appended on this account opening form tally with the signatures appearing on the aforesaid receipt. A reference was also made of the return filed by the firm for the assessment year 1994-95. Sh. Diwan Chand has appended his signatures on the balance sheet, P&L account, trading account and also on a number of other paper filed along with the return. A perusal of these documents and also the signatures appearing on the verification made in the return, also belies the stand taken by the assessee. In view of above, it may be submitted that there is a documentary evidence showing that the assessee has accepted a cash loan of Rs. 1 lakh on 1-1-1993. The plea of picking up of letter seems to be a futile attempt to escape the provisions of section 269SS. A receipt referred to above not only contain the signature of Shri Diwan Chand partner but also has affixed with the rubber stamp of the firm and it is not believable that outsider would pick up both the letter pad as well as rubber stamp of the firm except with the connivance of the assessee. In view of the above, it is clear that the assessee has violated the provisions of section 269SS of the Income-tax Act, 1961."

9. The assessees had filed appeals to the CIT(A) and raised two grounds before him. One of the grounds raised before the CIT(A) was that the order passed by the DCIT under section 271D was barred by limitation. The CIT(A) vide para 5 of the order in the case of M/s. Diwan Chand Amrit Lal, reproduced hereunder, rejected the contention advanced on behalf of the assessee:

"5. I have carefully considered the conspectus of this matter and the facts on record. It is settled law that in a taxing Act one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used. Even if there be casus omissus, the defect can be remedied only by legislation and not by judicial interpretation. It is the duty of the adjudicating authority to give effect to the words used without scanning the wisdom or policy of the Legislature and without engrafting, adding or implying anything which is not congenial to or inconsistent with such express intent of the law-giver. If the statute is a taxing statute, it has to be assumed that the law-making authority does not commit a mistake or make an omission. To my mind, the legislative intent is manifest by the plain words used in section 271A, or for that matter, also in section 271D, on the one hand and, on the other, the provisions such as section 271 of the Act. While in the latter case, penalty is initiable only in the course of proceedings under the Act, such embargo does not apply to the former group of cases. I am fortified in this view by the decision rendered by the ITAT, Allahabad Bench in Income-tax Appeal No.728 of 1992 - Miri Lal Mulk Raj v. ITO, Ground numbered 2 is, therefore, rejected." The appeals of other assessees have also been dismissed on the same grounds.

10. As expressed earlier, we are concerned with the ground relating to limitation. The decision of the CIT(A) is contained in para 5 of the order which is reproduced above. Before us, written submissions were filed on behalf of the assessees by Shri Ravinder Bindlish, the sum and substance of which is as under:

(i) That limitation under section 275(1)(c) for purposes of section 271D is prescribed to be up to the end of the financial year in which the proceedings in the course of which action for imposition of penalty has been initiated are completed or six months from the end of the month in which action of imposition of penalty is initiated, whichever period expires later. In this case, the ITO was in possession of information regarding the receipt of money in cash of Rs. 1,50,000 in the case of M/s. Bhagwan Dass Lalit Mohan and Rs. 1 lakh each in the cases of M/s. Devvan Chand Amrit Lal and Shri Naresh Kumar respectively from Shri Surinder Kumar and accordingly issued notices to the respective appellants regarding the said loans.

(ii) That the issue of notice by the Assessing Officer in regard to these loans was in accordance with the provisions of section 275(1)(c) of the Income-tax Act, 1961 and, therefore, limitation starts from the date of issue said notices.

(iii) That the subsequent notices issued by the DCIT, according to the Id. counsel, are not relevant for determination of time-limit prescribed under section 275(1)(c). It has been pointed out that though ITAT, Chandigarh Bench in the case of Asstt. CIT v. Shree Nivas Chemicals [2003] 84 ITD 76, has taken a different view, other Benches of the Tribunal such as Hyderabad, Delhi and Jodhpur Benches have taken a view in favour of the assessee. The relevant decisions have been cited as under:

(i) Dillu Cine Enterprises (P.) Ltd. v. Addl CIT [2002] 80 ITD 484 (Hyd);

(ii) Farrukhabad Investment (I) Ltd. v. Jt. CIT [2003] 85 ITD 230 (Delhi);

(iii) Hissaria Bros. v. Jt. CIT [2001] 73 TTJ (Jodh.) 1.

Reference has also been made to the decision of Rajasthan High Court in the case of CIT v. M.A. Presstressed Works [1996] 220 ITR 226 in support of the contention that the limitation for imposition of penalty starts from the completion of the proceedings in the course of which penalty proceedings have been initiated. According to the ld. counsel, in these cases, the penalty has been first initiated by the Assessing Officer and subsequently the penalty has been imposed by the DCIT. So the limitation starts from the date of issue of notice by the Assessing Officer.

11. The ld. counsel for the assessee has further contended that it cannot the intention of the Legislature to allow litigation to continue for indefinite period. Relying upon the decision of Patna High Court in the case of State of Bihar v. Puran Chandra Mahto 1999 (1) RCR (Civil) 630, the ld. Counsel contended that the object of limitation cannot be lost sight of and that the possibilities of the parties being dragged in Courts for an indefinite period is to be avoided. Reliance was also placed on the decision of Punjab & Haryana High Court in the case of Smt Tarawanti v. State of Haryana 1995(1) R.R.R. 110, 1994(3) R.R.R. 247, 1994 P.L.J. 495, in support of the contention that rule of limitation is founded on consideration of public and the provisions of the Act dealing with the litigation are required to be interpreted with the approach which advances the cause of public policy and not otherwise. Reliance has also been placed on the decision of Punjab & Haryana High Court in the case of Naurang Singh v. State of Punjab 1997(1) R.C.R.(Civil) 660,1997(1) P.L.R. 363, to support the contention that public policy demands that rule of law, justice, equity and good conscience which by now has become legend having got imbibed in the jurisprudence by innumerable consistent and persistent pronouncements of the Apex Court, the principle is that one should not be vexed twice for the same cause of action even by articulating or splitting the relief or claim, particularly when the element of certainty, continuity and to bring an end to the litigation and determination of rights of the parties for all times to come, is one of the judicial concern.

12. Shri S.K. Bansal, Advocate, who appeared as an intervener, contended that section 271D falls in Chapter XXI and all the provisions contained in this Chapter shall have to be read as a whole. Relying upon the Full Bench decision of the Delhi High Court in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1, it was contended that the entire statute has to be read as a whole and thereafter chapter by chapter and then section by section and ultimately word by word. Reliance was also placed on the decision of Karnataka High Court in the case of Shanbagh Restaurant v. Dy. CIT [2004] 266 ITR 393, wherein the Hon'ble High Court, according to the ld. counsel, quashed the penalty order as barred by limitation. Reliance was also placed on the decision of Delhi Bench of the ITAT in the case of Farrukhabad Investment (I) Ltd. v. Jt. CIT [2003] 80 TTJ (Delhi) 82 to support the contention that date of show-cause notice by the Assessing Officer has got to be considered as the starting point for computing the limitation under section 275(1)(c) of the Income-tax Act, 1961. Reliance was also placed on the decision of Kolkata Bench of the ITAT in the case of Asstt. CIT v. Birkmyre Export Co. (P) Ltd. [2002] 255 ITR (AT) 72 wherein penalty under section 27IB of the Income-tax Act, 1961 was held to be barred by limitation as the order had not been passed within six months from the date of initiation. Reliance was also placed on the decision of Hyderabad Bench of the ITAT in the case of Dillu Cine Enterprises (P) Ltd. v. Addl. CIT [2002] 80 ITD 484, in support of the said contention. Reliance was also placed on the decision of Rajasthan High Court in the case of Nem Kumar Tholia v. Addl. CIT [1992] 194 ITR 371 (FB), wherein it was held that the IAC could act only on a reference made by the ITO and when the IAC exercised jurisdiction for imposing penalty, he was in fact exercising the jurisdiction conferred on the ITO. The ld. counsel contended that with the deletion of section 274(2) w.e.f. 1-4-1976, the entire jurisdiction in respect of imposition of penalty is now vested in the ITO. Reliance was also placed on the decision of the Supreme Court in the case of D.M. Mansvi v. CIT [1972] 86 ITR 557, to support the contention that recording of the satisfaction for initiation of penalty proceedings is necessary. According to the ld. counsel, penalty proceedings are necessarily to be initiated by the ITO or by the appellate authority. Reliance was also placed on the decision of the Jodhpur Bench of the ITAT in the case of Hissaria Bros. v. Jt. CIT [2001] 73 TTJ (Jodh.) 1 in support of the contention that penalty proceedings under sections 271D and 271E are to be initiated in the course of assessment proceedings. It was, accordingly, pleaded that the penalty orders passed in these cases of the appellants may be held as barred by limitation.

13. Shri S.K. Mukhi, Advocate, appeared and sought permission of the Bench to assist the Court as amicus curiae in regard to the issue involved in this appeal. Considering the importance of the matter, the permission was granted. It was contended by Shri Mukhi that the interpretation which is canvassed on behalf of the revenue would result in hardship, futility, absurdity or uncertainty. Relying upon the decision of the Supreme Court in the case of D. Saibaba v. Bar Council of India [2003] 6 SCC 186, it was contended that where literal construction or plain meaning of a statute may lead to hardship, futility, absurdity or uncertainty, the Court is bound to attach a purposive or contextual construction to arrive at a more just, reasonable and sensible result. It was contended that if the interpretation advanced by the revenue is accepted, it would mean that there is no limitation for initiation of penalty proceedings. This would result in uncertainty and hardship. Moreover, it would not be the intention of the Legislature to leave the field for revenue officers wide open for levy of penalty in respect of the contraventions such as the one under section 271D. Our attention has been specifically invited to paras 17 and 18 of the judgment of the Supreme Court in the case of D. Saibaba, copy of which has been placed on record. It was vehemently argued that the view expressed by various Benches in favour of the assessee may be preferred to the view expressed by some of the Benches against the assessee.

14. The ld. Departmental Representative, on the other hand, contended that section 269SS was introduced in order to counter evasion of tax which is generally discovered in the course of search. If the interpretation advanced on behalf of the assessee is accepted, then the purpose of incorporation of section 269SS by the Legislature would be defeated insofar as in most of the cases the assessments are already completed in respect of such cases where search takes place. In other words, if during the course of search, the contravention of provisions of section 269SS are detected, since the assessment would have already been completed, there would be no time-limit for the imposition of penalty under section 271D or 271E. It was further contended that the Legislature in its wisdom has not prescribed any time-limit for initiation of penalty proceedings in certain cases and it is not open to the Tribunal or any Court to fill the gap left by the Legislature. The ld. D.R. relied upon the decision of the Kolkata Bench of the Tribunal in the case of Tata Tea Ltd v. Jt. CIT [2003] 87 ITD 351, to support the view that the job of the Tribunal and the Court is to interpret the law as legislated and no attempt should be made to fill in casus omissus of the Legislature. It was further contended that as per provisions of section 271D, the Legislature had specifically empowered the DCIT to impose the penalty under section 271D/271E. Subsequently, the JCIT has been empowered to levy the penalty. There is no power with the Assessing Officer either to initiate the penalty proceedings or to impose the penalty under the aforementioned provisions of the Act. The ld. D.R. placed reliance on the decision of Nagpur Bench of the Tribunal in the case of ITO v. Ramnivas Agrawal (2004) 89 TTJ (Nag.) 795, wherein it has been held that the limitation for imposition of penalty under section 271D/271E is six months from the end of the month in which the DCIT had initiated the penalty proceedings. Similar view has been taken by the ITAT, Chandigarh Bench in the case of Asstt. CIT v. Shree Nivas Chemicals [2003] 84 ITD 76. The other decisions cited on behalf of the assessee are stated to be distinguishable on facts and in any case, it was contended that with due respects, the opinion to the contrary is not based on the correct interpretation of law. It was further contended that in this case, the Assessing Officer cannot assume jurisdiction and the condition for recording of satisfaction as in the case of penalty under section 271(1)(a), (b) or (c) is not required to be recorded in respect of penalty under section 271D/271E. Reference was also made to the decision of Kerala High Court in the case of CIT v. S.M. Syed Mohamed [1995] 216 ITR 331 (FB), which relates to old law (section 271) when a reference was to be made by the Assessing Officer in certain cases to the IAC for imposition of penalty. According to the ld. Departmental Representative, there is a distinction between the reference to be made by the Assessing Officer for imposition of penalty to the IAC specifically provided under the statute as per the old law and the provision for imposition of penalty by the competent authority under the law. The ld. Departmental Representative also contended that in interpreting the statute, it is not desirable to introduce the concept of two views and the view favourable to the assessee to be adopted. For this, reliance was placed on the decision of Supreme Court in the case of Escorts Ltd. v. Union of India [1993] 199 ITR 43. It was contended that the decision of the Court has got to be read in the context in which it has been rendered. For this, reliance has been placed on the decision of the Supreme Court in the case of CIT v. Sun Engg. Works (P.) Ltd. [1992] 198 ITR 297. It was accordingly pleaded that the view may be expressed in favour of the revenue.

15. We have given our thoughtful consideration to the rival contentions. The issue involved is relating to penalty under sections 271D and 271E. The provisions relating to the imposition of penalty are contained in Chapter XXI of the Income-tax Act, 1961. There are several provisions of the Act under Chapter XXI providing for penalty for various defaults. However, most of the litigation and the development of law are in regard to the provisions of section 271 of the Income-tax Act, 1961. It will be relevant to refer to section 271 as well as sections 271D and 271E so as to appreciate the distinction in the language of the aforementioned provisions of the Act which, in our view, is essential to be kept in mind in deciding the issue before us:

"271.(1) If the Assessing Officer or the Commissioner (Appeals) or the Commissioner in the course of any proceedings under this Act is satisfied that any person-

(a) omitted by the Direct Tax Laws (Amendment) Act, 1989 w.e.f. 1-4-1989,

(b) has failed to comply with a notice under sub-section (2) of section 115WD or under sub-section (2) of section 115WE or under subsection (1) of section 142 or sub-section (2) of section 143 or fails to comply with a direction issued under sub-section (2A) of section 1420, or

The following clause (d) shall be inserted after clause (c) of sub-section (1) of section 271 by the Finance Act, 2005, w.e.f. 1-4-2006:

(d) has concealed the particulars of the fringe benefits or furnished inaccurate particulars of such fringe benefits, he may direct that such person shall pay by way of penalty,-

(i) omitted;

(ii) in the cases referred to in clause (b), in addition to tax, if any, payable by him, a sum of ten thousand rupees for each such failure;

(iii) in the cases referred to in clause (c) or clause (d), in addition to tax, if any, payable by him, a sum which shall not be less than, but which shall not exceed three times, the amount of tax sought to be evaded by reason of the concealment of particulars of his income or fringe benefits or the furnishing of inaccurate particulars of such income or fringe benefits.

Explanation 1 to 7."

271D. (1) If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.

(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.

271E.(1) If a person repays any loan or deposit referred to in section 269T otherwise than in accordance with the provisions of section, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so repaid.

(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner." Section 274 provides for the procedure in imposition of penalty. Section 275 provides for bar of limitation for imposing penalties. Since these sections are also relevant, the same are reproduced hereunder:-

"274. Procedure.-(1) No order imposing a penalty under this Chapter shall be made unless the assessee has been heard, or has been given a reasonable opportunity of being heard.

(2) No order imposing a penalty under this Chapter shall be made-

(a) by the Income-tax Officer, where the penalty exceeds ten thousand rupees;

(b) by the Assistant Commissioner or Deputy Commissioner, where the penalty exceeds twenty thousand rupees, except with the prior approval of the Joint Commissioner.

(3) An income-tax authority on making an order under this Chapter imposing a penalty, unless he is himself the Assessing Officer, shall forthwith send a copy of such order to the Assessing Officer.

275. Bar of limitation for imposing penalties.-(1) No order imposing a penalty under this Chapter shall be passed-

(a) in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later:

Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the Chief Commissioner or Commissioner, whichever is later,

(b) in a case where the relevant assessment or other order is the subject-matter of revision under section 263 or section 264, after the expiry of six months from the end of the month in which such order of revision is passed;

(c) in any other case, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later.

(2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any action initiated for the imposition of penalty on or before the 31st day of March, 1989.

Explanation.- In computing the period of limitation for the purposes of the section-

(i) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129;

(ii) any period during which the immunity granted under section 245H remained in force; and

(iii) any period during which a proceeding under this Chapter for the levy of penalty is stayed by an order or injunction of any Court, shall be excluded."

16. It hardly needs to be emphasized that the controversy before us is in regard to interpretation of the provisions of section 275. The Indian Income-tax Act, 1922 did not prescribe any period for completion of penalty order. So when there was an inordinate delay in imposition of penalty, some Courts held that there was an abuse of power and the penalty having been imposed after unreasonable lapse of time about 12 years, the penalty was quashed. It is unnecessary to refer to such cases at this stage. In Income-tax Act, 1961, section 275 prescribes a limitation period for imposition of penalty. As originally enacted section 275 provided that no order imposing penalty under Chapter XXI could be passed after the expiration of two years from the date of completion of the proceedings in the course of which the proceedings for imposition of penalty had commenced. In the year 1970, section 275 was amended so as to obviating difficulties in such cases where the assessments were subject-matter of appeals and the additions were either deleted or reduced. Under the amended provisions of the Act, the limitation for imposing penalty under Chapter XXI ordinarily was for two years from the end of the financial year in which the proceedings in the course of which action for imposition of penalty are initiated, were completed. However, where the relevant assessment or other order was subject-matter of an appeal, the time-limit for completing the proceedings was either two years period as referred to earlier or period of six months from the end of the month in which the order of the appellate authority was received by the Commissioner, whichever period expired later. There were several amendments between 1975 and 1988 with which we are not concerned. However, there was an amendment by the Direct Tax Laws (2nd Amendment) Act, 1989 by virtue of which clause (c) was incorporated in section 275 w.e.f. 1-4-1989, which is relevant for the present controversy.

17. In nutshell, under section 275, the penalty order under Chapter XXI was required to be passed within two years from the date of completion of the proceedings in course of which the proceedings for imposition of penalty were commenced. From 1-4-1971 to 31-3-1989, section 275 divided cases into two categories, namely, (i) where the assessment to which the proceedings for imposition of penalty relate was the subject-matter of an appeal to the DCIT(A)/AAC, as the case may be, the CIT(A) or Appellate Tribunal, and (ii) all other cases. The period of limitation for the cases under category (i) was as under:

(i) two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated were completed, or

(ii) six months from the end of the month in which the order of the Deputy Commissioner (Appeals) up to 31-3-1988, Appellate Assistant Commissioner or w.e.f. 10-7-1978 Commissioner (Appeals) or, as the case might be, the Appellate, Tribunal was received by the Chief Commissioner or Commissioner up to 31-3-1988, the Commissioner, whichever period expired later. The period for limitation for cases under category (ii) was as under:

"Two years from the end of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, were completed."

From 1-4-1989, section 275 divides cases into three categories, namely, Category-I covers the cases where the assessment to which the proceedings for imposition of penalty relates is the subject-matter of an appeal to the appellate authorities (up to the level of Appellate Tribunal); Category-II covers the cases where the relevant assessment is the subject-matter of revision under section 263 and Category-III covers all other cases not falling within Categories-I and II. The period of limitation for the cases falling under Category-I is as under:

- the financial year in which the proceedings, in the course of which the action for the imposition of penalty has been initiated, are completed, or

- six months from the end of the month in which the order of the Deputy Commissioner (Appeals) or the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the Chief Commissioner or Commissioner, whichever period expires later. The period of limitation for cases falling under Category-II is as under:

- six months from the end of the month in which such order of revision is passed. The period of limitation for the cases falling under Category-III is as under:-

- the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, arc completed, or

- six months from the end of the month in which action for imposition of penalty is initiated. Whichever period expires later. It may be noted that in computing the period of limitation for purposes of section 275(1), certain period is to be excluded with which we are not concerned for the present controversy. Penalties under sections 271D and 271E are for failure to comply with the provisions of sections 269SS and 269T respectively.

18. In order to appreciate the necessity for incorporation of sections 269SS, 269T, 271D and 271E, it would be relevant to trace the legislative intend for incorporation of such provisions of the Act. Section 269SS was newly inserted by Finance Act, 1984 (21 of 1984) w.e.f. 1-4-1984. The provisions are effective from 1-7-1984. The scope and effect of section 269SS and section 276DD have been explained in the departmental Circular No. 387, dated 6-7-1984. The relevant portion is reproduced hereunder:-

"(xxiv) Prohibition against taking or accepting certain loans and deposits in cash.- 32.1. Unaccounted cash found in the course of searches carried out by the Income-tax Department is often explained by taxpayers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of account in the form of such loans and deposits, and taxpayers are also able to get confirmatory letters from such persons in support of their explanation.

32.2 With a view to countering this device, which enables taxpayers to explain away unaccounted cash or unaccounted deposits, the Finance Act, 1984, has inserted a new section 269SS in the Income-tax Act debarring persons from taking or accepting, after 30-6-1984, from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if the amount of such loan or deposit or the aggregate amount of such loan and deposit is Rs. 10,000 or more. This prohibition will also apply in cases where on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), and the amount or the aggregate amount remaining unpaid is Rs. 10,000 or more. The prohibition will also apply in cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on the date on which such loan or deposit is proposed to be taken is Rs. 10,000 or more."

Section 269T was also incorporated by the Income-tax (Second Amendment Act), 1981 (38 of 1981) w.e.f. 11-7-1981. While explaining the objects for incorporation of section 269T, the CBDT in Circular No. 345, dated 28-6-1982 indicated as under:-

"2.1 The proliferation of black money poses a serious threat to the national economy and it was considered necessary to take effective steps to contain and counter this major economic evil. The Government have, in recent past, taken several legislative and administrative measures to unearth black money. The Income-tax (Second Amendment) Act, 1981 (hereinafter referred to as the Amending Act) represents another step in the same direction.

2.2 It came to Government's notice that a substantial amount of black money was deposited by tax evaders with banks, companies, cooperative societies and partnership firms either in their own names or in benami names. The Income-tax (Second Amendment) Act, 1981, seeks to counter attempts to circulate black money in this manner."

It is evident from the explanatory Circulars issued by the CBDT that provisions of sections 269SS and 269T were necessitated to counter the serious threat to the national economy by proliferation of black money and the provisions had been incorporated to counter this major economic evil. There is a reference in the explanatory Circulars of the CBDT to the black money and the unaccounted cash found in the course of searches carried out by the Income-tax Department. When we look at the objective behind incorporation of sections 269SS and 269T, the contentions advanced on behalf of the assessees that penalty proceedings are necessarily to be initiated in the course of assessment proceedings loses its lusture. If it were so, then in search cases, where the unaccounted cash was sought to be explained with reference to cash loans and deposits would escape the levy of penalty under sections 271D and 271E as assessments in most of the cases would be completed before the date of search. This background, in our considered view, is important for getting us to take a pragmatic view in the matter of interpretation of section 275. Now, reverting to section 275, as pointed out earlier, there are three categories of cases for which a separate limitation has been provided under the said section. It is nobody's case that the assessees' case falls under category-I or category-II, i.e., under clause (a) or clause (b) of section 275. The assessees' case, admittedly, falls under category-III, i.e., under clause (c) of section 275. We have reproduced section 271 along with other relevant provisions involved of the Act elsewhere in this order. It would appear that quoting of section 271 was unnecessary but we purposely quoted the same so as to remove the impression, or if we may say so, the confusion which is created by reference to the decided cases relating to the provisions of section 271. In order to appreciate the distinction between sections 271 and 271D and 271E, it is necessary to keep in mind the authority having jurisdiction to impose the penalty under the respective provisions of the Act. Their Lordships of the Supreme Court in the case of Varkey Chacko v. CIT [1993] 203 ITR 885, had the occasion to deal with the issue relating to the jurisdiction of the authority to impose penalty. Their Lordships held that in considering the validity of the penalty under the Income-tax Act, two aspects must be firmly borne in mind, namely, who may impose the penalty and in what measure. It will be relevant to point out the facts of this case. For assessment year 1968-69, the assessee had filed return on 16-4-1970. On 27-3-1972, the ITO made the order of assessment and initiated penalty proceedings against the assessee on the basis of a finding recorded in the assessment order that there was concealment of an amount not exceeding Rs. 25,000. On 26-3-1974, the ITO imposed penalty of Rs. 10,000. On appeal, the AAC set aside the penalty and the Appellate Tribunal confirmed his order on the ground that the Assessing Officer had no jurisdiction to impose the penalty as per the law in force on the date the return was filed. (A reference was to be made to the IAC) On reference, High Court reversed the Tribunal's order holding that the competence of the ITO to impose penalty depended on the findings arrived at by him in the assessment proceedings as to the fact of concealment and the law applicable was that was in force on the date of assessment order. On appeal, the Hon'ble Supreme Court held that when the ITO reached the satisfaction that the appellant had concealed his income and made the assessment order on 27-3-1972, the amended provisions of section 274(2) were in operation and they entitled the ITO to impose penalty in cases where the amount of income in respect of which particulars had been concealed were less than Rs. 25,000. It was held that since the concealed income was less than Rs. 25,000, the ITO had the jurisdiction to impose penalty and there was no need for him to have referred the matter to the IAC. Their Lordship further held as under:

"Penalty for concealment of particulars of income or for furnishing inaccurate particulars of income can be imposed only when the assessing authority is satisfied that there has been such concealment or furnishing of inaccurate particulars. Proceedings for the imposition of penalty can, therefore, be initiated only after an assessment order has been made which finds such concealment or furnishing of inaccurate particulars. Who, at this point of time has the authority is what is relevant. Whoever this authority may be, he is obliged to impose such penalty as was permissible under the law in that behalf on the date on which the offence of concealment was committed, that is to say, on the date of the offending return. The two aspects must be firmly borne in mind, namely, who may impose the penalty and in what measure."

Similar view has been expressed by their Lordships of Supreme Court in the case of CIT v. Dhadi Sahu [1993] 199 ITR 610. The relevant observations are as under:

"Held, reversing the decision of the High Court, that the reference of the cases was validly made by the Income-tax Officer before 1-4-1971, and the Inspecting Assistant Commissioner validly acquired jurisdiction to pass the orders imposing penalty. The amending Act did not make any provision that references validly pending before the Inspecting Assistant Commissioner should be returned without any final order being passed. The previous operation of section 274(2) as it stood prior to 1-4-1971, and anything done thereunder continued to have effect under section 6(b) of the General Clauses Act, 1897, enabling the Inspecting Assistant Commissioner to pass orders imposing penalty in pending references. What was material to be seen was as to when the reference was initiated. If the reference was made before 1-4-1971, it would be governed by section 274(2) as it stood before that date and the Inspecting Assistant Commissioner would have jurisdiction to pass the order of penalty."

19. The above decisions of the Hon'ble Supreme Court indicate that it is necessary to find out as to who is the authority competent to impose the penalty under section 271D. The authority for imposition of penalty is DCIT (now JCIT). The Assessing Officer under section 271D or 271E is not competent to impose penalty. When the Assessing Officer does not have the authority to impose the penalty, a crucial question that arises for consideration is as to whether he could have initiated the penalty proceedings. It may be pertinent to mention that section 274(2) provides for financial limit for the income-tax authorities for imposition of penalty. In the event of the penalty imposable being more than the amount specified under section 274(2), the previous approval of Jt. Commissioner is required. Section 274(2), as it stood before its amendment from 1-4-1971, provided a reference to the Inspecting Assistant Commissioner for imposition of penalty exceeding Rs. 1,000. Thus, there was a provision for reference by the Assessing Officer to the IAC for imposition of penalty notwithstanding the fact that penalty had to be initiated by the Assessing Officer. In other words, whereas the competent authority to be satisfied that assessee had committed the default was the Assessing Officer but the authority for imposition of penalty was given to the IAC for which a reference was required to be made to him. This system has since been withdrawn. As per the modified section 274, the authority for imposition of penalty is vested with the concerned officers. However, where the penalty exceeds the specified limits, prior approval of the Jt. Commissioner is required.

20. Another factor that deserves consideration is the requirement of recording of satisfaction in the course of any proceedings. When the language of provisions of sections 271, is compared with bsection 271D/271E, the distinction is prominently visible. Under section 271, recording of satisfaction before initiation of penalty in the course of proceedings is a condition precedent for imposition of penalty for specified defaults. Under sections 271D and 271E, there is no such requirement of recording of satisfaction in the course of any proceedings. Moreover, the authority for imposition of penalty under section 271 is the Assessing Officer or the CIT(A), as the case may be. On the other hand, the authority for imposition of penalty under sections 271D and 271E is the Dy. CIT which has later on been substituted by the Jt. CIT. With reference to the proceedings of section 271, their Lordships of the Punjab & Haryana High Court also in the case of CIT v. Munish Iron Store [2003] 263 ITR 484, held that jurisdiction to impose penalty under section 271 flows from recording of satisfaction of the Assessing Officer regarding concealment of income. Similar view has been taken by the Delhi High Court in the case of CIT v. Vikas Promoters (P.) Ltd. [2005] 277 ITR 337 and earlier in some other cases. However, these decisions lose significance when we compare the plain language of provisions of sections 271D and 271E vis-a-vis that of section 271. It is evident from the language used by the Legislature that the condition precedent of recording satisfaction as required for the defaults specified under section 271 is not intended for the purposes of defaults contemplated under sections 271D and 271E.

21. As per the law laid down by the Hon'ble Supreme Court in the case of CIT v. Dhadi Sahu [1993] 199 ITR 610 and in the case of Varkey Chacko v. CIT [1993] 203 ITR 885, the validity of penalty proceedings has got to be seen with reference to the authority empowered to impose the penalty on the relevant date.

22. We have quoted sections 271D and 271E elsewhere in the order. The authority to impose the penalty under these provisions is the Dy. CIT (now Joint CIT). When the Assessing Officer does not have jurisdiction either to initiate or impose penalty under section 271D or 271E, a notice issued by him for making inquiries relating to the contravention of section 269SS or section 269T cannot be construed to be initiation of penalty proceedings by the competent authority. We would like to make it abundantly clear that even if a show-cause notice is issued by the Assessing Officer for imposition of penalty under section 271D or under section 271E that notice would be without any jurisdiction as the Assessing Officer has no authority under law either to initiate or impose the penalty under section 271D or under section 271E. We are, therefore, of the considered view that in the present appeals, at the relevant point of time, the DC1T had the jurisdiction to initiate and impose the penalty under section 271D and, therefore, the limitation under section 275(1)(c) has got to be computed form the date of initiation by the DCIT. We may gainfully refer to the decision of the Karnataka High Court in the case of Shanbagh Restaurant v. Dy. CIT [2004] 266 ITR 393 wherein their Lordships had the occasion to consider the issue relating to limitation under section 271D. In that case, the assessee-firm was carrying on restaurant business. For assessment year 1991-92, for which the previous year ended on 31-3-1991, the return of income filed by the assessee had been taken up for scrutiny by the Assessing Officer. In the course of scrutiny of accounts, the Assessing Officer found that assessee had received loans and deposits in cash in contravention of provisions of section 269SS of the Income-tax Act, 1961 and also made payments of loans and deposits in cash. The Assessing Officer had completed the assessment on 25-2-1994. The DCIT issued a notice dated 8-6-1994 asking the assessee to show cause as to why penalty under sections 271D and 271E may not be imposed. The assessee filed reply. The DCIT after considering the explanation of the assessee imposed the penalty under sections 271D and 271E vide order dated 28-3-1995. On appeal against the imposition of penalty, the CIT(A) held that order passed by the DCIT was barred by limitation as having been passed alter the expiry of six months from the date of initiation. On appeal, the Tribunal reversed the order of the CIT(A) by holding that the penalty orders had been passed by the DCIT within the financial year after the end of the financial year in which the assessment was made. On further appeal, the Hon'ble Karnataka High Court held that the financial year in respect of the assessment order expired on 31-3-1994. The action for imposition of penalty was initiated by issue of notices dated 8-6-1994 by the DCIT. Their Lordships further held that in that event the orders imposing penalty should have been passed before 31-12-1994 as six months period from the end of June 1994 expired on 31-12-1994. The order dated 28-3-1995 imposing penalty was, thus, held to be barred by limitation. Though this decision has been cited on behalf of the assessee, we are of the considered view that it clearly supports the view advanced on behalf of the revenue. It has been held by the Hon'ble High Court that the period of six months has got to be computed from the date of issue of notice by the DCIT. In the cases before us, the DCIT had issued notices to the appellants and the penalty orders under section 271D have been passed within six months after the expiry of the month in which the said show-cause notices were issued by the DCIT. In the case of Bharat Construction Co. v. ITO [1999] 153 CTR 414, their Lordships of the Madhya Pradesh High Court have also expressed the view that for the purposes of levy of penalty under section 27IB, the limitation for imposition of penalty is six months from the date of initiation by the competent authority.

23. The contention advanced on behalf of the appellants that the interpretation canvassed on behalf of the revenue would lead to uncertainty and ambiguity and is against the intention of the Legislature requires consideration. As pointed out earlier, under section 271, the recording of satisfaction in the course of any proceedings is a condition precedent for initiation of penalty proceedings. However, there is no time-limit fixed as such for initiation of proceedings except that the initiation has got to be in course of any proceedings under the Act. Admittedly, there is a limitation for completion of assessment proceedings and, therefore, by implication, there is a limitation for initiation of penalty proceedings which are initiated in the course of assessment proceedings. So, however, it may be relevant to point out that even under section 271, the CIT(A) has the power lo enhance the penalty and also the additional power to initiate penalty proceedings for concealment of income, etc., in the proceedings before him. Though there is limitation for filing of appeals to the CIT(A) yet there is no limitation prescribed for the CIT(A) to dispose of the appeal. Therefore, it is implied that the CIT(A) does not have any limitation for initiation of penalty proceedings except that these are to be initiated in the course of proceedings before him. In other words, the limitation starts from the point of initiation. So, however, for initiation of penalty proceedings, in certain cases there is no limitation.

24. In the case of Food Corpn. of India v. CST [1998] 109 STC 131 (SC), the issue relating to limitation within which a penalty order could be passed by the appellate authority/Commissioner of Madhya Pradesh General Sales Tax Act, 1958 arose before the Hon'ble Supreme Court. Their Lordships explaining similar provisions under the M.P. General Sales Tax Act, 1958 as the provisions of the Income-tax Act relating to penalty, held that when the appellate authority/Commissioner has been given additional powers to impose penalty for the first time in the course of proceedings before him, the limitation prescribed for initiation of penalty proceedings by the Assessing Officer do not apply for initiation by the appellate authority/Commissioner. Under the Income-tax Act, 1961, section 271 also gives additional power to the CIT(A) to impose penalty. As pointed out earlier, the CIT(A) not having any limitation for deciding an appeal by implication means that there is no limitation for initiation of penalty proceedings by him. The limitation starts from initiation of penalty in the course of proceedings before the CIT(A). Another example of uncertain period of limitation may be derived from the judgment of Madhya Pradesh High Court in the case of Prabhudayal Amichand v. CIT [1999] 237 ITR 483, wherein penalty order was set aside by the Tribunal. When the fresh order was passed on the direction of the Tribunal, a question was raised about the period of limitation. Their Lordships of the Madhya Pradesh High Court held that the limitation under section 275 did not apply to the set aside proceedings. It is, therefore, evident that uncertainty of period in initiation of penalty proceedings under section 271D or 271E is not solitary.

25. In the light of the above discussion, it appears that the Legislature has not considered it necessary to provide for limitation for initiation of penalty proceedings under sections 271D and 271E. It becomes more probable when we consider the intention of the Legislature behind incorporation of provisions of sections 269SS and 269T. We have referred to the legislative intent behind incorporation of sections 269SS, 269T, 271D and 271E in the preceding paragraphs. The intention behind incorporation of these provisions was to counter the proliferation of black money, which when found in the course of search is sought to be explained by cash loans from various persons. As it is, there is no time-limit for conducting searches. When in the course of search, some information is found about cash loans or deposits or repayment of loans or deposits or such claims are made, the necessity for initiating proceedings under section 271D or 271E arises. If one were to compute the limitation with reference to the assessment proceedings, then in no case, penalty under sections 271D and 271E could be initiated in the cases where the information is gathered in the course of search. That would defeat the very purpose of the legislating the provisions of sections 271 and 271E. Looking from the background which gave rise to incorporation of sections 269SS, 269TT, 271D and 271E, we are of the considered view that the Legislature has consciously not prescribed any limitation for initiation of penalty proceedings under sections 271D and 271E. The limitation of course has been prescribed for imposition after its initiation by the competent authority.

26. Assuming for argument's sake that there is an unintended omission by the Legislature in not providing limitation for initiation of penalty proceedings under sections 271D and 271E, even in that case, it is not for us to provide for the casus omissus of the Legislature. In the case of Prukash Nath Khanna v. CIT [2004] 266 ITR 1 at page 9, their Lordships of the Supreme Court held, "It is a well-settled principle in law that the Court cannot read anything into a statutory provision which is plain and unambiguous. A statute is an edict of the Legislature. The language employed in a statute is the determinative factor of legislative intent. The first and primary rule of construction is that the intention of the legislation must be found in the words used by the Legislature itself. The question is not what may be supposed and has been intended but what has been said." It has further been held, "While interpreting a provision t he Court only interprets the law and cannot legislate it. If a provision of law is misused and subjected to the abuse of process of law, it is for the Legislature to amend, modify or repeal it, if deemed necessary." Their Lordships furl her held that a statute must be construed with reference to the context and other clauses thereof. In the present case, considering the context in which the provisions of sections 269SS and 269T and consequentially incorporation of sections 271D and 271E, we are of the considered view that the non-prescribing the limit for initiation of penalty proceedings is conscious and there is neither any necessity nor are we empowered to prescribe any limitation for initiation of penalty proceedings under sections 271D and 271E in interpreting the provisions.

27. In the final analysis, we hold that the authority competent to impose penalty under sections 271D and 271E is vested with the Dy. CIT (now Joint CIT) and the Assessing Officer does not have the power either to initiate the penalty proceedings or impose the same. There is no procedure for reference by the Assessing Officer to the competent authority for imposition of penalty under section 271D or 271E. Therefore, the limitation for completion of penalty proceedings as provided under section 275(1)(c) has got to be computed from the date of issue of show-cause notice by the competent authority, which in the present case, is the DCIT (now JCIT). Since the respective orders under section 271D have been passed within a period of six months from the date of initiation by the competent authority, the penalty orders passed in the cases of the appellants herein are not barred by limitation.

28. In the light of our decision, for the detailed reasons given earlier, we hardly need to mention that whereas we agree with the view expressed by ITAT, Chandigarh Bench in the case of Asstt. CIT v. Shree Nivas Chemicals [2003] 84 ITD 76 and the Nagpur Bench of the ITAT in the case of ITO v. Ramnivas Agrawal [2004] 89 TTJ (Nag.) 795, we do not agree with the view expressed by Hyderabad Bench of the Tribunal in the case of Dillu Cine Enterprises (P.) Ltd. v. Addl. CIT [2002] 80 ITD 484 and Jodhpur Bench of the Tribunal in the case of Hissaria Bros. v. Jt. CIT [2001] 73 TTJ (Jodh.) 1 and the Delhi Bench of the ITAT in the case of Farrukhabad Investment (I) Ltd. v. Jt. CIT [2003] 85 ITD 230.

29. Thus, our conclusion to the reference is as under:

"Having regard to provisions of sections 271D and 271E of the Income-tax Act, 1961, the period of limitation for the purposes of section 275 of the Act is to be reckoned from the date when penalty proceedings are initiated by the DCIT (JCIT) and not from the date the assessment proceedings are completed."

30. The Registry is directed to take follow up action in the appeals of the assessees on the basis of this decision.

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