Judgment:
1. The appeal has been filed by the assessee against the imposition of penalty of Rs. 1,20,000 Under Section 271D. In the impugned penalty order, the AO discussed that the assessee had taken loans in cash exceeding Rs. 20,000 in contravention of Section 269SS of the Income-tax Act, 1961. He also discussed that the assessee had accepted loans in that regard of Rs. 60,000 each from Shri B.P. Surat and Shri P.L. Kulkarni on 11-4-1990 and 18-4-1990 respectively. The amounts under consideration are stated to have been repaid on 2-7-1990. The assessee claimed before the AO that the lenders were purely agriculturists and that they had deposited the amounts with the assessee out of sale proceeds of agricultural land. The AO ultimately came to the conclusion that the assessee had not furnished any reasonable cause about acceptance of loans under consideration in cash.
In view of the said fact, he imposed a penalty of Rs. 1,20,000 which is equal to the amount of cash received by the assessee by way of loans in contravention of the provisions of Section 269SS.2. The appeal filed by the assessee against the above-mentioned penalty order was dismissed by the CIT(A) in limine on the ground that in addition to payment of advance tax of Rs. 2,000, the assessee was required to pay self-assessment tax of Rs. 1,498 (including interest Under Section 234B and 234C) and that the assessee had failed to make payment of the said self-assessment tax. The assessee has come up in further appeal, against the above-mentioned rejection of the first appeal, before us.
3. The learned counsel on behalf of the assessee has relied on the decision of the Orissa High Court in the case of CIT v. Kalipada Ghose [1987] 167 ITR 173 in which case also, under similar circumstances, appeals for assessment years 1974-75 and 1975-76 having been rejected in limine by the Appellate Asstt. Commissioner, the Tribunal, considering the facts that the assessee had subsequently deposited the admitted tax and that the provision was a new one, not well-known to all concerned, directed the Appellate Asstt. Commissioner to admit the appeals for being disposed of on merits. The learned departmental representative, however, strongly objects to reliance on this particular decision in view of the amendment brought to Section 249(4) by the Direct Tax Laws (Amendment) Act, 1989 with effect from 1-4-1989.
(4) No appeal under this Chapter shall be admitted unless at the time of filing of the appeal,- (a) where a return has been filed by the assessee, the assessee has paid the tax due on the income returned by him; or (b) where no return has been filed by the assessee, the assessee has paid an amount equal to the amount of advance tax which was payable by him : Provided that, in a case falling under Clause (b) and on an application made by the appellant in this behalf, the Deputy Commissioner (Appeals) or, as the case may be, the Commissioner (Appeals) may, for any good and sufficient reason to be recorded in writing, exempt him from the operation of the provisions of that clause.
It is to be noted that the expression "in a case falling under Clause (b)" was introduced to the proviso to this Sub-section by way of the abovementioned Amendment with effect from 1-4-1989. The learned departmental representative has argued in this connection that inasmuch as the return of income was actually filed by the assessee for assessment year 1991-92, his case falls within the ambit of Clause (a) of the relevant Sub-section and not under Clause (b) of the said Sub-Section He, thus, rightly argues that in view of the amended provisions, there is no power with the appellate authorities to exempt the assessee from the operation of the provisions of Clause (a) even if there may be good and sufficient reason for the assessee for not paying the tax due on the income returned by him in a case where the return has been filed by him.
5. Although we agree with the above-mentioned contentions of the learned departmental representative, at the same time again, we are of the view that this particular appeal does not at all fall within the ambit of Sub-section (4) of Section 249. Although in the impugned penalty order, the assessment year has been mentioned as ' 1991 -92' we are of the view that neither the said reference to the assessment year is relevant nor even applicable to the present case. This is not the case of imposition of penalty arising out of any particular assessment proceeding to which alone the requirement and the further implications thereafter, of filing a return of income would apply. The assessee has been penalised in the instant case, Under Section 27 ID for contravention of the provisions of Section 269SS. The nature of the default in this particular case consists of the act of the assessee in accepting a cash loan beyond certain limit. The amount taken under cash loan is not required to be added back in the assessment of the assessee for any year and in that way, the default under consideration cannot be considered to be related to any particular assessment year. Even though the fact of the cash loan having been taken might be recorded in the books of the assessee for a particular accounting year, it cannot be said that the issue is relevant to the proceedings relating to determination of income of the assessee for the same assessment year.
In fact, the default being without any reference to the question of determination of income of the assessee and the penalty not arising out of any addition made in any assessment order, the default has got to be considered as independent of any particular assessment year. In fact, the penalty in a case like this, can be imposed on the assessee even much before the commencement of the assessment year, as considered by the AO herein, i.e., just after completion of the default by way of taking of cash loan. Even a non-assessee can also be penalised Under Section 270 ID of the IT Act. We are, therefore, of the opinion that so far as the penalty Under Section 27ID is concerned, in view of the fact that the said penalty cannot be considered to be connected with any particular assessment year, no return of income for any assessment year can be considered to be having any connection with the said penalty proceedings. Since Sub-section (4) of Section 249 relates entirely to the question of filing a return by the assessee (which again is intimately connected with the particular assessment year with which the matter of appeal is connected) and thereafter of non-payment of tax in relation to the said return, in the instant case, we are of the opinion that the provisions of this Sub-section cannot be applicable. The right of appeal against penalty is inherent to an assessee and unless there is a specific provision in the statute barring or limiting such right, there cannot be any determent of the assessee from filing of an appeal against a penalty order. In the instant case, the provisions of Sub-section (4) of Section 249 do not fit in with the scheme of imposition of penalty Under Section 27 1D for the reasons as discussed above. Hence, we are of the view that the right of appeal of the assessee against a penalty order passed Under Section 27ID is not circumscribed by the provisions of Sub-section (4) of Section 249 in any way. Finally therefore, we are of the opinion that whether the assessee paid his self-assessment tax for any particular assessment year or not, shall have no relevance to the question of admissibility of the appeal against imposition of penalty Under Section 27 ID on the assessee simply because of the fact that this penalty cannot be related to any particular assessment year or return of income in respect of any such year. Ultimately therefore, we hold that the CIT(A) was wrong in not entertaining the appeal of the assessee simply on the ground of applicability of the provisions of Section 249(4). As we hold, the said provisions do not apply in the instant case. We, therefore, set aside the order of the CIT(A) and direct him to admit the appeal filed by the assessee before him and thereafter to decide the same on merits.
6. In the result, the appeal filed by the assessee before us is partially allowed to the above-mentioned extent.