Tribunal revokes penalty under section 271D citing reasonable cause for cash transactions

The Tribunal allowed the appeal of the assessee and revoked the penalty under section 271D. It was found that the cash deposits were made by individuals for declaration under the Voluntary Disclosure of Income Scheme (VDIS) and were not loans or deposits. The Tribunal held that the assessee had a bona fide belief in the legitimacy of the transactions, as the department had accepted the VDIS declarations of these individuals. Therefore, the penalty was canceled based on the grounds of reasonable cause for the cash transactions.

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Issues:
1. Condonation of delay in filing appeal.
2. Imposition of penalty under section 271D for contravention of section 269SS.

Issue 1: Condonation of Delay
The appeal was filed 137 days late, and the assessee submitted an application for condonation along with an affidavit. The Tribunal, after hearing both parties, decided to condone the delay in the interest of justice.

Issue 2: Penalty under Section 271D
The Assessing Officer imposed a penalty of Rs. 10 lakhs on the assessee for accepting cash loans in contravention of section 269SS. The loans were received from various individuals in cash amounts exceeding Rs. 20,000. The CIT(A) upheld the penalty.

The assessee argued that the loans were deposited in the company's bank account by individuals who were directors or members of the company. These individuals had declared the amounts under the Voluntary Disclosure of Income Scheme (VDIS) in their personal capacity. The assessee contended that these cash deposits were not loans or deposits but accommodation entries made for the purpose of supporting the VDIS declarations.

The Tribunal considered the submissions and held that the cash deposits were made by individuals for declaration under VDIS, following advice from tax consultants to provide evidence of income declaration. Since the department had accepted the VDIS declarations of these individuals, the Tribunal found that the assessee had a bona fide belief in the legitimacy of the transactions. As there was a reasonable cause for accepting the cash deposits, the penalty under section 271D was deemed unjustified. Therefore, the Tribunal set aside the lower authorities' orders and canceled the penalty of Rs. 10,00,000.

In conclusion, the appeal of the assessee was allowed, and the penalty under section 271D was revoked based on the grounds of bona fide belief and reasonable cause for the cash transactions.

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