2002 (7) TMI 749 - AT - Income Tax

Penalties under IT Act sections 271D & 269T cancelled for non-transfer of funds; no intentional violation found.

The Appellate Tribunal ITAT Lucknow dismissed the Revenue's appeal and upheld the decision of the ld. CIT(A) to delete penalties imposed under sections ... Penalty - For failure to comply with provisions of section 269T Issues involved: Violation of sections 269SS and 269T regarding credit entries without account payee cheques or bank drafts, imposition of penalties under sections 271D and 269T, deletion of penalties by CIT(A), appeal by Revenue and Cross Objection by assessee.Summary:The Appellate Tribunal ITAT Lucknow, in the case involving violations of sections 269SS and 269T due to credit entries without account payee cheques or bank drafts, addressed the appeal of the Revenue and the Cross Objection of the assessee arising from the order of the ld. CIT(A)-II, Kanpur, dated 12-9-1994. During the assessment proceedings, it was found that there were credit entries on 31-3-1992, not through account payee cheques or bank drafts, amounting to Rs. 79,11,204. The Assessing Officer imposed penalties under sections 271D and 269T, which were later deleted by the ld. CIT(A) for the assessment year 1992-93. The Tribunal considered the contention that for a violation of section 269SS, there must be an involvement of transfer of money, which was not the case here. The Tribunal agreed with the decision of other benches and held that since there was no deposit as per the prescribed mode under section 269SS, the violation of provisions could not be accepted. It was also noted that there was no evidence to show that the violation was done knowingly or in defiance of the provisions. Therefore, the imposition of penalties was cancelled by the ld. CIT(A), a decision upheld by the Tribunal, resulting in the dismissal of the Revenue's appeal and the disposal of the assessee's Cross Objection accordingly.