2003 (1) TMI 46 - HC - Income Tax

Penalty under section 271D deleted as section 269SS inapplicable where payment was account-payee cheque and journal entry recorded

Commissioner of Income-Tax Versus Noida Toll Bridge Co. Ltd.

HC upheld the Tribunal's deletion of the penalty under section 271D, finding section 269SS inapplicable. The Tribunal determined the transaction was by ... Imposition of penalty u/s 271D - payment not made in the manner prescribed in section 269SS - contravene the provisions of section 269SS - HELD THAT:- Tribunal had deleted the said penalty. While holding that the provisions of section 269SS of the Act were not attracted, the Tribunal has noticed that:(i) in the instant case, the transaction was by an account payee cheque, (ii) no payment on account was made in cash either by the assessee or on its behalf, (iii) no loan was accepted by the assessee in cash, and (iv) the payment of Rs. 4.85 crores made by the assessee through IL & FS, which holds more than 30 per cent. of the paid-up capital of the assessee, by journal entry in the books of account of the assessee by crediting the account of IL & FS. Admittedly, neither the assessee nor IL & FS had made any payment in cash. The order of the Tribunal does not give rise to any question of law, much less a substantial question of law. The High Court Delhi dismissed the Revenue's appeal against the Income-tax Appellate Tribunal's order regarding penalty under section 271D of the Income-tax Act for the assessment year 1998-99. The Tribunal deleted the penalty, stating that the provisions of section 269SS were not violated as the payment was made by account payee cheque and not in cash. The High Court agreed with the Tribunal's findings and declined to entertain the appeal.