2013 (1) TMI 770 - AT - Income Tax

Tribunal grants immunity for cash transaction penalty citing genuine business need

A.C.I.T. Circle, Palampur Versus Amar Nath Prop. M/s Amar Nath Harish Chand and vice- versa

The Tribunal upheld the deletion of a penalty under section 271D imposed on an assessee for violating section 269SS by accepting cash, granting immunity ... - Issues involved: Appeal against deletion of addition u/s 273B for penalty u/s 271D.Summary:The appeal concerned the deletion of an addition of Rs. 13,15,000 by invoking section 273B to grant immunity to the assessee from penalty u/s 271D for violating section 269SS. The assessee, engaged in product distribution, accepted cash from his son, leading to the penalty imposition by the Assessing Officer. However, the ld. CIT(A) deleted the penalty after considering submissions that the cash was urgently needed to avoid bounced cheques, which could have caused trouble under the Negotiable Instruments Act. The Tribunal found merit in the assessee's arguments, noting the genuine nature of the transaction and the prompt repayment through cheque. The Tribunal upheld the deletion of the penalty, citing section 273B's provision for substantiating 'reasonable cause' for non-compliance with section 269SS. The Tribunal emphasized the business exigency and the absence of intent to conceal income or defraud revenue.During the absence of the assessee and his son, the wife of the assessee deposited cash in the assessee's account from the son's firm, which was accepted as a reasonable cause. The Tribunal observed that the funds were urgently required for business needs, as evidenced by the simultaneous clearing of cheques issued to suppliers. The Tribunal highlighted clerical errors in the Assessing Officer's order and the swift repayment of the cash received. The Tribunal dismissed the revenue's appeal and allowed the Cross-objections supporting the ld. CIT(A)'s decision. The appeal of the revenue was dismissed, and the Cross-objections of the assessee were allowed.