2008 (4) TMI 720 - HC - Income Tax

High Court Upholds Tribunal Decision on Income Tax Penalties

COMMISSIONER OF INCOME TAX Versus SHREE AMBICA FLOUR MILLS CORPORATION

The High Court upheld the Tribunal's decision to cancel penalties under sections 271D and 271E of the Income Tax Act, as the Tribunal correctly ... - Issues Involved: The judgment involves the cancellation of penalties levied under sections 271D and 271E of the Income Tax Act, 1961.Penalty under Section 271D (R.A. No. 713/Ahd/1997): The Assessing Officer (AO) imposed a penalty under section 271D for violation of provisions of section 269SS of the Act. The penalty was confirmed by the CIT(A). The Tribunal, after considering the facts, concluded that the amount in question was received for safe custody and not for any business deal. It was found that the assessee had reasonable cause for accepting the cash amount. The Tribunal held that the penalty under section 271D was not justified, and the appreciation of facts by the Tribunal was correct.Penalty under Section 271E (R.A. No. 714/Ahd/1997): The AO imposed a penalty under section 271E for cash transactions between sister concerns. The CIT(A) confirmed the penalty. However, the Tribunal found that the transactions were not covered by the provisions of sections 269SS or 269T of the Act. It was noted that making payments on behalf of sister concerns was a common trading practice. The Tribunal concluded that the default, if any, was of a minor nature and no penalty should be imposed. The Tribunal's decision to delete the penalty under section 271E was upheld as it correctly appreciated the facts and evidence on record.Conclusion: The High Court upheld the Tribunal's decision to cancel the penalties under sections 271D and 271E, as the Tribunal had correctly appreciated the facts and evidence. The judgment was in favor of the assessee and against the Revenue.