Court upholds deletion of Rs. 1,14,60,017 penalty under Income Tax Act section 271D. Assessee's good faith recognized.

The High Court upheld the Tribunal's decision to delete a penalty of Rs. 1,14,60,017 imposed under section 271D of the Income Tax Act. The Court found that the assessee's actions were in good faith to address financial difficulties, with no evidence of intentional violation or tax planning. The penalty deletion was confirmed due to lack of evidence of defiance of provisions or tax planning, leading to the dismissal of the tax appeal.

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Issues involved: Appeal against deletion of penalty u/s 271D of the Income Tax Act for breach of Section 269SS.

Summary:
The Revenue appealed against the Tribunal's decision to delete a penalty of Rs. 1,14,60,017 levied u/s 271D of the Act. The counsel argued that the assessee breached Section 269SS, and the Tribunal erred in deleting the penalty. However, the Tribunal's decision was based on the absence of violation of Section 269SS due to journal entries crediting the accounts of a sister concern. The Tribunal also considered the financial crisis faced by the assessee, leading to adjustments without cash transactions. The High Court referred to a similar case where the penalty deletion was confirmed due to lack of evidence of intentional violation or tax planning. In this case, the Court found no evidence of defiance of provisions or tax planning by the assessee, who made adjustments in good faith to address financial difficulties. Consequently, the Court upheld the Tribunal's decision to delete the penalty, as there was a reasonable cause and no evidence of intentional violation or tax evasion. The tax appeal was dismissed.

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