Tribunal upholds CIT(A)'s decision, dismisses Revenue's appeal on penalty deletion.

The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalty of Rs. 2,75,32,000 imposed under section 271E. The Tribunal found that the penalty was barred by limitation and that there was no violation of section 269T warranting the penalty.

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Issues:
Penalty under section 271E for repayment of loan not made through account payee cheque or bank draft.

Analysis:

Issue 1: Initiation of Penalty Proceedings
The Revenue argued that the penalty under section 271E was rightly levied as the loan repayment was not made through account payee cheque or bank draft, violating section 269T. The Revenue contended that only the Joint Commissioner had the power to levy such penalty and that the notice issued by the Assessing Officer was not valid for initiating penalty proceedings. However, the assessee's counsel argued that the AO had the authority to initiate penalty proceedings and had followed the correct procedure. The AO had issued a notice to the assessee based on the violation of section 269T, which led to the initiation of penalty proceedings. The Tribunal observed that there was no bar on the AO, other than the Joint Commissioner, to initiate penalty proceedings under section 271E. The AO had prima facie satisfied himself of the violation and had correctly initiated the penalty proceedings. Therefore, the period of limitation for the penalty was to be counted from the date of initiation by the AO, which was within the prescribed time limit.

Issue 2: Merits of Penalty Imposition
Regarding the merit of the penalty imposition, the Tribunal examined whether there was a violation of section 269T warranting penalty under section 271E. The AO had noted that the loan was transferred through a journal entry to the assessee's wife, but no actual repayment was made to the creditor. The Tribunal agreed that since the creditor did not receive any amount, there was no actual repayment of the loan. The transfer of the loan to another debtor by journal entry did not constitute a violation of section 269T, as there was no repayment made outside the prescribed methods. Therefore, the Tribunal concurred with the CIT(A) that there was no basis for imposing a penalty under section 271E on the assessee.

Conclusion:
The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to delete the penalty of Rs. 2,75,32,000 imposed under section 271E. The Tribunal found that the penalty was barred by limitation and that there was no violation of section 269T warranting the penalty. The order was pronounced on 16-05-2014.

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