Tribunal cancels penalty under I.T. Act due to lack of control over cash loan.

The Tribunal canceled the penalty imposed under section 271D of the I.T. Act, 1961, in a case where the assessee had no control over a cash loan directly deposited into their bank account by a third party, promptly refunded the amount, and had a reasonable cause for non-compliance. The Tribunal emphasized the necessity of recording satisfaction under section 271D before initiating penalty proceedings, ultimately dismissing the Revenue's appeal and allowing the Assessee's appeal based on the lack of satisfaction and 'reasonable cause' provision under section 273B.

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Issues:
- Challenge against cancellation of penalty and deletion of part penalty under section 271D of the I.T. Act, 1961.

Analysis:
1. The case involved cross-appeals against the order of the Ld. CIT(A)-21, New Delhi, regarding the cancellation of penalty and deletion of part penalty under section 271D of the I.T. Act, 1961 for the A.Y. 2010-2011.

2. The Assessing Officer (A.O.) added back a sum of &8377; 16.18 lakhs under section 68 of the I.T. Act, and initiated penalty proceedings under section 271D separately. The penalty was levied in the sum of &8377; 15,80,000, equal to the amount of cash loan taken or accepted. However, the Ld. CIT(A) noted that the cash loan was directly deposited in the assessee's bank account by a third party over whom the assessee had no control. The assessee promptly refunded the amount, indicating no foul play. The Ld. CIT(A) canceled the penalty to the extent of &8377; 15 lakhs but confirmed it for &8377; 80,000.

3. The Learned Counsel for the Assessee argued that the bonafide of the assessee was not in dispute, and the A.O. did not record any satisfaction under section 271D of the I.T. Act before initiating penalty proceedings. The departmental appeal against the addition of &8377; 15,80,000 was dismissed by ITAT, Delhi Bench, supporting the deletion by the Ld. CIT(A).

4. The Hon'ble Supreme Court's judgment in CIT vs. Jai Laxmi Rice Mills (2015) was cited, emphasizing the need for satisfaction under section 271D of the Act before initiating penalty proceedings. The A.O. did not record any satisfaction, and the assessee had a reasonable cause for non-compliance as the cash was not directly given to them but deposited in a bank branch over which they had no control. The penalty was deemed not leviable based on the 'reasonable cause' provision under section 273B of the I.T. Act.

5. Consequently, the Tribunal set aside the orders of the authorities below and canceled the entire penalty, dismissing the appeal of the Revenue and allowing the appeal of the Assessee based on the lack of satisfaction recorded under section 271D and the 'reasonable cause' for non-compliance.

This detailed analysis outlines the key points and legal considerations leading to the decision to cancel the penalty and delete part of the penalty under section 271D of the I.T. Act, 1961.

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