2017 (2) TMI 1436 - AT - Income Tax

Tribunal Overturns Penalty for Cash Loan Repayment; Finds No Malafide Intent or Non-Genuine Transactions in Technical Error.

Sri Dipak Kumar Sahu Versus JCIT, Balasore Range, Balasore

The Tribunal allowed the appeal, deleting the penalty imposed under section 271E of the Act for repaying loans in cash, which violated section 269T. ... Penalty u/s. 271E - assessee has repaid loan/deposit in cash in contravention of the provisions of section 269T - HELD THAT:- As assessee has relied on the decision of OMEC Engineers [2007 (9) TMI 27 - HIGH COURT , JHARKHAND] wherein, it has been held that there being no finding of the Assessing Officer, the CIT(A) or the Tribunal that the transaction made by the assessee in breach of provisions of section 269SS was not a genuine transaction, penalty u/s.271D is not leviable merely for technical mistake. Similarly, in the present case also, we find that there is no finding of the Assessing Officer or the CIT(A) that the transactions in violation of section 269SS of the Act were not genuine. The assessee’s return has been accepted u/s.143(3) of the Act after scrutiny. There is no finding that the transactions were malafide aimed at disclosing concealed money. Therefore, we delete the levy of penalty u/s.271E - Decided in favour of assessee Issues:Appeal against sustaining penalty under section 271E of the Act.Analysis:The appeal was filed by the assessee against the order of CIT(A)- Cuttack, challenging the penalty imposed under section 271E of the Act. The Assessing Officer found that the assessee repaid loans in cash, violating section 269T of the Act. The JCIT issued a notice under section 271E based on this finding. The assessee argued that the recipients had no bank accounts due to lack of banking facilities in their areas. However, the JCIT was not satisfied and imposed a penalty of Rs. 3,28,176. On appeal, the CIT(A) upheld a penalty of Rs. 3,00,000, considering some payments as violations of section 269T. The assessee argued that the penalty was levied for a technical mistake and cited a High Court decision. The Tribunal noted that the transactions were not found to be non-genuine, and the return was accepted after scrutiny under section 143(3) without any malafide intent. Relying on the High Court decision, the Tribunal deleted the penalty, allowing the appeal.This case involved a dispute over the penalty imposed under section 271E of the Act for repaying loans in cash, violating section 269T. The Assessing Officer and CIT(A) upheld penalties of Rs. 3,28,176 and Rs. 3,00,000, respectively. The Tribunal considered the genuineness of the transactions and absence of malafide intent, as well as the acceptance of the return after scrutiny under section 143(3). Citing a High Court decision, the Tribunal concluded that the penalty for a technical mistake without evidence of non-genuine transactions or concealed money was not justified. As a result, the penalty was deleted, and the appeal was allowed.