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of <h1>ITAT overturns penalty under Section 271D, ruling in favor of assessee</h1> <h3>Mamata Patra Versus Jt. CIT, Range-5, Bhubaneswar</h3> The ITAT set aside the CIT(A)'s penalty order under Section 271D of the Income Tax Act, ruling in favor of the assessee. ITAT found the cash loans ... Penalty u/s.271D - violation of provisions of Section 269SS - HELD THAT:- We find there is no dispute with respect to the source the ld. AR submitted that there is no tax evasion and relied on the provisions of the Act on levy of penalty. The ld. AR submitted that the assessee has filed return of income on 13.11.2015 whereas penalty order u/s. 271D of the Act was passed on 13.10.2015. We find the assessee has filed the return of income disclosing income from house property, business and profession and other sources and balance sheet was filed along with supportive financial statements. AR’s contention that the assessee was holding the cash for the business operations at Jaipur and there is no malafide intention and the said transaction was disclosed in the income tax returns. Whereas the ld. DR submitted that the assessee has violated the provisions by accepting the cash loan. Further the ld. AR emphasized that the assessee has no intention to violate the provisions and has a reasonable cause in accepting the cash as the business transaction performed at Jaipur to be on cash to cash basis. Considering business activity of the assessee and we find strength in the arguments of ld. AR on genuineness of transaction and circumstances of the case. Accordingly, we set aside the order of the CIT(A) and delete the addition and the grounds of appeal of the assessee are allowed. Issues:Violation of provisions of Section 269SS of the Income Tax Act leading to penalty under Section 271D for accepting cash loans.Detailed Analysis:1. Background and Disputed Issue:The appeal was filed by the assessee against the CIT(A)'s order imposing a penalty under Section 271D of the Income Tax Act for accepting cash loans from two individuals, allegedly violating Section 269SS of the Act.2. Factual Findings:The Joint Commissioner observed that the assessee accepted cash loans from two individuals, one being an agriculturist, in contravention of Section 269SS. The assessee's explanations regarding the source of funds were not adequately supported by evidence, leading to the penalty imposition.3. Appellate Proceedings:The assessee appealed the penalty order before the CIT(A), providing written submissions and documents. Despite the submissions, the CIT(A) upheld the penalty, prompting the assessee to appeal further.4. Arguments Before ITAT:The assessee argued that one lender was an agriculturist without a bank account, making cash loan permissible under the Act. They contended that both loans were genuine, with no intention of tax evasion or violation of Section 269SS.5. Counter-Arguments:The Departmental Representative argued that the assessee failed to provide a reasonable cause for accepting the cash loans, urging dismissal of the appeal.6. ITAT's Decision:After considering submissions and evidence, ITAT found no tax evasion intent and that the loans were disclosed by the lenders. The ITAT emphasized the genuineness of the transactions and the absence of malafide intent, citing relevant judicial decisions supporting the assessee's position.7. Legal Precedents and Rulings:The ITAT referred to case laws like CIT Vs. Maheshwari Nirman Udyog and CIT Vs. Bhagwati Prasad Bajoria, highlighting the importance of reasonable cause and genuineness of transactions in penalty imposition under Section 271D.8. Final Verdict:Considering the arguments, legal provisions, and precedents, ITAT set aside the CIT(A)'s order, deleting the penalty and allowing the assessee's appeal based on the genuineness of the transactions and absence of tax evasion intent.9. Conclusion:The ITAT pronounced the appeal in favor of the assessee, emphasizing the genuine nature of the transactions and the lack of malafide intentions, ultimately overturning the penalty imposed under Section 271D.This detailed analysis showcases the thorough examination of the issues involved in the legal judgment, the arguments presented by both parties, the legal precedents considered, and the final decision rendered by the ITAT in favor of the assessee.
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