Tribunal Grants Stay on Penalties for Loan Violations in Real Estate

The Tribunal granted a stay of demand for the assessee in a case involving penalties under sections 271D and 271E for violating sections 269SS and 269T related to loan transactions in real estate projects. The Tribunal acknowledged the use of Real Time Gross Settlement (RTGS) method for transactions, which were considered as conducted through regular banking channels. The Tribunal found the assessee had a prima facie case, supported by financial evidence, and granted a stay for six months or until the disposal of appeals, whichever is earlier. The stay petitions were ultimately allowed, with the order pronounced in open Court on 09.03.2018.

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Issues:
Stay applications seeking to keep demands raised in sums of Rs. 2,30,10,000/- and Rs. 21,08,257/- in abeyance for the assessment year 2013-14 due to penalty under sections 271D and 271E for violation of provisions of section 269SS and 269T.

Analysis:
The assessee, engaged in real estate projects, received and repaid loans using the Real Time Gross Settlement (RTGS) method. The demands were raised for penalties under sections 271D and 271E for violating sections 269SS and 269T. The assessee argued that transactions were conducted through regular banking channels via RTGS, requiring the payer to issue an account payee cheque to the bank. The evidences presented showed the cheque number and amount mentioned on the RTGS transfer application form. The Tribunal noted that RTGS payments are electronically processed for instant fund transfers between payer and payee banks, constituting transactions in electronic mode through regular banking channels, thereby supporting the assessee's case.

The Tribunal found the assessee had a prima facie case in its favor, supported by the financial position showing a net overdraft limit and the undisputed genuineness of loans taken and repaid. Consequently, the Tribunal granted a stay of demand for six months or until the disposal of the appeals by the Tribunal, whichever is earlier. The next hearing was scheduled for 17.04.2018, with no fresh notices to be issued to the parties. Ultimately, the stay petitions of the assessee were allowed, and the order was pronounced in open Court on 09.03.2018.

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