2018 (5) TMI 1532 - AT - Income Tax

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 ... Levy of penalty u/s 271D and 271E - violation of provisions of section 269SS and 269T - grant of stay - Held that:- The payer has issued cheque to the bank clearly mentioning the cheque no. and cheque amount and thereafter transaction happened between payer banker and the payee banker. Advancement in the banking system these type of RTGS payments are done electronically in order to get instant realization of the amount from the account of the payer to the account of the payee. This, in our considered opinion, is mere carrying on transactions in electronic mode through regular banking channel. Assessee has made out a prima facie case in its favour. AR also placed on record the present financial position wherein the assessee has got net overdraft limit as on 08.03.2018 to the tune of ₹ 18.34 crores. He also argued that the genuineness of the loans taken and loans repaid are not disputed by the revenue. We are inclined to grant stay of demand for a period of six months from today or till the disposal of the appeals by this Tribunal whichever is earlier. 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.