Tribunal cancels penalty under Income Tax Act citing genuine cash repayments justified by urgency.

The Tribunal allowed the appeal, canceling the penalty imposed under section 271E of the Income Tax Act, 1961 for the assessment year 2013-14. The penalty was deleted as there was a reasonable cause for the cash repayments made by the assessee, which were found to be genuine and justified due to the urgency to avoid default penalties. The Tribunal emphasized that penalties should not be imposed for technical violations when transactions are genuine, following the precedent set in the Hindustan Steel Ltd. case.

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Issues:
Appeal against penalty under section 271E of the Income Tax Act, 1961 for A.Y. 2013-14.

Analysis:
1. The appeal was filed against the penalty imposed by the Assessing Officer under section 271E of the Income Tax Act, 1961. The Commissioner of Income Tax-(A)-6, Kolkata confirmed the penalty of Rs. 6,54,118/- on the assessee for the assessment year 2013-14.

2. The case proceeded ex-parte as neither the assessee nor a representative appeared, and no adjournment petition was filed. The case was disposed of on merits after hearing the departmental representative.

3. A delay of 41 days in filing the appeal was condoned after reviewing the petition for condonation of delay, as it was established that the assessee had a reasonable cause for the delay.

4. The penalty was imposed on the assessee for paying installments in cash towards repayment of finances obtained for the purchase of vehicles. The assessee explained the urgency for cash payments to avoid default and penalties, as cheque books were not available, and the transactions were genuine.

5. The Assessing Officer and the CIT(A) upheld the penalty for cash repayment to another finance company, despite the explanation provided by the assessee for closing the account to clear the finance and obtain a NOC for selling a vehicle.

6. The Tribunal found that the penalty should be deleted as there was a reasonable cause for making cash repayments, and the transactions were genuine. The genuineness of transactions was not in doubt, and the urgency for cash payments was justified to maintain credibility and avoid default penalties.

7. Citing the Hindustan Steel Ltd. case, the Tribunal emphasized that penalties should not be levied for technical and venial violations when transactions are genuine. The Supreme Court precedent was applied to the current case, leading to the deletion of the penalty.

8. Considering the reasonable cause for the violation and the genuine nature of transactions, the Tribunal decided to cancel the penalty, as the assessee had a valid explanation for the cash payments made.

9. Consequently, the appeal of the assessee was allowed, and the penalty under section 271E of the Income Tax Act, 1961 was canceled. The order was pronounced in the open court on January 6th, 2021.

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