2022 (12) TMI 1361 - AT - Income Tax

Tribunal overturns penalty under Income-tax Act, citing valid reasons

Amrit Breeder Farms Pvt. Ltd. Versus Assistant Commissioner of Income Tax, Circle-11 (1), Kolkata

The Tribunal allowed the appeal, directing the deletion of the penalty imposed under section 271DA of the Income-tax Act, 1961. The penalty of Rs.2,04,000 ... Penalty u/s. 271DA - deposit of cash in the bank account of the assessee, directly by the party, at a different location - HELD THAT:- As we find that there exists a good and sufficient reason in terms of proviso to section 271DA for deleting the penalty imposed by the Ld. AO. The facts demonstrated before us are uncontroverted which makes us incline towards the contentions made by the ld. Counsel narrated above. Considering the nature of business of the assessee and one of such transaction of deposit of cash by a party to a remote location in the bank account of assessee against a sales volume of Rs.56.93 Cr., we direct to delete the penalty impose d u/s. 271DA of the Act. Before parting, we make it clear to the assessee that this relief should not be construed as precedence and a lee way for accepting the money in the manner as in the pre sent case. We direct the AO accordingly. The grounds taken by the assessee in this respect are allowed. Issues:Challenge to penalty imposed under section 271DA of the Income-tax Act, 1961 for cash deposit directly by a party in the bank account of the assessee at a different location.Analysis:1. The appeal was filed against the penalty order under section 271DA of the Income-tax Act, 1961. The appellant contested the penalty of Rs.2,04,000 imposed due to cash deposit by a party directly in the bank account at a different location. The grounds raised challenged the lower authorities' orders as arbitrary, erroneous, and without proper reasons prejudicial to the appellant's interests.2. The brief facts revealed that the Auditor reported a cash deposit of Rs.2,04,000 on 04.07.2018 in the assessee's bank account by M/s Choudhary Poultry Feed Centre, which contravened Sec.269ST of the Act. The assessee maintained that the cash was directly deposited by the party and not accepted by them, requesting the penalty proceedings to be dropped.3. Despite the explanation provided by the assessee, the Joint Commissioner proceeded to levy the penalty, disregarding the direct deposit submission. The CIT(A) upheld the penalty, leading to the appeal before the Tribunal.4. During the appeal, the counsel argued for the penalty's deletion, emphasizing the significant business operations of the assessee and the specific transaction in question. The counsel highlighted the proviso of section 271DA, stating that no penalty is imposable if good and sufficient reasons for the contravention are proven.5. The Tribunal, after considering the contentions and material on record, found a good and sufficient reason to delete the penalty. The uncontroverted facts supported the assessee's arguments, leading to the penalty's removal. The Tribunal cautioned against misinterpreting the decision as a precedent for similar transactions in the future.6. Consequently, the appeal of the assessee was allowed, and the penalty under section 271DA was directed to be deleted, emphasizing the specific circumstances of the case and the proviso allowing for penalty exemption with valid reasons.This detailed analysis of the judgment highlights the grounds of appeal, factual background, legal arguments, and the Tribunal's decision to delete the penalty imposed under section 271DA of the Income-tax Act, 1961.