2023 (5) TMI 63 - AT - Income Tax

Tribunal quashes penalty orders citing limitation bar, assessee's reasonable cause. Appeals allowed.

M/s. Delhi State Taxi Operators’s Co-operative Thrift Credit And Services Society Ltd. Versus JCIT, Range-60, New Delhi.

M/s. Delhi State Taxi Operators’s Co-operative Thrift Credit And Services Society Ltd. Versus JCIT, Range-60, New Delhi. - TMI Issues Involved:1. Validity of Penalty Orders under Section 271D and 271E.2. Barred by Limitation under Section 275(1)(c).3. Reasonable Cause under Section 273B.4. Genuineness of Transactions and Rule of Consistency.Summary:1. Validity of Penalty Orders under Section 271D and 271E:The assessee challenged the penalty orders dated 24.04.2017 imposed by the JCIT for contravening sections 269SS and 269T of the Income Tax Act, 1961. The penalty was upheld by the CIT(A) despite the assessee's arguments that the penalties were imposed without proper jurisdiction and satisfaction recorded by the AO.2. Barred by Limitation under Section 275(1)(c):The assessee contended that the penalty orders were barred by limitation as per Section 275(1)(c). The first show cause notice (SCN) was issued on 04.05.2016, and the penalty orders were passed on 24.04.2017. The Tribunal observed that the initial SCN dated 04.05.2016 and subsequent notices were valid, and the penalty orders should have been passed within the specified date. The Tribunal held that the initiation of penalty proceedings by issuing a fresh SCN on 29.11.2016 and consequent levy of penalty were not in accordance with law, making the penalty orders unsustainable.3. Reasonable Cause under Section 273B:The assessee argued that there was a reasonable cause for the failure to comply with sections 269SS and 269T. The Tribunal noted that the assessee, a co-operative society, had a bonafide belief that it could accept and repay deposits in cash from its members. The Tribunal observed that the Department had never raised this issue in earlier years, implying acceptance of the assessee's practice. The Tribunal found the explanation offered by the assessee reasonable and held that the penalties should be canceled under Section 273B.4. Genuineness of Transactions and Rule of Consistency:The Tribunal noted that the legislative intent behind sections 269SS and 269T was to curb the circulation of black money. In the assessee's case, there was no allegation of unaccounted money or false entries. The Tribunal emphasized the rule of consistency, noting that the Department had accepted the assessee's practices in earlier years. The Tribunal concluded that the transactions were genuine and the penalties were not justified.Conclusion:The Tribunal quashed the penalty orders under sections 271D and 271E, holding that they were barred by limitation and that the assessee had a reasonable cause for its actions. The appeals filed by the assessee were allowed.