2024 (3) TMI 155 - HC - Income Tax

Penalty under s.271DA may be unsustainable if Rs.2.57 crore shown paid by cheque; deposit Rs.12.5 lakh to lift attachments

Raj Educational Trust, Represented by its Managing Trustee, B. Renuka Devi Versus The Deputy Commissioner of Income-Tax (Exemptions), The Commissioner of Income Tax (Appeals), Chennai, Indian Overseas Bank, Thanjavur Branch

HC held that penalty under s.271DA may be unsustainable if appellant proves a Rs.2.57 crore receipt was made by cheque. Balancing interests, court ... Penalty u/s 271DA - amount remitted into the petitioner's accounts, for violation of Section 269 ST - attachment notices - HELD THAT:- As the petitioner has placed on record evidence that prima facie indicates that the receipt of Rs. 2.57 crore was under Cheque No.119160 issued by M/s.Golden Vats Private Limited. If the petitioner is able to satisfy the appellate authority that the said remittance was indeed made by a cheque, the order imposing penalty would be unsustainable. Meanwhile, on account of the impugned orders of attachment, the petitioner which operates two educational institutions is unable to discharge payment obligations. Therefore, it becomes necessary to balance the petitioner's interest, on the one hand, and safeguard revenue interest, on the other. Towards such end, the petitioner is directed to remit a sum of Rs. 12.5 lakhs as a condition for raising the attachment of its bank accounts. Subject to an immediately upon receipt of the said sum, all of the attachment orders impugned herein shall stand raised and the petitioner shall be free to operate its bank accounts. This order is, however, subject to the outcome of the appellate proceedings. Issues involved:Challenge to orders of attachment of petitioner's bank accounts.Summary:Issue 1:The petitioner runs educational institutions and received a sum of Rs. 2,57,00,000 as donation, which led to an order imposing penalty under Section 271 DA of the Income-tax Act and subsequent attachment notices.The petitioner contended that the amount was received as a donation via Cheque No.119160, supported by communication from the donor and bank statements. The petitioner filed an appeal against the penalty order, and the appellate authority reserved orders. The attachment of bank accounts hindered the petitioner's ability to make payments for various purposes.Issue 2:The respondents argued that natural justice was followed before the penalty order, and the petitioner did not seek a stay on the impugned order. They suggested the petitioner should seek a stay in pending proceedings or present additional evidence to the assessing officer.A statutory appeal was filed against the penalty order, and the petitioner presented evidence indicating the receipt was through a cheque. If proven, the penalty order would be unsustainable. The attachment of bank accounts affected the petitioner's ability to fulfill payment obligations for its educational institutions.Judgment:The court directed the petitioner to remit Rs. 12.5 lakhs to lift the attachment of its bank accounts, balancing the petitioner's interests and revenue interests. Upon receipt of the sum, the attachment orders would be lifted, allowing the petitioner to operate its bank accounts, pending the outcome of the appellate proceedings. The writ petitions were disposed of accordingly, with no order as to costs.