TaxTMI 
TaxTMI 
2020 (3) TMI 716
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....1, Durgapur and his specious action in upholding the impugned order imposing penalty to the extent of Rs. 5,80,000/- in that legal perspective is therefore ab initio void, ultra vires and ex-facie null in law. 2. FOR THAT on a true and proper interpretation of the scope and ambit of the provisions of section 271E of the Income Tax Act, 1961, the Ld. Commissioner of Income Tax (Appenls) Durgapur misconceived his jurisdiction in upholding the action of the Ld. Joint Commissioner of Income Tax, Range 1, Durgapur of passing the specious order imposing penalty to the extent of Rs. 5,80,000/- misconstruing the expression "any other preson" appearing in the provisions of section 269T of the Act and his purported finding reached on such tenuous premise is completely unfounded, unjustified and untenable in law. 3.FOR THAT the Ld. Commissioner of Income Tax (Appeals) Durgapur acted unlawfully in upholding the order imposing penalty u/s. 271E of the Income Tax Act, 1961 amounting to Rs. 5,80,000/- passed by the Ld. Joint Commissioner of Income Tax, Range 1- Durgapur and was remiss in not taking into consideration the 'reasonable cause' as envisaged within the scope a....
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....o carry on their business. The assessee also submitted before the AO that the transactions of repayment of loan in question in the instant case are genuine and bona fide, therefore the penal proceedings u/s 271E of the I.T. Act, 1961 should not be initiated. However, the assessing officer rejected the contention of the assessee and imposed the penalty of Rs. 5,80,000/- u/s 271E of the I.T. Act 1961 for violation of provisions of section 269T of the I.T. Act 1961. 4. Aggrieved by the order of the assessing officer, the assessee carried the matter in appeal before ld CIT(A), who has confirmed the penalty imposed by the assessing officer. Aggrieved, the assessee is in appeal before us. 5. We heard both the parties and carefully gone through the submission put forth on behalf of the assessee along with the documents furnished and the case laws relied upon, and perused the fact of the case including the findings of the ld CIT(A) and other materials brought on record. We note that assessee, a partnership firm, is an authorized dealer of Hindusthan Petroleum Corporation Limited which is engaged in retail trading of motor spirit and high speed diesel. During the previous yea....
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....ing false entries in account books and later manufacturing explanations in support thereof. We note that Hon`ble Supreme Court in the case of A.D.I.T. -VS- Kumari A. B. Shanti (2002) 255 ITR 487 (SC), held as follows: "The next contention was that original Section 276DD is draconian in nature as penalty imposed for violation of Section 269SS is imprisonment which may extend to two years and shall also be liable to fine equal to the amount of loan or deposit. This Section was subsequently omitted and a new Section 271D was enacted. The penalty of imprisonment was deleted in the new Section. The new Section 271D provides only for fine equal to the amount of loan or deposit taken or accepted. It is important to note that another provision, namely Section 273B was also incorporated which provides that notwithstanding anything contained in the provisions of Section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause for such failure and if the assessee proves that there was reasonable cause for failure to take a loan otherwise than by accoun....
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....repayment has fallen due or not), and the amount or the aggregate amount remaining unpaid is Rs. 10,000 or more. The prohibition will also apply in cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on the date on which such loan or deposit is proposed to be taken, is Rs. 10,000 or more. 32.3 The prohibition will, however, not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by, the following, namely: (a) Government; (b) any banking company, post office savings bank or any co-operative bank; (c) any corporation established by a Cetral, State or Provincial Act ; (d) any Government company as defined in section 617 of the Companies Act, 1956; (e) such other institution, association or body or class or institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing notify in this behalf in the Official Gazette. 32.4 For the purposes of the provision, the expression banking company' shall have the meaning assigned to it in clause (a) of the Explanation to section 40A(8) of the Income....
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....t for some bona fide reason, the authority vested with the power to impose penalty has a discretion not to levy penalty. In the instant case, the Commissioner of Income-tax (Appeals) and the Appellate Tribunal found on the facts that the transactions were genuine and the identity of the lenders was also satisfied. The Appellate Tribunal also upheld the order of the Commissioner of Income-tax (Appeals) that there was no intention on the part of the assessee to evade the tax. Once the said finding as to the genuineness of the transactions is arrived at by the Tribunal on the facts, following the decision of this court in CIT v. Ratna Agencies [2006] 284 ITR 609 , wherein it was held that the Ending recorded by the Tribunal in this regard is a finding of fact and no question of law much less a substantial question of law would arise, we do not have any hesitation to hold that it may not be proper for this court to interfere with such a finding of fact. For all these reasons, answering the questions of law referred to us against the Revenue, the appeal stands dismissed. No costs." Therefore, when the transactions were genuine and the identity of the lender....
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.... Therefore, both on the question of law as well as on facts, we find that imposition of penalty under section 271E is not in order. It is therefore, cancelled." In the instant case, the Ld. Assessing Officer ought to have considered that the payment of loan of Rs. 5,80,000/- by the assessee were undisputedly genuine and bona fide as they were reflected in the books of the recipients as well as those of the assessee. The assessee has explained the circumstances in which it was constrained to make the repayment of the loans in question in cash, therefore penalty should not be levied. 9. An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi- criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in conscious disregard of its obligation.Penalty will not also be imposed merely because it is lawful to do so. For this we rely on the judgment of the Hon`ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State Of Orissa 83 ITR 26, wherein it was held as follows: "5. Under the Act pen....