TaxTMI 
TaxTMI 
2025 (3) TMI 140
X X X X Extracts X X X X
X X X X Extracts X X X X
..... CIT(A) has erred in law and on facts in confirming the action of Ld. AO in passing the impugned penalty order is contrary to law and has further erred in observing that there had been contravention of the provisions laid down in section 269ST of the Income Tax Act. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in imposing penalty u/s 27IDA and that too by recording incorrect facts and findings and not appreciating the facts and circumstances of the case and without observing the principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in passing the impugned penalty order u/s 27IDA is illegal and against the fact and circumstances of the case and the same is not sustainable on various legal and factual grounds. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 2. Brief facts are that the assessee M/s Delta Farm Services is engaged in the busi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....transaction" and thus, at any given point of time transaction of Rs. 2 lakhs alone was entered, absence of satisfaction in the assessment proceedings/order as mandated by the Hon'ble Supreme Court penalty cannot be imposed. Alternative plea it is the submission that in each case benefit of Rs. 2 lakhs be allowed. 5. The Ld. Counsel for the assessee further submits that there is a reasonable cause for accepting the sale consideration of the tractors in cash from the farmers and therefore there cannot be any penalty u/s 271DA of the Act. Ld. Counsel submits that if there are good and sufficient reasons for accepting cash penalty may not be imposed as per the provisions of section 269ST of the Act. 6. Ld. Counsel further made his submission as under: "In the case of M/s Delta Farm Services for AY 2018-19 Only issue in the present appeal is against the levy of penalty of Rs. 4,69,52,797/- u/s 27 IDA on the ground that the appellant has received cash more than Rs. 2 Lacs in respect of its sale from its customers in violation of section 269ST. Section 269ST introduced by the Finance Act, 2017 w.e.f. 1.4.2017 i.e. the present year is the first year, is rep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntains inter-alia other sections also such as section 269SS, 269T and 269ST. The title of the chapter XX-B reads "requirement as to mode of acceptance, payment or repayment in certain cases to counter act invasion of tax". In fact, section 269SS and 269T have come up for interpretation before the Hon'ble Courts on several occasions and Hon'ble Courts have held that the object and purport of these sections is to prevent the circulation of black money and unaccounted money to counteract tax evasion. Deposit or loan in cash exceeding prescribed limit-Finding that transaction was bona fide and default was technical- Penalty could not be imposed-CIT vs. Speedways Rubber P. Ltd. 326ITR 31 (P&H) Asstt Director of Inspection vs. Kumari A B Shanthi 255 ITR 258, 263 (SC)- CLC 12-21 Page 13877-78 of Chaturvedi & Pithisaria 7th edition, Volume 9- caption- 'Object of enacting section 269SS' CIT vs. Bhagwati Prasad Bajoria 263 ITR 487 (Gau)-CLC 70- 75- it cannot be said that the assessee entered the transactions to avoid the payment of tax or to defraud the revenue. CIT vs. Manoj Lalwani 260 ITR 590 - it cannot be said that the asses....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... JCIT as to existence of any black or unaccounted money, such penalty /s 27IDA to the extent of Rs. 4,69,52,797/-, it is submitted with great respect, is not justified in view of the above Memorandum & Case laws. 3. Penalty is quasi-criminal in character and Hon'ble Courts have held that it should not be imposed for technical or venial breach. Hindustan Steel Ltd. vs. State of Orissa, (1972) 83 ITR 0026 (SC) (CLC 5-11) Deposit or loan in cash exceeding prescribed limit-Finding that transaction was bona fide and default was technical- Penalty could not be imposed-CIT vs. Speedways Rubber P. Ltd. 326 ITR 31 (P&H) Finesse International Design Pvt. Ltd. vs. Addl. CIT in ITA No.2561/Del/2022 dated 02.04.2024 (ITAT Delhi Bench) in the context of section 269ST itself. PB 17-20 is the copy of written submissions before Ld. CIT(A) on this issue. 4. There is a proviso to section 269ST which says that if there are good and sufficient reasons, penalty may not be imposed and this position of law has been accepted in Asst. Director of Inspection (Inv.) vs. Kum. AdEL Shanthi, (2002) 255 ITR 0258 (SC) (CLC 12-21) In the instant case, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on of provisions of section 269T - Whether since repayments of deposits were made to members of assessee - society such transactions were not impeached by department as non genuine and were not noticed outside books of account, and assessee society entertained a bona fide belief that no contravention of any provisions of Act was being made while making repayment of loans / deposits in cash, there was a reasonable cause within meaning of section 273B and no penalty under section 271E could be imposed - Held, yes - Whether therefore, impugned penalty was to be cancelled - Held, yes - MUSLIM URBAN CO- OP.CREDIT SOCIETY LTD. VS. JT.CIT 96 ITD 83 (PUNE). 5. In fact, there was even a bona fide belief that cash could be accepted at any point of time not exceeding Rs. 2 Lakhs and that is how cash was accepted at any given point of time within this limit of Rs. 2 lacs. To entertain this belief was quite plausible in view of language of section 269ST which refers to 'single transaction' and whereas section 40A(3), 269SS, 269T used the expression 'aggregate'. Even at one place, section 269ST too uses the expression 'aggregate" Section 269ST was the new prov....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h of rupees more than 2,00,000/- in aggregate from various persons it is a clear violation of provisions u/s 269ST of the Act. The Ld. DR strongly placed reliance on the orders of the authorities below. Ld. DR further submits that as per the provisions of section 269ST(C) of the Act transactions relating to one event or occasion from the person has been violated by the assessee by receiving Rs. 2 lakhs and more from the farmers for purchase of tractors from the assessee. Ld. DR further submits that the decision relied on by the Ld. AR in the case of CIT Vs. Jai Laxmi Rice Mills (SC) the facts are different. 9. In the rebuttal the Ld. Counsel for the assessee submits that section 269ST sub-clause (c) is not applicable to the assessee since it is for one event or occasion which normally happens in the cases of weddings, engagements, birthday functions etc.. 10. Heard rival submissions, perused the orders of the authorities below and the voluminous documents placed before us. Perusal of the penalty order passed u/s 271DA of the Act by the Assessing Officer suggests that it was levied for the contravention of the provisions of section 269ST. The Assessing Officer is of the view t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....were introduced to prevent unaccounted income and black money. Assessee was under bona fide belief that cash could be accepted at any point of time not exceeding Rs. 2 lakhs and that is how cash was accepted at any given point of time within this limit of Rs. 2 lakhs. It was quite plausible to entertain this belief in view of language of section 269ST which refers to 'single transaction' and whereas section 40A(3), 269SS, 269T used the expression 'aggregate'. Even at one place, section 269ST too uses the expression 'aggregate'. Section 269ST was the new provision and this was the first year and therefore to entertain this belief was not something which was impossible. 13. Further there is no allegation by the Assessing Officer that the unaccounted income and black money was introduced by the assessee in the form of cash sales. Assessee duly accounted for cash receipts, particulars of farmers are kept proving their identity, aadhar, land revenue record and agricultural land holding of all the farmers, Form 60, etc. and all the statements in this regard were duly and regularly filed by the assessee. In such circumstances it cannot be said that there is any intention to evade tax. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... documents and Assessment order, it was noted by the Addl. CIT, Central Range-1, New Delhi that the assessee company has violated provisions of section 269ST of Income Tax Act, 1961 by way of cash receipts of Rs. 2,00,000/- or more from a single persons by splitting the invoices against sale of goods at its stores. 4. Aggrieved, the assessee filed appeal before the ld. CIT(A). 5. The ld. CIT(A) deleted the penalty levied made on account of transactions through the bank and confirmed the transactions made through cash. 6. The ld. CIT(A) confirmed the penalty holding that the details of the customers from whom payment in cash exceeding Rs. 2,00,000/- has been examined. The ld. CIT(A) held that the assessee has issued two bills to the customer bifurcating it below Rs. 2,00,000/- and the purpose of bifurcating the bills into two is obvious i.e. circumventing the provisions of section 269ST. The ld. CIT(A) held that no person issues two bills to the same customer for two different items. The ld. CIT(A) opined that if anyone goes to a shop and purchases 10 items, the bill is one for all the items and the payment is also made in one go. 7. Heard the arg....
X X X X Extracts X X X X
X X X X Extracts X X X X
....tled as "Requirement as to mode of acceptance, payment or repayment in certain cases to Counteract Evasion of Tax." 12. We have examined the judicial proposition on this issue. The Hon'ble Apex Court in the case of Hindustan Steel Ltd Vs. State of Orissa (83 ITR 26) held that held that penalty may not be imposed when there is technical or venial breach of the provisions of the Act. 13. Good cause' as defined Lexicon "Reason which is found to be adequate or proper and justified by a court or a competent authority dealing with the matter." 'Sufficient cause' "The expression 'sufficient cause' implies no negligence nor inaction nor want of bona fides on the part of the party". 14. Reliance is being placed on the following case laws with regard to good and sufficient cause: * CIT vs. Mysore Fertilizer Co. 145 ITR 91 (Mad.) * CIT vs. Chembara Peak Estates Ltd. 183 ITR 471 (Ker.) * CIT vs. Jaipur Electro P. Ltd. 183 ITR 476 (Raj.) * CIT vs. Bhikaji Ramchandra 183 ITR 478 (Bom.) 15. The Co-ordinate Bench of ITAT Guwathi in the case of Addl.CIT Vs. Smt. Prahati Baruah in ITA No. 418/Guwahati/....