2009 (4) TMI 803 - AT - Income Tax

Summary

Issues Involved:
1. Violation of provisions of section 269T.
2. Nature of transaction (loan or deposit).
3. Reasonable cause for non-compliance with section 269T.
4. Penalty under section 271E.

Summary:

1. Violation of provisions of section 269T:
The assessee made repayment of a loan amounting to Rs. 86,350 in cash to M/s. Ram Kumar Krishan Kumar, which was noticed by the Assessing Officer as a violation of section 269T of the Act. The Additional Commissioner of Income-tax imposed a penalty under section 271E, which was confirmed by the Commissioner of Income-tax (Appeals).

2. Nature of transaction (loan or deposit):
The assessee contended that the transactions were neither loans nor deposits as contemplated under section 269T. However, the Tribunal held that the repayments were indeed loans, as the transactions involved accepting and paying money between the assessee and M/s. Ram Kumar Krishan Kumar. The Tribunal clarified that the repayment of loans on or after June 1, 2002, is covered by section 269T, following the amendment by the Finance Act, 2002.

3. Reasonable cause for non-compliance with section 269T:
The assessee argued that the repayment was made in cash due to the urgent need of M/s. Ram Kumar Krishan Kumar, who refused to accept payment by cheque. The Tribunal found no substantive evidence to support this claim and noted that the payments were made on different dates without any proof of financial difficulty faced by M/s. Ram Kumar Krishan Kumar on those dates. Thus, the assessee failed to prove any reasonable cause for non-compliance with section 269T.

4. Penalty under section 271E:
The assessee's contention that no penalty should be imposed due to the surrender of income during a survey operation was rejected. The Tribunal held that the penalty under section 271E for violation of section 269T is separate from any penalty under section 271(1)(c) related to the surrendered income. Consequently, the Tribunal upheld the penalty of Rs. 86,350 imposed by the Additional Commissioner of Income-tax.

Conclusion:
The appeal filed by the assessee was dismissed, and the penalty under section 271E was confirmed. The decision was pronounced in the open court on April 24, 2009.