2012 (12) TMI 995 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of penalty levied u/s 271D for contravention of Section 269SS.
2. Deletion of penalty levied u/s 271E for contravention of Section 269T.

Summary:

Issue 1: Deletion of penalty levied u/s 271D for contravention of Section 269SS

The Revenue appealed against the order of the Commissioner of Income-tax (Appeals)-I, Baroda, which deleted the penalty of Rs. 2,20,72,844/- levied u/s 271D for accepting loans in contravention of Section 269SS. The Assessing Officer had noticed that the assessee accepted cheques (other than account payee cheques) exceeding Rs. 20,000/- from certain individuals, which was deemed as acceptance of loans or deposits otherwise than by account payee cheque or draft, violating Section 269SS. The assessee explained that the transactions were cheque discounting, not loans or deposits. The CIT(A) accepted this explanation, stating that the transactions did not amount to loans or deposits as defined in Section 269SS. The Tribunal upheld the CIT(A)'s decision, confirming that the provisions of Section 269SS were not applicable, and dismissed the Revenue's appeal.

Issue 2: Deletion of penalty levied u/s 271E for contravention of Section 269T

The Revenue also appealed against the deletion of penalty of Rs. 2,10,44,348/- levied u/s 271E for repayment of loans/deposits in cash, violating Section 269T. The Assessing Officer considered the cheque discounting transactions as repayment of loans or deposits in cash. The CIT(A) clarified that the transactions were cheque discounting, not repayment of loans or deposits, and thus outside the scope of Section 269T. The Tribunal agreed with the CIT(A), noting that the assessee had not repaid any loans but had received repayments from farmers. Therefore, the provisions of Section 269T were wrongly applied by the Assessing Officer. The Tribunal upheld the CIT(A)'s order and dismissed the Revenue's appeal.

Conclusion:

Both appeals by the Revenue were dismissed, and the orders of the CIT(A) were upheld, confirming that the transactions in question did not amount to loans or deposits, and thus, the penalties u/s 271D and 271E were not applicable.