2013 (1) TMI 779 - AT - Income Tax

Summary

Issues involved: Appeal against deletion of penalty u/s 271D of Rs. 7,00,000 imposed by Addl. C.I.T. for receiving share application money in cash.

Summary:

Issue 1: Deletion of penalty u/s 271D

The appeal filed by the revenue challenged the deletion of penalty u/s 271D of Rs. 7,00,000 imposed for receiving share application money in cash. The CIT (A) deleted the penalty citing lack of satisfaction by the AO for initiating penalty proceedings u/s 271D. The assessee received Rs. 7,00,000 in cash for share application money, violating section 269SS of the Income-tax Act, 1961. The CIT (A) held that the imposition of penalty for a technical mistake without reasonable cause is not justified in law. The jurisdictional High Court's decision in a similar case supported the deletion of penalty, emphasizing the distinction between a loan and a deposit. The High Court concluded that the share application money received in cash did not violate section 269SS, thus canceling the penalty.

Issue 2: Judicial interpretation and application of law

The CIT (A) analyzed the provisions of section 269SS and 271D, emphasizing the requirement of reasonable cause for failure to comply with the law. The concept of "reasonable cause" was discussed in the context of penalty provisions, requiring a cause beyond the control of the assessee. The CIT (A) highlighted that the AO did not find the transaction to be non-genuine and no addition was made during assessment, indicating acceptance of the cash amount. The decision of the jurisdictional High Court and the interpretation of loan vs. deposit further supported the assessee's position. The Tribunal upheld the CIT (A)'s order, dismissing the revenue's appeal based on the judicial precedents and legal analysis presented.

Conclusion:

The Tribunal sustained the CIT (A)'s order, dismissing the revenue's appeal against the deletion of penalty u/s 271D. The decision was based on the interpretation of legal provisions, the requirement of reasonable cause, and the judicial precedents cited in support of the assessee's position.