2010 (7) TMI 1117 - AT - Income Tax

Summary

Issues involved: Appeal against penalty u/s 271D for cash deposit exceeding limit in bank account.

Summary:
1. The AO confirmed a penalty of Rs. 23,000/- u/s 271D for violating provisions of section 269SS due to a cash deposit exceeding the limit in the bank account.
2. Assessee explained the cash deposit was due to approaching OD limit and fear of cheques being dishonored, borrowed from Mrs. M. K. Trivedi.
3. The ld. CIT(A) upheld the penalty, finding the explanation not tenable and without supporting evidence.
4. Assessee argued no addition was made for unexplained cash deposit, and penalty should not have been levied.
5. ITAT held the explanation provided by the assessee was plausible and genuine, as no addition was made for the cash deposit.
6. AO should have verified the OD limit and genuineness of the transaction before levying the penalty.
7. ITAT allowed the appeal, canceling the penalty as the explanation was found satisfactory.

Judgment: The ITAT Ahmedabad allowed the appeal, canceling the penalty u/s 271D imposed on the assessee for a cash deposit exceeding the bank account limit, as the explanation provided was deemed satisfactory and genuine.