2016 (7) TMI 1334 - AT - Income Tax

Penalties imposed u/s 271D & 271E - reasonable cause - proof of breach of the statutory provisions contained in sections 269SS & 269T - whether persons from whom cash was received and was subsequently repaid were identifiable agriculturists - Held that - CIT(A) has made a finding of fact that creditors from whom cash was received and cash was repaid were genuine and he has also made a finding of fact that a confirmation to that fact was obtained from these persons and the transactions were not made for attempting to evade tax therefore he held that there was a reasonable cause for entering into such transactions. The learned CIT(A) has passed an exhaustive and elaborate speaking order and we do not find any infirmity in the order of learned CIT(A) therefore the appeals filed by Revenue are dismissed. - Decided in favour of assessee.

Summary

Issues:
1. Deletion of penalties imposed under sections 271D & 271E of the Income Tax Act by the learned CIT(A).
2. Consideration of reasonable cause for contravention of statutory provisions.
3. Assessment of genuineness of transactions and creditors by the learned CIT(A).
4. Justification for imposition of penalties under sections 271D & 271E.

Analysis:
1. The appeals before the Appellate Tribunal ITAT Amritsar involved the deletion of penalties under sections 271D & 271E of the Income Tax Act by the learned CIT(A) for the Assessment Year 2007-08. The Revenue was aggrieved by the actions of the CIT(A) in removing the penalties imposed by the Assessing Officer on the appellant for violating the provisions of Section 269SS and 269T of the Act.

2. The Tribunal noted that in the second round of appellate proceedings, the CIT(A) remanded the issue back to the Assessing Officer. The Assessing Officer reported that the individuals from whom cash transactions were conducted were identifiable agriculturists, and they provided documentation to support their agricultural activities. The CIT(A) considered the concept of "reasonable cause" as per Section 273B of the Act, emphasizing that penalties should not be imposed in cases where contraventions occurred due to a reasonable cause beyond the appellant's control.

3. The CIT(A) found that the creditors involved in the cash transactions were genuine agriculturists, and the transactions were not aimed at evading tax. The confirmation of the cash deposits and repayments further supported the genuineness of the transactions. The CIT(A) emphasized that the breach of statutory provisions was due to a bona fide belief and business exigencies, leading to a venial breach. Referring to judicial precedents, including the Supreme Court and the High Court of Punjab and Haryana, the CIT(A) concluded that the penalties under sections 271D & 271E were not justified.

4. The Tribunal upheld the CIT(A)'s findings, stating that the creditors were genuine, and the transactions were not conducted to evade tax. The Tribunal found no infirmity in the CIT(A)'s order, leading to the dismissal of the appeals filed by the Revenue. The Tribunal's decision was based on the factual findings and legal reasoning presented in the CIT(A)'s detailed and comprehensive order, which considered the reasonable cause for the transactions and the genuineness of the parties involved.

In conclusion, the Appellate Tribunal upheld the decision of the CIT(A) to delete the penalties under sections 271D & 271E, emphasizing the importance of considering reasonable cause and genuineness of transactions in such cases.