2009 (12) TMI 682 - AT - Income Tax

Penalty under section 271E - violation of section 269T repayment of unsecured loan Held that - It is not a repayment of deposit - Since the amendment with effect from 1-6-2003 no penalty is-imposable in the present case under section 271E because the repayments are during January 2003 to March 2003 of unsecured loans/advances from customers and not of any deposit and hence there is no violation of section 269T in favor of assessee

Summary

Issues: Revenue's appeal against deletion of penalty under section 271E of the Income-tax Act for the assessment year 2003-04.

The judgment pertains to an appeal by the revenue against the deletion of a penalty under section 271E of the Income-tax Act for the assessment year 2003-04. The case involves a civil contractor who made repayments in violation of section 269T of the Income-tax Act. The Assessing Officer imposed a penalty of Rs. 7,23,470 under section 271E for repayment of loans without complying with the provisions. However, the Commissioner of Income-tax (Appeals) deleted the penalty citing an amendment in section 271E effective from 1-6-2003, which changed the imposable penalty criteria. The Commissioner held that before the amendment, penalties were applicable for deposit repayments, not loans or advances from customers. The Tribunal concurred, stating that the repayment in question was not a deposit but a loan or advance from customers. Therefore, no penalty was imposable post the amendment, as the repayments were not in violation of section 269T. The Tribunal upheld the Commissioner's decision, rejecting the revenue's appeal and dismissing it accordingly.