2015 (4) TMI 509 - HC - Income Tax

Penalty under section 271D - Tribunal confirmed penalty levy - Held that - The fact that money was withdrawn on 6th May, 1998 from the bank account of the lender and the fact that the money was deposited in the bank account of the borrower on 6th May, 1998 itself is a pointer to show that the assessee was under a belief that there was a great urgency. True that he could have achieved the object by obtaining an account payee cheque from the lender but the same would have taken time for the purpose of clearance. Having booked the vehicle on 29.04.1998 and demand by the financier to make immediate payment, the appellant was apprehensive of getting his, booking cancelled are also of non-availability of truck due to heavy demand in the market. The appellant was not sure whether the payments will be lump sum or through installments. He was driven by a sense of urgency for which he took loan from his brother in cash and deposited the same in his bank account. It was his judgement regarding the urgency in the prevailing circumstances and according to him the urgency existed for making payment.The observation of CIT (A) is a pointer to show that the case is clearly covered by Section 273B of the Income Tax Act. It is elementary that an appellate authority interferes with an order not because the impugned order is not right but because the impugned order is shown to be wrong. Our attention was not drawn to any finding of the learned Tribunal indicating that the order of CIT (A) was wrong. Therefore, the interference was not only wrong but also perverse. - Decided in favour of the assessee.

Summary

Issues Involved:
Challenge to judgment and order pertaining to penalty imposed under Income Tax Act for contravention of section 269SS.

Analysis:
The judgment in question dealt with an appeal regarding a penalty imposed upon the assessee for receiving a cash loan in contravention of section 269SS of the Income Tax Act. The C.I.T (Appeals) had initially deleted the penalty, citing a reasonable cause for the violation. However, the Tribunal allowed the revenue's appeal, setting aside the C.I.T (Appeals) order. The key issue revolved around whether there was a reasonable cause for the cash loan transaction. The Tribunal's decision was challenged based on the interpretation of relevant sections, including 269SS, 271D, and 273B of the Income Tax Act.

The appellant's advocate argued that the C.I.T (Appeals) order was well-reasoned and should not have been interfered with. On the other hand, the revenue's advocate contended that there was no reasonable cause for the cash loan, emphasizing the timeline of payments made by the assessee after receiving the loan. The assessing officer's findings were presented to support the revenue's position.

The High Court, however, disagreed with the revenue's arguments, stating that the contravention of section 269SS occurred when the cash loan was obtained, and subsequent actions by the assessee could not remedy this violation. The Court highlighted that the urgency perceived by the assessee in obtaining the cash loan was a valid reason for the transaction, as supported by the circumstances surrounding the loan. The Court upheld the C.I.T (Appeals) decision, emphasizing that the Tribunal's interference was not justified and amounted to being both wrong and perverse.

In conclusion, the High Court answered the second question in favor of the assessee, indicating that the appeal was allowed based on the reasoning that there was a reasonable cause for the cash loan transaction, as per the provisions of Section 273B of the Income Tax Act.