2015 (8) TMI 461 - AT - Income Tax

Penalty imposed under section 271(E) - mode of repayment - loan was actually repaid through account payee cheques but due to a clerical mistake it was wrongly shown as cash payments in the audited books of account - CIT(A) deleted penalty - Held that - Assessee s contention that repayments through cheques were wrongly mentioned as cash payments as a result of clerical mistake is believable because, as found by the learned Commissioner of Income-tax (Appeals), withdrawals made from State Bank of India account of M/s. Supriya School of Nursing through cheques were wrongly mentioned in the books of account as cash withdrawals. Therefore, on overall examination of facts and materials on record, it is very much evident that the repayment of loan by the assessee to Mr. S. S. Prasad and Smt. S. Vijay Kumari were through account payee cheques. Hence, there is no violation of provisions contained under section 269T of the Act thereby, attracting the penal provision of section 271E. In the aforesaid facts and circumstances, we do not find any infirmity in the order of the learned Commissioner of Income-tax (Appeals) in deleting the penalty imposed under section 271E - Decided in favour of assessee.

Summary

Issues:
Appeal against deletion of penalty under section 271(E) of the Income-tax Act, 1961 for assessment year 2008-09.

Analysis:

Issue 1: Deletion of Penalty under Section 271(E)
The Department appealed against the deletion of penalty under section 271(E) by the Commissioner of Income-tax (Appeals). The assessee, a registered society, purchased land using funds from individuals and repaid the amount in cash, triggering penalty provisions. The Additional Director of Income-tax imposed a penalty under section 271(E) after finding discrepancies in the repayment details. The assessee contended that repayments were made through account payee cheques, supported by bank statements and confirmations. The Commissioner of Income-tax (Appeals) reviewed the evidence and concluded that the repayments were indeed made through cheques, overturning the penalty. The Tribunal upheld this decision, emphasizing the credibility of primary documents like bank statements over book entries. The Tribunal found no violation of section 269T, leading to the deletion of the penalty.

Issue 2: Entertaining Additional Evidence
The Department alleged that the Commissioner of Income-tax (Appeals) entertained additional evidence without providing an opportunity to the assessing authority. However, during the hearing, no specific additional evidence was identified by the Department. Upon examination, no evidence supporting the Department's claim was found. Consequently, the Tribunal dismissed this ground as lacking merit, leading to the dismissal of the Revenue's appeal.

In conclusion, the Tribunal upheld the decision of the Commissioner of Income-tax (Appeals) to delete the penalty under section 271(E) for the assessment year 2008-09, as the evidence supported the assessee's contention of repayments through cheques and no violation of statutory provisions was established. The appeal by the Revenue was dismissed, and the order was pronounced on January 21, 2015.