2013 (10) TMI 1497 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the issue of penalty imposition under sections 271D and 271E of the Income Tax Act, 1961 for the assessment year 2001-02 due to violations of sections 269SS and 269T of the Act.

Penalty Imposition under Sections 271D and 271E:
The Appellate Tribunal heard two Appeals by the Assessee challenging the Orders by the Commissioner of Income Tax (Appeals) dismissing the appeal contesting the penalty imposition under sections 271D and 271E of the Income Tax Act for the assessment year 2001-02. The assessee, a partnership firm, received sums in cash from another firm, leading to violations of sections 269SS and 269T of the Act. The penalties were levied and confirmed due to the failure to provide sufficient evidence or reasonable cause for the violations.

The Tribunal considered the arguments presented by both parties. The assessee claimed that the transactions were genuine and bona fide, with no deliberate defiance of the law, and thus, penalty imposition was not justified. The Revenue contended that the assessee failed to prove a reasonable cause for the violations as required by section 273B of the Act.

The Tribunal analyzed the legal provisions of sections 269SS, 269T, 271D, and 271E, emphasizing the constitutional validity of the penalties for violations. It was clarified that the applicability of penalties depended on the factual circumstances and conduct of the assessee, not solely on the law's prescription. The Tribunal highlighted that genuine and bona fide transactions could be considered for penalty relief, but non-genuine transactions would be treated as income under section 68 of the Act.

Regarding the specific transactions in question, the Tribunal found that while one sum received qualified as a loan or deposit under section 269SS, the other sum did not fall under section 269T due to the timing of repayment. Despite the violations, the Tribunal granted relief under section 273B based on the unique circumstances of the case, including the relationship between the parties and the nature of the transactions.

In conclusion, the Tribunal allowed both appeals by the assessee, ruling in favor of penalty relief based on the grounds of reasonable cause and the applicability of the un-amended provision of section 269T of the Act.