2015 (9) TMI 1651 - AT - Income Tax

Penalty u/s. 271D - receiving loans in cash - bonafide reasons for not furnishing complete details before the tax authorities - assessee received loans from Mr. Kashinath Tapuriah, which is in contravention of the provisions of section 269-SS - alternative addition u/s 68 - HELD THAT - Assessee has bonafide reasons for not furnishing complete details before the tax authorities. Therefore in the interest of substantial justice, the matter deserves to be set aside to the file of the AO, who is directed to reconsider the matter afresh, in accordance with law. In so far as penalty proceedings u/s. 271D are concerned, if an addition is made u/s. 68 of the Act, by treating it as non-genuine cash credit, it needs to be reconsidered as to whether the Assessing Officer can invoke provisions of section 269SS so as to levy penalty. Since the quantum proceedings are set aside the Assessing Officer is at liberty to initiate penalty proceedings afresh, after making a fresh assessment. - Decided in favour of assessee for statistical purposes.

Summary

Issues:
Quantum proceedings - Cessation of liability, Non-cooperation of assessee, Loan liability of director, Addition confirmed by CIT(A), Appeal before Tribunal.
Penalty u/s. 271D - Receipt of loans in cash, Alleged non-genuine receipts, Appeal against penalty, Reconsideration of penalty proceedings.

Quantum Proceedings Analysis:
The appeals by the assessee-company were against the orders passed by the CIT(A)-36, Mumbai for A.Y. 2009-10. The assessee's return of income declared total income at Rs. Nil, leading to scrutiny. The Assessing Officer proceeded with the assessment due to non-cooperation by the assessee in providing necessary information, resulting in a total income of &8377; 18,41,901/- with a significant addition due to the cessation of liability. The assessee contended before the CIT(A) that the loan liability of the director could not be provided due to his judicial custody. However, the CIT(A) confirmed the addition citing lack of evidence on loan transactions. The Tribunal, considering the genuine reasons for non-furnishing of details, set aside the matter to the Assessing Officer for a fresh assessment, emphasizing the need for substantial justice.

Penalty u/s. 271D Analysis:
The Assessing Officer levied a penalty u/s. 271D for receiving loans in cash, treating them as unexplained cash credit. The assessee argued before the Tribunal that the alleged non-genuine receipts should not be covered under section 269-SS, hence penalty u/s. 271D should not apply. The Tribunal acknowledged the reasons for the inability to provide information due to the director's custody and directed a reconsideration of the penalty proceedings along with the quantum assessment. The Tribunal allowed the appeals filed by the assessee-company for statistical purposes, emphasizing the need for a fresh assessment and penalty proceedings based on substantial justice.

Conclusion:
The Tribunal's judgment focused on the genuine reasons for non-cooperation by the assessee and the need for a fair reconsideration of the assessment and penalty proceedings. The matter was remanded to the Assessing Officer for a fresh assessment in accordance with the law, highlighting the importance of providing complete details and substantial justice in tax proceedings.