2023 (4) TMI 1249 - AT - Income Tax

Penalty u/s. 271E - non mandate of provisions of section 269T - HELD THAT - We are of the considered view that even if the financers on account of the poor track record of the assessee were not ready and willing to receive the monthly installments towards repayment of loans from her through cheques, then she could have safely made the said repayments by way of account payee bank drafts or electronic clearing system through his bank account or any other prescribed electronic mode as provided in Rule 6ABBA of the I.T. Rules, 1962. We are unable to persuade ourselves to subscribe to the explanation of the assessee that as the financers were not ready to receive the repayment of loans from her vide account payee cheques, therefore, for the said reason she was compelled to make the said payments in cash. Also we do not find any substance in the claim of the assessee that she was unaware of the provisions of section 269T - It is a matter of fact borne from record that the assessee at the relevant point of time was availing the services of a Chartered Accountant and had got her accounts for the year under consideration audited from him. Considering the aforesaid factual position, and independent of the settled position of law that an assessee cannot be allowed to plead ignorance of law, we are even otherwise of the considered view that there is no substance and merit in the claim of the assessee that she was oblivion of the modes and manner for repayment of loans as prescribed u/s 269T of the Act. Adverting to the support drawn by the assessee from the fact that a similar penalty that was imposed in the case of her nephew, viz Shri Ajay Gill had been vacated by the CIT(A), NFAC, we are of a strong conviction that as the facts involved in every case stand on their independent footing, therefore, her aforesaid claim would be of no assistance. As the assessee had not only failed to comply with the provisions of section 269T therein rendering her liable for imposition of penalty u/s. 271E but had also failed to come forth with any reasonable cause which had prevented her to make repayment of the monthly installments of her outstanding loans in a manner other than that prescribed under law, therefore, finding no infirmity in the penalty imposed by the JCIT u/s. 271E of the Act, uphold the same. Appeal filed by the assessee is dismissed.

Summary

Issues involved:
The judgment involves the sustainability of the penalty imposed by the JCIT under Sec.271E of the Income-tax Act, 1961 for assessment year 2015-16.

Controversy:
The controversy in the present appeal pertains to the penalty imposed by the JCIT under Sec.271E of the Act for cash repayment of loans in contravention of the prescribed modes under section 269T of the Act.

Assessee's Arguments:
The assessee contended that she made cash repayments as per the financers' instructions and due to ignorance of section 269T provisions, thus invoking section 273B for reasonable cause exemption from penalty.

JCIT's Decision:
The JCIT rejected the assessee's contentions, emphasizing that the financers' instructions did not justify non-compliance with section 269T. The JCIT also noted the presence of a Chartered Accountant, dismissing the claim of ignorance of the law.

Analysis:
Upon review, the Tribunal found that the assessee repaid loans totaling Rs.6,71,939 in cash, contrary to section 269T's prescribed modes. The Tribunal highlighted the statutory provisions requiring repayment through specific methods, including account payee cheques, bank drafts, or electronic systems.

Assessee's Ignorance:
The Tribunal dismissed the assessee's plea of ignorance, citing her engagement of a Chartered Accountant and the established legal principle that ignorance of the law is not a valid defense.

Comparison with Previous Case:
The Tribunal rejected the assessee's reliance on a relative's case where a penalty was vacated, emphasizing the need to assess each case independently.

Decision:
Ultimately, the Tribunal upheld the penalty imposed by the JCIT under Sec.271E, as the assessee failed to comply with section 269T provisions and did not provide a valid reason for deviating from the prescribed repayment methods.

Conclusion:
Consequently, the appeal filed by the assessee was dismissed by the Tribunal, affirming the penalty of Rs.6,71,939 imposed by the JCIT under Sec.271E of the Income-tax Act, 1961.