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Issues Involved: Appeal against the levy of penalty u/s. 271E of the Income Tax Act, 1961.
Summary: The appeal was filed by the assessee against the order of CIT(A) confirming the penalty u/s. 271E of the Act amounting to Rs. 1 lac. The assessee, engaged in the fertilizers business, received a trade advance of Rs.1 lac from his brother for supply of fertilizers. The repayment of the advance was made in cash installments, leading to the penalty imposition for violating section 269T of the Act. The main contention raised by the assessee was that the transaction was genuine and between family members, exempting it from the provisions of sec. 269T. Citing precedents, the counsel argued that transactions among relatives do not fall under the purview of loans or deposits, especially when no interest is charged. The Tribunal also considered the affidavit of a legal practitioner supporting the assessee's position. After hearing the arguments and examining the evidence, the Tribunal found that there was no violation of sections 269SS or 269T of the Act. Additionally, the Tribunal accepted the existence of a reasonable cause for the repayment in cash. Consequently, the penalty u/s. 271E was deemed unjustified and was deleted. Therefore, the appeal of the assessee was allowed, and the penalty u/s. 271E was deleted. (Order pronounced on 20.04.2012)
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