2018 (6) TMI 104 - HC - Income Tax

Penalty u/s 271D - whether the amount in issue was not a loan within the meaning of Section 269SS - Held that - Tribunal in his order has primarily relied on entries in the books of account and thus the two cash payments were imprest, and therefore neither loan nor deposit - also the interest accrued on the FDRs was duly reflected in the returns of income of the assessee - thus we take the statement made by the counsel for the respondent/ assessee that the matter may be remanded to the Tribunal for fresh adjudication and accordingly the matter is set aside - hence no final opinion is given on penalty u/s 271D.

Summary

Issues:
Appeal against deletion of penalty under Section 271D of the Income Tax Act, 1961 for Assessment Year 1999-2000.

Analysis:
1. The Tribunal deleted the penalty of ?21,47,019/- imposed by the Assessing Officer under Section 271D of the Income Tax Act. The substantial question of law raised was whether the Tribunal was correct in deleting the penalty by considering the amount in question not as a loan within the meaning of Section 269SS of the Act.

2. The Assessing Officer rejected the assessee's contention that the cash payments were towards imprest, not a loan, based on various observations. The Commissioner of Income Tax (Appeals) upheld this decision, emphasizing that the funds were used for personal benefits, not for the stated purpose of purchasing old manuscripts for the organization.

3. The Tribunal's order focused on the entries in the books of account, indicating that the cash payments were imprest and not a loan or deposit. It concluded that there was no debtor-creditor relationship between the assessee and the organization, hence no violation of Section 269SS of the Act. The Tribunal directed the deletion of the penalty imposed on the assumption of a cash loan.

4. However, the High Court noted that the Tribunal did not consider specific aspects from the penalty order and the CIT(A)'s findings that questioned the legitimacy of the imprest claim. The High Court also highlighted details from the assessment order showing how the cash received was utilized to acquire fixed deposit receipts (FDRs), raising doubts about the purpose stated by the assessee.

5. Considering the arguments raised and the need for further examination, the High Court remanded the matter back to the Tribunal for fresh adjudication. The Court clarified that it had not given a final opinion on the penalty under Section 271D, allowing the Tribunal to independently review the case without influence. The respondent/assessee was granted the opportunity to present all contentions and issues in accordance with the law during the fresh adjudication.