2018 (6) TMI 611 - AT - Income Tax

Levy of penalty u/s 271D and 271E - transaction of advance and its receipt back in cash in excess of ₹ 20,000/- - Assessee contended that it is trade advance and 269SS and 269T did not apply to a trade advance - advance, which was received back as the film for which it was given did not run - Held that - the question of his being paid a booking advance by the movie theatres arises only where he is, as claimed, working as a booking agent, of which there is nothing on record to suggest, much less establish. On the contrary, he is admittedly working as a manager with a business house in the film trade. It is perhaps for this reason that he is known to the assessee; a transaction of lending or advancing could materialize only between parties known to each other; rather, having mutual trust the assessee working through its partners The claim of the amount loan/deposit being a trade advance, is, as found by the Revenue, wholly unproved (if not disproved). On the contrary, the conduct and the surrounding facts and circumstances point to the contrary, i.e., to it being not so. The same is the assessee s only explanation for the contravention of sections 269SS and 269T. No reasonable cause for the same has been shown, much less proved, for us to consider the application of section 273B in the facts and circumstances of the case. No reason for interference and, accordingly, confirm the levy of impugned penalty u/s. 271D and 271E - Decided against the assessee.

Summary

Issues:
Confirmation of penalty under sections 271D and 271E of the Income Tax Act, 1961 for Assessment Year 2013-14.

Analysis:
The judgment revolves around two Appeals by the Assessee challenging the penalty imposed under sections 271D and 271E of the Income Tax Act, 1961 for the Assessment Year 2013-14. The Assessing Officer observed the Assessee, a partnership firm in the film distribution business, to have received and repaid a sum of ?2,00,000 in cash to an individual, which exceeded the prescribed limit under sections 269SS and 269T of the Act. The penalty proceedings were initiated based on the non-compliance with these sections. The Assessee claimed the amount was a booking advance for film distribution, but failed to provide substantial evidence to support this claim. The Commissioner of Income Tax (Appeals) confirmed the penalty, emphasizing the lack of concrete evidence and the questionable nature of the transaction. The Assessee's argument about the non-appearance of the individual involved was also addressed, highlighting the need for substantial proof to support their claims.

The Tribunal observed that the confirmation of the penalty was based on the acceptance of the transaction as genuine. However, the transaction was not reflected in the Assessee's regular books of account, raising doubts about its authenticity. The lack of proper documentation, such as receipts issued to individual theatres, further undermined the Assessee's claims. The Tribunal raised questions about the nature of the transaction, the absence of corroborative material, and the failure to follow standard business practices in such transactions. The Assessee's reliance on the individual's affidavit was deemed insufficient, as it lacked credibility without proper verification or supporting evidence.

The Tribunal found the Assessee's explanation unsubstantiated and inconsistent with the facts of the case. The lack of proof regarding the transaction being a trade advance, coupled with the absence of reasonable cause for non-compliance with relevant sections of the Act, led to the confirmation of the penalty under sections 271D and 271E. The Tribunal dismissed the Assessee's appeals, emphasizing the need for concrete evidence and adherence to legal requirements in financial transactions. The judgment underscores the importance of maintaining proper records and transparency in financial dealings to avoid penalties under the Income Tax Act.

In conclusion, the Tribunal upheld the penalty imposed on the Assessee under sections 271D and 271E of the Income Tax Act, 1961 for the Assessment Year 2013-14. The judgment highlights the significance of providing substantial evidence, following standard business practices, and maintaining transparency in financial transactions to avoid penalties and ensure compliance with the law.