2019 (2) TMI 1074 - AT - Income Tax

Penalty levied u/s 271D & 271E - Cash transactions exceeding permissible limit - HELD THAT - None of the assessee s cash transactions in both receiving as well as repaying loan exceeds ₹20,000/- statutory limit prescribed u/s.269SS and u/s 269T of the Act. The assessee had obtained its cash loan from relatives of its partners. Hon ble Rajasthan high court s decision in CIT vs. Raj Kumar Sharma 2007 (4) TMI 218 - RAJASTHAN HIGH COURT holds that the impugned penalt(ies) are not sustainable in case the transactions in question do not exceed the specified limit of ₹20,000/-. The assessee therein had taken aggregate loan(s) of ₹90,000/- in the relevant previous forming subject-matter of adjudication. We therefore conclude in the instant case as well that both the lower authorities have erred in imposing sec. 271D and whilst 271E penalty in issue. The same are directed to be deleted. - Decided in favour of assessee.

Summary

Issues:
Appeal against penalties under sections 271D and 271E of the Income Tax Act, 1961 for assessment year 2005-06.

Analysis:
The appeal before the Appellate Tribunal ITAT Kolkata pertained to penalties levied under sections 271D and 271E of the Income Tax Act, 1961 for the assessment year 2005-06. The Commissioner of Income Tax (Appeals)-21 Kolkata had affirmed the Assessing Officer's actions in imposing these penalties. The case proceeded ex parte as the appellant did not appear despite a notice being sent. The Departmental Representative argued that the penalties were rightly imposed as the appellant had received cash amounts exceeding the statutory limit under sections 269SS and 269T but it was revealed during the hearing that the transactions did not exceed the specified limit of ?20,000. Citing a decision of the Hon'ble Rajasthan High Court, it was established that penalties are not sustainable if the transactions do not surpass the prescribed limit. In this case, the appellant had taken loans within the permissible limit, leading to the conclusion that the lower authorities erred in imposing penalties under sections 271D and 271E. Consequently, the penalties were directed to be deleted, and the appeals of the two assesses were allowed.

This judgment highlights the importance of adhering to statutory limits while dealing with cash transactions to avoid penalties under the Income Tax Act. It emphasizes the need for a thorough examination of the facts and legal provisions before imposing penalties, as demonstrated by the reference to a relevant court decision. The case serves as a reminder for tax authorities to ensure compliance with the law and for taxpayers to be aware of the prescribed limits to avoid unnecessary penalties.