2019 (12) TMI 1187 - AT - Income Tax

Penalty u/s 271D - obtaining cash loan in contravention of section 269SS - the cash has been deposited directly in the Bank account of assessee, for which assessee has no control - reasonable cause u/s 273B - HELD THAT - A.O. merely initiated penalty proceedings separately for violation of Section 269SS of the I.T. Act. He did not record any satisfaction under section 271D of the I.T. Act before initiating the penalty proceedings under section 271D of the I.T. Act. Further, the explanation of assessee on merit clearly suggest that assessee had a reasonable cause for violation to comply with the provisions of Law because no cash given directly to assessee but deposited at Shilong Branch over which assessee did not have any control. The assessee immediately acted on the matter and refunded the amount in question. The finding of fact recorded by Ld. CIT(A) have not been disputed through any evidence or material on record. Therefore, considering the issue in the light of reasonable cause under section 273B of I.T. Act, for failure to comply with the provisions of Law, no penalty is leviable in the matter. Considering the above discussion in the light of judgment of the Hon'ble Supreme Court in the case of CIT vs. Jai Laxmi Rice Mills 2015 (11) TMI 1453 - SUPREME COURT set aside the orders of the authorities below and cancel the entire penalty. - Decided in favour of assessee.

Summary

Issues:
1. Penalty under section 271D of the IT Act, 1961 for accepting cash loan in contravention of section 269SS.
2. Delay in filing appeal due to unforeseen circumstances.

Issue 1: Penalty under section 271D of the IT Act, 1961 for accepting cash loan in contravention of section 269SS:

The appellant, an individual, received a notice u/s 148 of the IT Act for depositing cash exceeding ?10,00,000 in bank accounts. During re-assessment proceedings, it was noted that the appellant maintained bank accounts with multiple banks. The appellant explained that cash deposits were from withdrawals and funds from friends and relatives for showing bank balance for a student visa. The Assessing Officer (A.O.) initiated penalty proceedings u/s 271(l)(c) for the addition made. Subsequently, after 30 months, a notice was received for penalty u/s 271D for accepting a cash loan of ?4,00,000 in contravention of section 269SS. The appellant argued that the A.O. was satisfied with explanations provided. However, the penalty was imposed, and the CIT(A) confirmed it. The appellant contended that no penalty should be levied as there was a "reasonable cause" under section 273B for accepting the loan. The Tribunal, in line with a similar ITAT Delhi Bench order, allowed the appeal, citing the Supreme Court judgment in CIT vs. Jai Laxmi Rice Mills (2015) 379 ITR 521 (SC), canceling the penalty.

Issue 2: Delay in filing appeal due to unforeseen circumstances:

The appellant filed an appeal with a three-day delay, citing a road accident involving their father requiring surgery. An affidavit was submitted explaining the delay, which was accepted by the Tribunal, and the delay was condoned.

In conclusion, the Tribunal allowed the appeal of the Assessee, canceling the penalty imposed under section 271D of the IT Act, 1961. The decision was based on the appellant's reasonable cause for accepting the cash loan and the absence of recorded satisfaction under section 271D by the A.O. The judgment aligned with the Supreme Court ruling in CIT vs. Jai Laxmi Rice Mills, emphasizing the importance of a valid satisfaction before initiating penalty proceedings.