2020 (4) TMI 485 - AT - Income Tax

Penalty u/s 271D - Period of limitation - urgency and compulsion to take loan in cash - default u/s 269SS - HELD THAT - Clause (c) of section 275(1) of the Act provides that no order u/s 271D of the Act shall be passed after expiry of the financial year, in which the proceedings are completed or six months from the end of the month in which the action for imposition of penalty, is initiated. The relevant financial year, is 2016-17 in this case and the relevant month of initiation of penalty, is April, 2016. Therefore, the order passed by the Assessing Officer on 29.11.2016 is very much valid and not time barred. On merits we find this is a clear case of receipt of cash by the assessee in violation of section 269SS - no justification for accepting loans in cash even through banking channels were available and also utilized by these two lenders. The appellant required money for hospital premises but there were no compelling reasons for accepting the cash as such - appellant is well educated doctor and cannot claim to be ignorant of law in this regard - Decided against assessee.

Summary

Issues Involved:
1. Time-barred penalty order under section 271D of the Income Tax Act.
2. Merits of the penalty under section 271D for receiving cash loans in violation of section 269SS of the Act.

Issue 1: Time-barred Penalty Order under Section 271D:
The appeal challenged the penalty under section 271D imposed by the CIT(A) for the assessment year 2013-14. The assessee contended that the penalty order dated 29.11.2016 was time-barred. The argument was based on the provisions of clause (c) of section 275(1) of the Act, which states that the penalty order should be passed within six months from the end of the month in which the action for imposition of penalty is initiated. The Tribunal dismissed the assessee's claim, ruling that the order passed on 29.11.2016 was valid and not time-barred as it fell within the specified time frame.

Issue 2: Merits of the Penalty under Section 271D:
The case involved the receipt of cash loans by the assessee, a medical professional, in violation of section 269SS of the Act. The Assessing Officer invoked the penalty under section 271D, holding that the loans were accepted without any reasonable cause. The CIT(A) partially granted relief to the assessee concerning loans taken through electronic transfer but confirmed the penalty for the remaining cash loans. The Tribunal upheld the CIT(A)'s decision, emphasizing that there were no justifiable reasons for accepting cash loans when banking channels were available. The Tribunal noted that ignorance of the law cannot excuse non-compliance and upheld the penalty under section 271D for the remaining loans. The Tribunal found the CIT(A)'s order fair and reasonable, dismissing the appeal and confirming the penalty imposed.

In conclusion, the Tribunal upheld the penalty under section 271D for receiving cash loans in violation of section 269SS of the Act, dismissing the appeal filed by the assessee. The judgment emphasized the importance of complying with legal provisions and rejected the claim of ignorance as a defense for non-compliance with tax laws.