2020 (12) TMI 351 - AT - Income Tax

Penalty u/s 271D and 271E - Default under provisions of section 269SS and 269T - Accepting loans by way of cash in excess of the prescribed limit - HELD THAT - If the assessee is able to establish that all the cash transactions are arising out of the bank withdrawals and recorded in the assesse s books of accounts within a reasonable span of time from the date of cash withdrawals from the respective bank accounts and further if all the entities are pertaining to sister concerns (arising out of the same group of ownership), then the provisions of section 269SS and 269T will not be applicable and accordingly the penal provisions of section 271D and 271E cannot be invoked. Therefore, in the interest of justice, we hereby remit the matter back to the file of the Ld. AO to examine accordingly. - Decided in favour of assessee.

Summary

Issues involved:
- Appeal against orders of Ld. CIT (A) for AYs 2010-11 to 2012-13 under sections 271D & 271E of the Income Tax Act.
- Delay in filing the appeal before the Tribunal.
- Violation of provisions of section 269SS and 269T of the Act by the assessee.
- Applicability of penal provisions under sections 271D and 271E.
- Interpretation of cash transactions between sister concerns in the real estate business.

Analysis:
1. Delay Condonation: The Tribunal considered a delay of four days in filing the appeal due to the ill health of the Chairman & Managing Director of the assessee company. The delay was condoned after finding the reasons reasonable, allowing the appeals to proceed on merit.

2. Violation of Provisions: The assessee, a Real Estate company, failed to file returns for AYs 2010-11 to 2012-13, leading to notices under section 148. The violation of sections 269SS and 269T was identified during assessment, resulting in penalties under sections 271D and 271E, based on cash loans received and repaid. The Ld. AO and CIT (A) upheld the penalties citing relevant legal precedents.

3. Contentions and Arguments: The assessee argued that cash transactions were between sister concerns, hence exempt from sections 269SS and 269T. They emphasized the common ownership and genuine fund transfers from bank accounts. Legal references were made to support the argument for penalty deletion, contrary to the Revenue's stance.

4. Tribunal's Decision: After reviewing submissions, the Tribunal acknowledged the merit in the assessee's argument regarding sister concerns and fund transfers. While recognizing the potential for accounting manipulation with cash transactions, the Tribunal referred to circulars and legal judgments. Consequently, the matter was remitted to the Ld. AO to verify the nature of transactions and ownership relationships. If cash transactions were from bank withdrawals and duly recorded, penalties under sections 271D and 271E were to be deleted, emphasizing justice and adherence to legal provisions.

5. Final Verdict: The Tribunal allowed the appeals for statistical purposes, directing a reevaluation by the Ld. AO based on ownership relationships and transaction recording. The decision was pronounced in December 2020, reflecting a nuanced approach to the interpretation of cash dealings in the real estate sector involving sister concerns.