2021 (7) TMI 1102 - AT - Income Tax

Penalty u/s 271E - contravention of the provision of section 269T of the Act for repayment of loan in cash exceeding the permissible limit - Assessee argued no proper satisfaction was recorded by the assessing officer - HELD THAT - AO erred in levying penalty u/s 271E of the Act in the case of assessee as firstly revenue failed to prove whether assessee actually received any cash loan or repaid any cash loan from R.C. Upadhya and secondly Ld. AO was not having any jurisdiction to levy the penalty as no assessment proceedings were pending in the case of assessee and thus no satisfaction was recorded by the ld. AO to initiate the penalty. Thus, finding of ld. CIT(A) is set aside and Ld. AO is directed to delete the penalty - Decided in favour of assessee.

Summary

Issues Involved:
Challenge to the levy of penalty under section 271E of the Income-Tax Act, 1961 for Assessment Year 2009-10.

Detailed Analysis:

1. Jurisdiction and Limitation of Penalty:
The appellant contested the penalty imposed under section 271E, arguing that it was without jurisdiction and time-barred. The appellant emphasized that no proper satisfaction was recorded by the assessing officer. The contention was that the penalty was confirmed without appreciating the absence of any loan transactions in the appellant's books. The CIT(A) upheld the penalty, citing the basis of levy on seized documents. The Tribunal noted that no assessment proceedings were pending for the relevant year in the appellant's case, emphasizing the necessity for a proper satisfaction to initiate penalty proceedings.

2. Evidence of Cash Loan Transactions:
The case stemmed from a search on another individual, which led to the alleged discovery of cash loan transactions involving the appellant. Despite the appellant's denial and lack of evidence supporting the cash loan transactions, a penalty was levied under section 271E. The Tribunal highlighted the absence of evidence indicating that the appellant had taken or repaid any cash loan, leading to the conclusion that the penalty lacked a factual basis.

3. Legal Precedence and Applicability:
The appellant relied on legal precedents and decisions to support the appeal. The Tribunal considered relevant judicial decisions, including the necessity of recording satisfaction in the assessment order for levying penalties under section 271E. The Tribunal referenced the importance of pending assessment proceedings before imposing penalties, emphasizing the discretionary nature of penalty imposition based on specific circumstances.

4. Final Tribunal Decision:
After thorough consideration of the arguments and legal aspects, the Tribunal ruled in favor of the appellant. The Tribunal found that the assessing officer erred in levying the penalty under section 271E due to the lack of evidence supporting the cash loan transactions and the absence of pending assessment proceedings. Consequently, the Tribunal directed the assessing officer to delete the penalty imposed. The Tribunal allowed the grounds raised by the appellant, ultimately leading to the appeal being allowed in favor of the appellant.

In conclusion, the Tribunal's detailed analysis and consideration of jurisdiction, evidence, legal precedence, and the lack of pending assessment proceedings led to the decision to set aside the penalty imposed under section 271E for the appellant, thereby allowing the appeal.