2023 (9) TMI 477 - AT - Income Tax

Penalty u/s. 271D - acceptance of cash loan in contravention of provisions of section 269SS - HELD THAT - It is pertinent to note that since the assessee was an agriculturist and deriving income related to agricultural activities, as on salary there was no regular assessment in assessee s case. The Assessing Officer at no point of time disputed the bank statement of the assessee wherein the amount of Rs. 1,42,000/- was transferred in The Berna Gamni Seva Sahakari Mandali Ltd. and the same was shown in the bank statement dated 26-03-2011. The transaction as well as the ledger along with the certificate was not doubted and in fact the contention of the ld. Departmental Representative that it was mismatching appears to be not correct and thus there was no cash involved in the present transaction. Therefore, section 269SS will not be applicable in the present case and the penalty levied u/s. 271D does not survive. CIT(A) as well as the AO was not correct in levying the penalty u/s. 271D - Appeal of the assessee is allowed.

Summary

Issues involved: Appeal against penalty order under section 271D for accepting a loan in contravention of section 269SS.

Issue 1: Validity of penalty under section 271D

The Assessing Officer imposed a penalty under section 271D on the assessee for accepting a loan of Rs. 1,42,000 in contravention of section 269SS. The assessee contended that the loan was accepted through a banking channel, supported by bank statements and documentary evidence. The ld. CIT(A) upheld the penalty. The Tribunal noted that the assessee, being an agriculturist with income from agricultural activities, had no regular assessment. The bank statement confirmed the loan transaction to The Berna Gamni Seva Sahakari Mandali Ltd., with no cash involvement. As such, section 269SS was deemed inapplicable, and the penalty under section 271D was deemed unjustified. The appeal of the assessee was allowed.

Key Phrases:
- Penalty under section 271D
- Contravention of section 269SS
- Banking channel
- Agricultural income
- Regular assessment
- Bank statement
- No cash involvement
- Inapplicability of section 269SS
- Justification of penalty