2005 (1) TMI 313 - AT - Income Tax

Summary

Issues:
- Condonation of delay in filing appeals
- Penalty under section 271D of the IT Act, 1961
- Penalty under section 271E of the IT Act, 1961

Condonation of Delay:
The assessee filed two appeals against CIT(A) orders for the assessment year 1992-93, with a delay of 5 days. The delay was attributed to the dissolution of the assessee-firm and the death of two partners. The delay was condoned by the ITAT based on the explanation provided by the assessee, citing judgments of the Hon'ble Supreme Court and the Tribunal, and the fact that the delay was only for 5 days. The appeals were admitted after condonation of delay.

Penalty under Section 271D:
In one appeal, the grievance was against sustaining a penalty of Rs. 40,000 under section 271D of the IT Act, 1961. The penalty was imposed by the Dy. CIT for accepting cash loans of Rs. 20,000 each from two individuals, allegedly in violation of provisions of section 269SS. The ITAT held that the penalty was not justified as the loans were taken due to an urgent business need to make a payment to a principal supplier. The ITAT also noted that the loans were within the limit specified by the CBDT Circular and that the reasons for accepting the cash loans constituted a reasonable cause, thus canceling the penalty.

Penalty under Section 271E:
In the other appeal, the issue was sustaining a penalty of Rs. 41,600 under section 271E of the IT Act, 1961. The penalty was imposed for returning two loans of Rs. 20,000 each in cash. The ITAT ruled that since the amounts were loans and not deposits, and the provisions of section 269T were not applicable to loans before a certain amendment date, no penalty under section 271E was leviable. The ITAT also considered the circumstances, such as the recipients being illiterate and without bank accounts, as constituting a reasonable cause for the cash repayment, and thus canceled the penalty.

In conclusion, the ITAT allowed both appeals of the assessee, condoning the delay in filing appeals and canceling the penalties imposed under sections 271D and 271E of the IT Act, 1961, based on the explanations and legal provisions presented during the proceedings.