2002 (4) TMI 233 - AT - Income Tax

Summary

Issues:
Challenge to imposition of penalty under sections 271D and 271E.

Issue 1: Penalty under Section 271D
The appellant challenged the penalty imposed under Section 271D for accepting cash sums in violation of sections 269SS and 269T. The appellant argued that being located in a small town without a bank account and lack of awareness about legal provisions were reasons for the default. The Assessing Officer (AO) imposed a penalty of Rs. 48,500 after considering the circumstances. The appellant contended that the penalty was unjustified due to the genuine nature of the loans and the interpretation of the violation of section 269SS. The Departmental Representative argued that the appellant, being in the jewelry and money-lending business for 15 years, was well-versed in tax matters and had professional help during the proceedings. The Tribunal held that ignorance of the law is not an excuse, and mens rea is not required for imposing penalties. The Tribunal also clarified the violation threshold of Rs. 20,000 under section 269SS and upheld the penalty only to the extent of Rs. 18,500.

Issue 2: Penalty under Section 271E
The appellant challenged the penalty imposed under Section 271E for returning deposits in excess of Rs. 20,000. The appellant argued that the penalty was unjustified as no specific allegation was made regarding the excess amount in the notice or order. The Departmental Representative contended that the facts clearly indicated a violation of sections 269SS and 269T, and the appellant had the opportunity to object before the lower authorities. The Tribunal held that the imposition of the penalty was valid as the appellant failed to prove that the amounts returned were loans and not deposits, thereby violating section 269T. The penalty under Section 271E was upheld by the Tribunal.

In conclusion, the Tribunal partly allowed the appeal regarding the penalty under Section 271D, reducing it to Rs. 18,500, and dismissed the appeal challenging the penalty under Section 271E. The judgment emphasized the importance of compliance with tax laws, the strict interpretation of penalty provisions, and the need for taxpayers to be aware of legal requirements despite professional assistance.