2000 (5) TMI 175 - AT - Income Tax

Summary

Issues:
- Appeal against deletion of penalty under section 269SS of the Income-tax Act by CIT(A)
- Interpretation of section 269SS regarding acceptance of deposits in cash
- Compliance with section 269SS through transfer vouchers

Analysis:
The appeal before the Appellate Tribunal ITAT Jaipur was directed by the revenue against the CIT(A)'s order deleting a penalty imposed under section 269SS of the Income-tax Act. The revenue contended that the CIT(A) erred in deleting the penalty of Rs. 1,53,200 out of Rs. 1,94,200 levied under section 269SS. The brief facts revealed that the assessee-company had accepted deposits/loans in cash from various individuals, leading to the penalty imposition by the Dy. CIT, Alwar Range, Alwar. The CIT(A) had deleted the penalty for two deposits but confirmed it for one, resulting in an appeal by the revenue against the deletion of penalties for the two deposits.

Upon detailed consideration, the Tribunal analyzed the scope and effect of section 269SS, emphasizing its objective to prevent the acceptance of unaccounted cash or deposits through means other than account-payee cheques or drafts. The Tribunal referred to a Departmental Circular highlighting the legislative intent behind the provision. The Tribunal noted that the 'payee' has been defined in the Negotiable Instruments Act, and since the deposits were made through transfer vouchers, the amount was credited through proper banking channels. Consequently, the Tribunal concluded that the assessee had not violated the provisions of section 269SS and upheld the CIT(A)'s decision to delete the penalty.

In conclusion, the Appellate Tribunal dismissed the revenue's appeal, affirming the decision to delete the penalty imposed under section 269SS. The analysis highlighted the importance of compliance with the specific requirements of section 269SS regarding the acceptance of deposits in cash and underscored the significance of proper banking channels in maintaining adherence to the law.