2004 (2) TMI 308 - AT - Income Tax

Summary

Issues:
1. Cancellation of penalties under sections 271D and 271E of the IT Act, 1961.

Detailed Analysis:
1. The Revenue appealed against the cancellation of penalties under sections 271D and 271E of the IT Act, 1961. The case involved the acceptance of loans and deposits exceeding Rs. 20,000 in cash from a sister concern, leading to contravention of provisions. The Dy. CIT imposed penalties based on findings of cash transactions violating sections 269SS and 269T, totaling Rs. 10,63,350 and Rs. 3,90,000 respectively. The assessee argued that the transactions were for immediate business needs and technical breaches without any intent to deceive the Revenue. The CIT(A) deleted the penalties considering it a technical breach with no loss to the Revenue.

2. The Department challenged the CIT(A)'s decision, contending that the transactions breached sections 269SS and 269T as they were in cash, despite both parties having bank accounts. The assessee argued that the transactions were due to common partners' decisions for business needs in remote areas, constituting a technical breach without mala fide intent. The Tribunal noted the technical fault due to common partners and the genuine nature of transactions, following the precedent set by the Supreme Court in Hindustan Steel Ltd. v. State of Orissa. The Tribunal also referred to a similar case involving the sister concern where penalties were deleted, indicating a settled issue.

3. The Tribunal found that the transactions were technical breaches due to common partners and maintained current accounts for business needs. The Tribunal emphasized the genuine nature of transactions and the absence of doubt by the Department on the transactions' authenticity. Referring to previous judgments, the Tribunal concluded that no penalty was exigible in the present case, aligning with the consistent view taken in identical cases. Consequently, the Tribunal upheld the CIT(A)'s decision to delete the penalties under sections 271D and 271E of the IT Act, 1961, dismissing the appeals by the Revenue.