2005 (11) TMI 213 - AT - Income Tax

Summary

Issues:
1. Penalty under section 271D for accepting cash deposits in violation of section 269SS.
2. Penalty under section 271E for making cash repayments in contravention of section 269T.

Analysis:

Issue 1: Penalty under section 271D
The case involved penalties imposed under sections 271D and 271E of the Income Tax Act, concerning cash transactions in violation of sections 269SS and 269T. The Appellate Tribunal considered two appeals by the Revenue challenging the deletion of penalties by the CIT(A). The assessee had accepted cash deposits exceeding the specified limit from various parties, leading to the imposition of a penalty under section 271D. The assessee argued ignorance of the law and lack of advice from their counsel regarding the restrictions on cash transactions. The Tribunal noted the provisions of section 273B, allowing for non-imposition of penalties if a reasonable cause for the violation is proven. Citing relevant case law, the Tribunal emphasized the need for deliberate defiance or contumacious conduct for penalty imposition. Considering the circumstances, including the assessee's ignorance and lack of awareness, the Tribunal upheld the CIT(A)'s decision to delete the penalty under section 271D.

Issue 2: Penalty under section 271E
Regarding the penalty under section 271E for making cash repayments in contravention of section 269T, the Tribunal found the facts similar to the penalty under section 271D. The assessee provided similar reasons for deletion of the penalty, which were accepted in the earlier appeal. Relying on the previous decision regarding penalty under section 271D, the Tribunal upheld the deletion of the penalty under section 271E. Considering the repayment of loans to be in line with the reasonable cause accepted in the previous appeal, the Tribunal dismissed the Revenue's appeals in both instances.

In conclusion, the Appellate Tribunal upheld the CIT(A)'s decisions to delete the penalties under sections 271D and 271E, emphasizing the importance of reasonable cause and lack of deliberate defiance in penalty imposition for violations of the Income Tax Act.