2005 (2) TMI 90 - HC - Income Tax

Contravention of the provisions of section 269SS - penalty under section 271D - assessee had no reasonable cause for borrowing the amount in cash - in the exercise of the powers under section 260A of the Act the findings of the fact of the Appellate Tribunal cannot be disturbed and there is no scope for interference by the High Court with a finding recorded when such finding can be treated to be a finding of fact. We are therefore of the view that there is no substantial question of law that arises out of the order of the Appellate Tribunal as the Appellate Tribunal has rendered a finding of fact. Tribunal has rightly come to the conclusion that the penalty imposed was not warranted

Summary

Issues:
1. Interpretation of sections 269SS and 271D of the Income-tax Act, 1961.
2. Reasonable cause for borrowing cash and penalty imposition.
3. Appellate Tribunal's authority to decide on penalty imposition.
4. Scope of High Court interference with Appellate Tribunal's findings.

Analysis:
1. The case involved appeals by the Revenue against the Income-tax Appellate Tribunal's order regarding loans taken by the assessee in contravention of section 269SS of the Income-tax Act, 1961. The Joint Commissioner imposed a penalty under section 271D, which was confirmed by the Commissioner of Income-tax (Appeals). The Appellate Tribunal, however, quashed the penalty, leading to the Revenue's challenge in the High Court.

2. The Appellate Tribunal considered the assessee's explanation that the borrowed money was intended for safekeeping and business use, even though it was not immediately utilized. The Tribunal found a reasonable cause for borrowing, disagreeing with the penalty imposition. The High Court upheld the Tribunal's decision, stating that the mere non-utilization of the borrowed amounts does not negate the business requirement for the loans.

3. The High Court highlighted the Supreme Court's ruling that findings of fact by the Appellate Tribunal are generally not subject to interference by the High Court unless they involve a substantial question of law. In this case, as the Tribunal's decision was based on factual considerations, the High Court found no substantial question of law to warrant interference and dismissed the appeals at the admission stage.

4. The judgment emphasized the limited scope for the High Court to intervene in matters where the Appellate Tribunal has arrived at factual findings. The Court, following legal precedents, concluded that no substantial question of law arose from the Tribunal's decision in this case, leading to the dismissal of the appeals. The connected case was closed accordingly.