2012 (5) TMI 131 - HC - Income Tax

Cancelling the penalty u/s 271-D/27/E by tribunal - contravention of provisions of section 269SS / 269T Held that - Tribunal rightly invoked Section 273-B as no penalty shall be imposable on the assessee for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure - from the materials brought on record it is clear that four persons were agriculturists from whom various deposits in cash were accepted amounting to Rs. 10,000/- or lesser amount and came to the conclusion that those agriculturists had no bank account and the amounts were paid in cash in favour of assessee.

Summary

Issues:
Appeal against penalty under Section 271-E of the Income Tax Act based on contravention of provisions of Section 269-T.

Analysis:
The appeal in this case was made under Section 260-A of the Income Tax Act against the Tribunal's order dated 16th July, 2002. The issue revolved around the penalty under Section 271-E imposed for alleged contravention of Section 269-T provisions. The CIT (Appeals) had dismissed the appeal against the penalty, which led to the assessee filing an appeal before the Tribunal. The Tribunal, after considering the facts, allowed the appeal and set aside the penalties under Sections 271-D and 271-E of the Act.

The grounds pressed by the appellant's counsel included the acceptance of cash deposits in contravention of Section 269-T, leading to the imposition of penalties under Sections 271-D and 271-E. The Tribunal's decision to cancel the penalties was based on the fact that the amounts were repaid in cash to individuals who did not have bank accounts, as explained by the assessee. The Tribunal found a reasonable cause for accepting and repaying the amounts in cash, as the individuals involved were villagers without bank accounts.

The Tribunal's decision was supported by Section 273-B of the Act, which states that no penalty shall be imposed if there was a reasonable cause for the failure to comply with the provisions. In this case, the Tribunal found a reasonable cause for non-compliance and, therefore, canceled the penalties under Sections 271-D and 271-E. The Tribunal's decision was based on factual findings and was deemed justified, leading to the dismissal of the appeal against the penalties.

In conclusion, the High Court upheld the Tribunal's decision to cancel the penalties under Sections 271-D and 271-E based on the reasonable cause found for non-compliance with the provisions related to cash deposits and repayments. The judgment highlighted the importance of considering individual circumstances and reasons for non-compliance when imposing penalties under the Income Tax Act.