2013 (12) TMI 314 - HC - Income Tax

Violation of section 269SS and 269T - Held that - the assessee being a shroff has two lines of business cheque discounting business and money-lending business - The assessee had to discount the cheque for cash - The assessee had not taken any loan or deposit from the agriculturist by such transaction and, therefore, neither section 269SS nor section 269T are attracted - There is no question of any breach of section 269SS and/or section 269T of the Act as alleged - There was no question of levying any penalty under section 271D and section 271E of the Act - Decided against Revenue.

Summary

Issues:
- Interpretation of sections 269SS and 269T of the Income-tax Act, 1961
- Whether penalty under sections 271D and 271E of the Act was rightly imposed

Analysis:
1. The appeals were filed by the Revenue against the ITAT's order confirming the Commissioner of Income-tax (Appeals) decision to quash penalties imposed under sections 271D and 271E of the Income-tax Act, 1961. The penalties were initiated due to the assessee accepting cheques in breach of section 269SS and section 269T of the Act.

2. The Assessing Officer found that the assessee accepted cheques exceeding Rs. 20,000 without being account payee cheques, triggering penalty proceedings under sections 271D and 271E of the Act. The Commissioner of Income-tax (Appeals) subsequently set aside the penalties, leading to the Revenue's appeals before the ITAT.

3. The ITAT upheld the Commissioner's decision after considering the nature of the assessee's business involving cheque discounting for farmers. The assessee maintained separate ledgers for cheque discounting and money-lending businesses. The ITAT agreed that no loan or deposit was taken from the agriculturists, thus sections 269SS and 269T were not violated, and penalties were not justified.

4. The Court noted that the cheque discounting business might not constitute a loan or deposit. Since there was no evidence of the assessee taking loans or repaying them, sections 269SS and 269T were not contravened. Consequently, the ITAT's decision to uphold the Commissioner's order was deemed appropriate.

5. The Court concluded that no substantial question of law arose in the appeals. As the transactions did not involve loans or deposits, penalties under sections 271D and 271E were unwarranted. Therefore, the appeals were dismissed as they lacked merit.

This detailed analysis of the judgment showcases the interpretation of relevant sections of the Income-tax Act, the nature of the assessee's business, and the reasoning behind the dismissal of the appeals by the Revenue.