2002 (11) TMI 801 - AT - Income Tax

Summary

Issues:
Appeal against deletion of penalty under section 271E for repayment of loan of Rs. 86,000 in contravention of section 269T.

Analysis:
The case involved an appeal by the Revenue against the deletion of a penalty under section 271E for the assessment year 1990-91. The Revenue contended that the learned CIT(A) erred in law and in facts in deleting the penalty of Rs. 86,000 imposed under section 271E of the Act. The Assessing Officer found that the assessee repaid a loan of Rs. 86,000 in cash to her husband, which was considered a contravention of provisions of section 269T of the IT Act, 1961. The learned CIT(A) deleted the penalty, leading to the Revenue's appeal.

During the proceedings, the Departmental Representative supported the Assessing Officer's order, while the Authorized Representative of the assessee argued that the repayment was a loan and not a deposit. The Authorized Representative cited legal precedents to support the argument that prior to 1-6-2002, section 269T applied to the repayment of deposits and not loans. The Tribunal observed that the transaction in question was indeed a repayment of a loan of Rs. 86,000, and there were distinct differences between a loan and a deposit. The Tribunal noted that the provisions of section 269T did not apply to loan transactions before 1-6-2002.

Furthermore, the Tribunal highlighted that the purpose of section 269T was to prevent the proliferation of black money by ensuring repayments through account payee cheques to establish the payee's identity. In this case, the identity of the lender was known to the Department, and the genuineness of the loan transaction was not in doubt. The Tribunal concluded that any breach of law was not deliberate but at most a technical default, citing legal precedent that penalties should not be imposed for technical or venial breaches.

Based on the facts and circumstances, the Tribunal upheld the order of the learned CIT(A) and dismissed the Revenue's appeal. The Tribunal found that the provisions of section 269T did not apply to the repayment of a loan transaction in the year under consideration, leading to the rejection of the Revenue's grounds for appeal.