2018 (7) TMI 1565 - HC - Income Tax

Penalty u/s 271D - breach of Section 269SS for the subject three assessment years - Held that - We find that the impugned order of the Tribunal is a detailed speaking order. Wherever the party has made submissions and made out a reasonable cause, the Tribunal has exercised its discretion in setting aside the imposition of penalty or restoring it to the Assessing Officer for fresh consideration in the light of the facts pointed out by the appellant during the course of the hearing. Wherever no reasonable cause was pointed out, the impugned order of the Tribunal did not disturb the findings arrived at by the Assessing Officer and the CIT(A). Thus, this is not a case of non exercise of discretion under Section 273B of the Act as alleged by the appellant. From the reading of the impugned order of the Tribunal, we find that in respect of the loans on which penalty has been confirmed, the appellant assessee has not made out and / or submitted any reasonable cause for the Tribunal to exercise its discretion to set aside the penalty in such cases. The case laws of the Apex Court and coordinate bench of this Court relied upon by Mr. Jha on behalf of the appellant, is binding upon us and there can be no quarrel with the proposition set out therein. However, the same cannot be considered in vacuum. It necessarily has to be in the context of the facts arising in the case. In this case, we find that the appellant assessee has not made out any case for reasonable cause in respect of cases where the impugned order has not disturbed the finding of the lower authorities. Tribunal was right in upholding penalty imposed under Section 271D

Summary

Issues:
Challenging penalty imposed under Section 271D for breach of Section 269SS
Reasonable cause under Section 273B

Analysis:
1. The three appeals under Section 260A of the Income Tax Act, 1961 challenge the common order of the Income Tax Appellate Tribunal (the Tribunal) related to Assessment Years 2003-04, 2004-05, and 2005-06. The main contention raised was whether the penalty imposed under Section 271D for breach of Section 269SS was justified.

2. The appellant received loans in cash in violation of Section 269SS, leading to penalty proceedings under Section 271D. The Assessing Officer initiated penalty proceedings and, upon unsatisfactory explanation from the appellant, imposed penalties for the three assessment years in question.

3. The appellant appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who dismissed the appeals. Subsequently, the Tribunal partly allowed the appeal by deleting penalties for loans of &8377; 20,000 or less received in cash. The issue was remanded to verify if lenders were agriculturists and if banking facilities existed in their villages. Penalties related to specific loan amounts were also remanded for reexamination based on the appellant's contentions.

4. The appellant contended that the Tribunal's order was unsustainable as penalties were upheld for some parties while deleted for others based on the same facts. The appellant cited legal precedents to argue for a wider interpretation of 'reasonable cause' under Section 273B.

5. The Court found that the Tribunal's order was detailed and considered reasonable cause where presented by the appellant. Penalties were upheld where no reasonable cause was shown. The Court emphasized that the appellant failed to establish reasonable cause in cases where penalties were confirmed.

6. The Court rejected the appellant's argument that the Tribunal did not appropriately address the grounds raised in the appeal memo. It held that the Tribunal's consideration was reasonable, especially since the appellant was represented by an advocate who should have made appropriate submissions.

7. Ultimately, the Court found the Tribunal's decision reasonable and not perverse. It concluded that the questions raised did not give rise to substantial legal issues and dismissed all three appeals without costs.