2018 (11) TMI 1182 - HC - Income Tax

Penalty u/s 271E - repayment of deposits in cash made by the assessee to her related persons - default u/s 269T - first burden to establish that there existed a loan or advance - Held that - AO was having books of accounts of the assessee, including the cash book evincing the contentious payment. It was thus incumbent upon him to have recorded the finding that there existed a loan or deposit or advance by the said recipient viz. Adarsh Credit Cooperative Society. In absence of any loan or advance by the ACCS, the cash payment made to it does not fall foul to Section 269T of the Act of 1961. There is nothing on record to show that there existed a loan or advance by said ACCS, repayment whereof has been made in cash. Argument of Mr. Bissa that the burden was on assessee to show that the payment was not in violation to Section 269T is misconceived and ex-facie contrary to settled canon of burden of proof. It is a settled proposition that the burden to prove lies upon a person who asserts a fact. In the facts of the present case assessee put forth her explanation and took a stand that there existed no loan or advance from ACCS and the amount was paid towards her contribution in the society. As such the burden entirely lay upon AO first to establish that there existed a loan or advance and the contentious payment in repayment of such loan. That being the factual and legal position, we are of the considered opinion that the learned Commissioner (Appeals-2), Udaipur was perfectly justified in holding that there is no violation of the provisions of Section 269T of the Act of 1961 and consequently, levy of penalty under Section 271E of the Act of 1961 was uncalled for. - decided in favour of assessee.

Issues:
1. Challenge to the order dismissing Department's appeal against Commissioner Income Tax's order
2. Justification for deleting penalty u/s 271E without considering Section 269T provisions
3. Treatment of repayments of deposits in cash to a related person
4. Treatment of regular account of the assessee with the related society as exempt

Issue 1: Challenge to the order dismissing Department's appeal against Commissioner Income Tax's order

The appellant filed an appeal under Section 260A of the Income Tax Act, challenging the order passed by the Income Tax Appellate Tribunal, which dismissed the Department's appeal against the order of the Commissioner Income Tax (Appeals-2). The appellant sought setting aside of the appellate orders based on substantial questions of law related to the penalty imposed under Section 271E of the Act of 1961.

Issue 2: Justification for deleting penalty u/s 271E without considering Section 269T provisions

The dispute revolved around the appellant's cash transactions of ?54,93,095/- in the account of Adarsh Credit Cooperative Society Limited. The Assessing Officer proposed a penalty under Section 271E for violating Section 269T. The appellate authority observed that the cash deposits were not against any loan or deposit, hence not attracting Section 269T. The Tribunal upheld this decision, stating that the burden of proof was on the Revenue, and there was no evidence of repayment of a loan or deposit, leading to the penalty deletion.

Issue 3: Treatment of repayments of deposits in cash to a related person

The appellant contended that the cash payment was towards her contribution in the Society, not a loan or deposit repayment. The Tribunal found no evidence of a loan or advance by the Adarsh Credit Cooperative Society, thus not violating Section 269T. The burden of proof lay on the assessing officer to establish the existence of a loan or advance, which was not done, justifying the deletion of the penalty.

Issue 4: Treatment of regular account of the assessee with the related society as exempt

The Tribunal emphasized that the cash payment was made to a regular account maintained with the Society, where the appellant was a member. The absence of proof of a loan or advance by the Society led to the conclusion that the penalty under Section 271E was unwarranted. The appellate authority and the Tribunal found no substantial question of law, upholding the deletion of the penalty.

In conclusion, the High Court dismissed the appeal, concurring with the decisions of the appellate authority and the Tribunal. The Court found no infirmity in the orders and no substantial question of law involved in the case.

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