2022 (11) TMI 416 - AT - Income Tax

Penalty u/s 271D and penalty u/s. 271E - Default u/s 269SS and u/s 269T - Loan/deposits taken/paid by the assessee is more than Rs.20,000/- - assessee argued that amount received from various parties / amount paid to various parties for unsecured loan did not exceed the limit of Rs.20,000/- and thus no provisions of Section 271D and 271E are attracted - HELD THAT - As the plain reading of both the Sections denotes that Section 269SS is attracted when the amount of loan taken from individual person exceeds Rs,20,000/- and Section 269T is attracted when the repayment of loan made to individual person exceeds Rs.20,000/-. The Bench has also gone through the cash book placed on record and statement of loan taken and loan repaid in cash drawn from the cash book it can be noted that the amount of loan taken from each person and amount of loan repaid to each person does not exceed Rs.20,000/-. Revenue Authorities levied and confirmed the penalty by holding that Aggregate of loan/deposits taken/paid by the assessee is more than Rs.20,000/- by not appreciating the provisions of these Sections. In my view, after evaluating the provisions of law, aggregate of loan is to be seen personwise and not aggregate loan taken from all the persons in the whole year. Therefore, under these present facts and circumstances of the case, the penalty is not attracted in the present case and thus both the penalties confirmed by the ld. CIT(A) (supra) are directed to be deleted.Appeals filed by the assessee are allowed.

Summary

Issues:
Appeal against penalty under Section 271E and 271D of the Income Tax Act, 1961.

Analysis:
1. Background: The appeals were filed against the orders of the ld. CIT(A) concerning penalties under Section 271E and 271D for the assessment year 2013-14.

2. Penalty Imposition: The assessee received cash and made payments to various parties, which the Revenue deemed as violations of Section 269SS and Section 269T, attracting penalties under Section 271D and 271E, respectively.

3. Assessee's Arguments: The assessee contended that the amounts involved did not exceed Rs.20,000 per person, thus not violating the provisions of Section 269SS and 269T. The assessee supported this argument with the cash book and affidavits of the parties involved.

4. Revenue's Position: The Revenue, however, supported the penalties imposed by the ld. CIT(A).

5. Judgment: Upon careful consideration, the Bench found that the aggregate of loans taken and repaid by the assessee did not exceed Rs.20,000 per person. The Bench noted that penalties were erroneously confirmed by the ld. CIT(A) without appreciating the provisions of Sections 269SS and 269T.

6. Legal Interpretation: The judgment highlighted that Section 269SS applies when the loan amount from an individual exceeds Rs.20,000, and Section 269T applies when the repayment to an individual surpasses Rs.20,000. The Bench emphasized that the aggregate loan amount should be assessed personwise, not collectively from all individuals throughout the year.

7. Decision: In light of the legal provisions and the specific circumstances of the case, the Bench ruled in favor of the assessee, directing the deletion of both penalties imposed under Section 271D and 271E by the ld. CIT(A).

8. Outcome: Consequently, both appeals filed by the assessee were allowed, and the penalties were set aside.

This detailed analysis of the judgment provides a comprehensive overview of the issues involved, the arguments presented by the parties, the legal interpretation applied by the Bench, and the final decision rendered in favor of the assessee.