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2024 (1) TMI 215 - HC - Income TaxStay of demand / waiver of pre-deposit - Penalty u/s 271E - Allegation of cash transactions - whereas there were adjustments by way of book entries - appeal has been filed by the petitioner along with an application for stay, however, the respondent/Appellate Authority directed the petitioner to pay 20% of the demand - HELD THAT - With regard to the grant of loan by the petitioner to M/s. Shakti Sugar Ltd. and repayment of the same made by M/s. Shakti Sugar Ltd. to the aforesaid three entitiled based on the instructions of the petitioner and as regards the discharge of liabilities, suitable enteries have been made both in the books of account of the petitioner as well as M/s. Shakti Sugar Ltd. and in a similar way, the same was reflected in the audited books of account. When such being the case, initiation of proceedings against the petitioner appears to have been made under an wrong assumption that there was cash transaction. However, all these aspects have not been dealt with by the Assessing Officer and the same can be gone into by the Appeallate Authority in an Appeal pending before him. Therefore, this Court, prima facie is of the view that the entire penalty proceedings passed under Section 271-E of the Act is liable to be set aside. Accordingly, this Court directs the Appeallate Authority concerned to to take the petitioner's Appeal on file without insisting upon any pre-deposit and consider the issues that were discussed by this Court in this order and thereafter, shall dispose the appeal in accordance with law, within a period of eight (8) weeks from the date of receipt of a copy of this order.
Issues involved: Challenge to order imposing penalty under Section 271-E of the Income Tax Act, 1961.
Summary: Issue 1: Challenge to the penalty imposed under Section 271-E of the Income Tax Act, 1961. The petitioner, an assessee company, advanced a sum of Rs. 14,00,00,000 to M/s. Shakti Sugar Ltd., which then repaid the sum to three entities as per the petitioner's instructions. The petitioner argued that there was no cash transaction involved, as reflected in the audited books of accounts. Despite this, the Assessing Officer imposed a penalty under Section 271-E. The petitioner filed an appeal along with a stay application, but the Appellate Authority directed a 20% payment. The High Court, after hearing both sides, found that the transactions were in accordance with the law, and the Assessing Officer's assumption of a cash transaction was incorrect. The Court directed the Appellate Authority to consider the appeal without any pre-deposit and dispose of it within eight weeks. Conclusion: The High Court set aside the penalty proceedings under Section 271-E and directed the Appellate Authority to consider the appeal without any pre-deposit and dispose of it within eight weeks.
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