2024 (12) TMI 1174 - AT - Income Tax

Penalty u/s 271DA - violation of provisions of section 269ST - CIT (A) deleting the penalty levied by AO on the invoice value - HELD THAT - As noticed from the data submitted before the AO that the date wise bills aggregated by the AO were raised at different point of time. It is further noticed that different sales bills were executed by different sales executives. AO has not stated as to how the bills were in respect of sales to one person only and also that it was against the provisions of section 269ST of the Act. Apparently, the standalone amount of these bills is less than Rs. 2 lacs. It is also noticed that AO has not brought on record any name/identity of the persons whom he is alleging to be accommodated by the appellant by raising split bills. Accordingly, it was not justified on his part to presume that there was splitting of cash bills against the appellant with respect to cash sales mentioned. We agree with the contention of the appellant that it is regular phenomena for a brand like appellant company to have such small value cash sales during any particular day. The provision of section 269ST nowhere permits to aggregate/club different cash sales Invoices in a day and treat the same as violation of the provisions of the Act if the aggregate is Rs. 2 lakhs or more. The violation of the section 269ST by receiving cash from a person of Rs. 2 lakhs or more in a day with respect of single or multiple transactions is essentially connected with the payer, it has to be conclusively proved that the amount is received from a single person in a single day. In the present case, it is mere the presumption of the AO that the aggregate amount of cash sales in a day might have been received from one person. There is no basis or supporting evidence to justify the presumption. We do not see any reason to disturb the findings of CIT(A) and accordingly, the order of the CIT (A) is upheld and the ground raised by the Revenue is dismissed.

Summary

Issues Involved:
- Appeal filed by Revenue against deletion of penalty under section 269ST of the Income-tax Act, 1961 for Assessment Year 2018-19.
- Appeal filed by Revenue against order of Commissioner of Income-tax (Appeals) for Assessment Year 2019-20 based on revised monetary limit for filing departmental appeals.

Analysis:

Issue 1: Appeal against Deletion of Penalty for Violation of Section 269ST (Assessment Year 2018-19)

The primary issue in this appeal was the deletion of a penalty of Rs. 1,43,56,339 imposed on the assessee for violating the provisions of section 269ST of the Income-tax Act, 1961. The case stemmed from search and seizure operations revealing cash receipts exceeding Rs. 2,00,000 from a single person, allegedly in violation of section 269ST. The Assessing Officer invoked penalty proceedings under section 271DA, leading to the deletion of a portion of the penalty by the Commissioner of Income-tax (Appeals) (CIT(A)).

The CIT(A) deleted the penalty based on the submission and evidence presented by the assessee during the appellate proceedings. The assessee argued that the invoices were below Rs. 2 lakhs, issued across various stores and times, by different salespersons. The CIT(A) found that the Assessing Officer's presumption of splitting bills to evade section 269ST was incorrect. The CIT(A) highlighted that the law does not permit aggregating different cash sales bills in a day to allege a violation of section 269ST. The CIT(A) emphasized the need for conclusive proof that cash exceeding Rs. 2 lakhs was received from a single person in a single day, which was lacking in this case.

The Income Tax Appellate Tribunal (ITAT) upheld the CIT(A)'s decision, noting that the CIT(A) had thoroughly analyzed the facts and evidence before deleting the penalty. The ITAT found no reason to disturb the CIT(A)'s findings, ultimately dismissing the Revenue's appeal.

Issue 2: Appeal Based on Revised Monetary Limit for Filing Departmental Appeals (Assessment Year 2019-20)

In the second appeal, the Revenue challenged the CIT(A)'s order for Assessment Year 2019-20. However, during the hearing, the assessee's counsel pointed out that the tax effect in the Revenue's appeal was below Rs. 60 lakhs, in line with the CBDT's Circular No.09/2024 dated 17.09.2024, which revised the monetary limit for filing departmental appeals to Rs. 60 lakhs. The Revenue's appeal was thus deemed not maintainable based on the revised limit.

The ITAT dismissed the Revenue's appeal for Assessment Year 2019-20, aligning with the CBDT's circular and the reduced monetary threshold for departmental appeals. Consequently, both appeals filed by the Revenue were dismissed.

In conclusion, the ITAT upheld the CIT(A)'s decision to delete the penalty in the first appeal and dismissed the Revenue's appeal for the second assessment year based on the revised monetary limit for filing departmental appeals.