9911796707
TMI Blog2008 (2) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... court was delivered by D. A.MEHTA- 1. The Income Tax Appellate Tribunal, Ahmedabad Bench 'C' has referred the following question for the opinion of this Court u/s. 256(1) of the Income Tax Act, 1961 (the Act) at the instance of the Commissioner of Income Tax. "Whether, the Appellate Tribunal is right in law and on the facts in cancelling penalty of Rs. 23 lacs levied u/s.271-D of the Act for violation of the provisions of section 269SS when the assessee transferred the purchase price as Sarafi?" 2. The Assessment Year is 1991. The assessee, a limited company, is a subsidiary of another limited company M/s. Lallubhai Amichand and Company Limited (the creditor company). The assessee purchased goods from time to time from the credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice and considering the written explanation tendered by the assessee and after hearing the assessee the Dy. C.I.T. came to the conclusion that the conversion of the outstanding balance from goods purchase Account to Sarafi Account by transfer entries was a deposit in violation of provisions of Section 269SS of the Act. Accordingly penalty of Rs.23 lacs was levied u/s. 271D of the Act by treating the amount as loan or deposit taken or accepted. The assessee carried the matter in Appeal before the Commissioner (Appeals) who vide order dated 15.02.1994 confirmed the levy of penalty. The assessee carried the matter in Second Appeal before the Tribunal who has allowed the Appeal vide impugned order dated 30.11.1995. 5. Mr. B. B.Naik, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the respondent-assessee apart from heavily relying on the impugned order of Tribunal pointed out that the order of the Tribunal was passed after taking into consideration the object of bringing provisions of section 299SS on the statute as well as after considering existence of reasonable cause as provided in section 273B of the Act. It was further submitted that the Tribunal had found that even if there was any breach the same was only a venial or technical breach which does not warrant penalty as laid down by the Apex Court. That there was difference between the terms 'loan' and 'deposit'. The authorities below had treated both the terms as synonymous and therefore also no penalty was leviable in absence of any firm conclusion as to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty shall be imposable on a person or an assessee, as the case may be, for any failure referred to in the said provision if the assessee proves that there was reasonable cause for such failure. In other words penalty is not automatic u/s. 271D of the Act on mere violation of provisions of section 269SS of the Act. 9. The Tribunal has found that there is no evidence on record to show that infraction of the provisions was with knowledge or in defiance of the provisions. It has further been held that there is nothing on record to indicate that the assessee had indulged in any tax planning or tax evasion. To the contrary, the Tribunal has recorded that by making the book entries the assessee has made the adjustment bonafide without havin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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