Case Number: ITA 5394/DEL/2019
Appellant: Devinder Gupta & Sons (HUF), New Delhi
Respondent: JCIT Range-30, New Delhi
Assessment Year: 2013-14
Result: 2013-14
Case Filed On: 2019-06-14
Order Type: Final Tribunal Order
Date of Order: 2023-01-17
Pronounced On: 2023-01-17
The Income Tax Appellate Tribunal, Delhi Bench “B”, New Delhi, heard the case ITA 5394/DEL/2019 filed by Devinder Gupta & Sons (HUF), New Delhi, against the JCIT Range-30, New Delhi. The primary issue was the penalty imposed under Section 271E of the Income Tax Act, 1961, for the assessment year 2013-14.
The appellant, Devinder Gupta & Sons (HUF), challenged the penalty of Rs. 3,40,000 imposed by the Assessing Officer under Section 271E of the Act, sustained by the CIT(A)-X, New Delhi. The penalty was imposed for the alleged contravention of Section 269T, which prohibits the repayment of loans or deposits in cash exceeding Rs. 20,000.
The appellant argued that the repayment of a part of the loan amounting to Rs. 3,40,000 in cash to its sister concern, M/s. DNB Properties Pvt. Ltd. (DNB), was made due to urgent business commitments. The lender, a sister concern managed by the Karta of the assessee, required funds to meet certain obligations and avoid litigation. The appellant contended that the repayment was genuine and confirmed by the lender, which was accepted during the assessment proceedings under Section 143(3) of the Act.
The Tribunal heard the arguments from both sides and considered the submissions. The appellant’s counsel argued that the lender had not conducted any business activities for several years and was in dire need of funds. The repayment was made in cash and deposited into the lender’s bank account, which was used to repay an advance taken by the lender from another party.
The Tribunal noted the judgment of the Hon’ble Gauhati High Court in CIT vs. Bhagwati Prasad Bajoria HUF (2003) 183 CTR 484 (Gauhati), where the court emphasized the discretion given to the authority in the matter of penalty imposition under Section 271D. The court held that where a reasonable cause exists, the penalty should not be imposed merely because it is lawful to do so. This principle applies equally to Section 271E, enacted on similar grounds.
Similarly, the Hon’ble Delhi High Court in Director of Income Tax vs. All India Deaf and Dumb Society (2006) 198 CTR 376 (Del) upheld the principle of reasonable cause for transactions under Section 269SS.
In this case, the Tribunal observed that the loan repayment was made under genuine circumstances, and the lender had confirmed the transaction. The assessment under Section 143(3) did not raise any questions about the bona fides of the transaction, but the penalty was imposed mechanically.
Considering the judicial precedents and the facts and circumstances, the Tribunal decided to cancel the penalty imposed under Section 271E. The order of the CIT(A) was set aside, and the penalty was reversed and cancelled.
The appeal of the assessee was allowed, and the penalty imposed under Section 271E was cancelled.
Order Pronounced in the Open Court on: 17/01/2023
Members Present:
Shri Chandra Mohan Garg, Judicial Member
Shri Pradip Kumar Kedia, Accountant Member
Dated: 17/01/2023
Assistants: Prabhat
Copy Forwarded to:
Assistant Registrar
ITAT New Delhi
Devinder Gupta & Sons (HUF) vs. JCIT Range-30, New Delhi: Penalty Under Section 271E for AY 2013-14
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