Devinder Gupta & Sons (HUF), New Delhi V. JCIT Range-30, New Delhi

ITA 5394/DEL/2019

AI Insights

The case involves Devinder Gupta & Sons (HUF), who appealed against a penalty of Rs.3,40,000 imposed by the Assessing Officer for repaying a part of a loan in cash, which was deemed a violation of Section 269T of the Income Tax Act. The penalty was initially upheld by the CIT(A). The assessee argued that the cash repayment was necessary to assist a sister concern, DNB Properties Pvt. Ltd., in meeting urgent business commitments. The ITAT, referencing decisions from the Gauhati and Delhi High Courts, found that the penalty was imposed without sufficient consideration of the circumstances and the genuine nature of the transaction, leading to the cancellation of the penalty.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 121538 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 7 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 23-11-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 13-06-2019
• Other Referred Cases: CIT vs. Bhagwati Prasad Bajoria HUF, Assistant Director of Inspection (Investigation) v. Kum. A.B. Shanthi, Director of Income Tax vs. All India Deaf and Dumb Society
• Laws Referred To: Section 271E of the Income Tax Act, Section 269T of the Income Tax Act, Section 143(3) of the Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 143(3); 271D; 271E

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.A. No.5394/DEL/2019 Assessment Year 2013-14 Devinder Gupta & Sons (HUF), E-567, Greater Kailash-II, New Delhi. Vs. CIT, Range-30, New Delhi. TAN/PAN: AADHD7296J (Appellant) (Respondent) Appellant by: Ms. Mansi Jain, Adv. Respondent by: Shri Kumar Pranav, Sr.DR Date of hearing: 24 11 2022 Date of pronouncement: 17 01 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Assessee seeking to challenge the penalty i mposed a mo unting to Rs.3,40,000/- by the Assessing Off icer under Section 271E of the Act and sustained by the CI T(A)-X, Ne w De lhi for the Assess ment Year 2013-14. 2. Briefl y stated, the assessee has mad e a repayment of a part of loan during the year under consideration amo unting to Rs.3,40,000/- in cash to one of its sister concern namel y, M/s. DNB Properties Pvt. Ltd. (DNB) . The assess ment was fra med under Section 143(3) of the Act. In the course of the assessment proceedings, the assessee furnished confirmation of the lender as required by the Assessing Officer. The Assessing Officer however noted that the act of repayment of loan in cash is in I.T.A. No.5394/Del/2019 2 violation of provision of Section 269T of the Act. Consequently, the penalty procee dings were initiated and penalty wa s i mposed under Section 271E of the Act of the equal amount vide order dated 17.08.2017 by the Joint Co mmissioner of Income Tax . 3. Aggrieved, the assessee preferred appeal before the CIT( A). The CI T(A) took note of the sub missions made on behalf of the assessee but however confirmed the penalty for alleged contravention of Section 269T of the Act. 4. Further aggrieved, the assessee preferred appeal before the ITAT. 5. We have heard the parties in length and considered the submissions advanced by both the sides. It is the case of the assessee that lender DNB has not conducted any business activities since last few years and was in dire need of funds to meet ce rtain urgent business commit ment to avoid litigation. The lender is a s ister concern man aged and controlled b y the Karta of the assessee. Thus, the assessee responded to the request of the lender and deposited cash to the tune of Rs.3,40,000/- in the bank account of the lender comp any which was, in turn, used to repay the advance taken by the lender fro m one Shri Sushanto Mukherjee. The se facts are verifiable from the account of the lender. It was f urther submitted that the net payable a mount declared to have been received from lender has been found genuine and accepted in the course of the assessment proceedings by the Assessing Officer. Several decisions were relied upon to seek relief fro m the clutches of penalty i mposed under Section 271E of the Act in the circu mstances. I.T.A. No.5394/Del/2019 3 6. In the factual backdrop, we take note of the judgments rendered by the Hon’ble Gauhati High Court in the case of CIT vs. Bhagwati Prasad Bajoria HUF, (2003) 183 CTR 484 (Gauhati) wherein the Hon’ble Court took note of the object of introducing of Section 269SS as explained by the Hon’ble Supre me Court in Assistant Director of Inspection (Investigation) v. Kum. A.B. Shanthi, (2002) 255 ITR 258 (SC) and held that the legislature has given discretion to the authority in the matter of le vy of penalt y under Section 271D of the Act. The Hon’ble Court held that where a reasonable cause exists for transactions covered under Section 269SS, the penalty shall not be i mposed mere ly because it is lawful to do so. Dra wing parallel, sa me p roposition would apply in the matter of provisions of Section 271E of the Act which is enacted on the si milar footings. 7. Si milar proposition was echoed towards existence of reasonable cause by the Hon ’ble De lhi High Court in Director of Income Tax vs. All India Deaf and Dumb Society (2006) 198 CTR 376 (Del). In the backdrop of legal position, the facts and circu mstances requires to be looked at in cu mulative manner to ascertain the existence of mala fide if an y. 8. It is an admitted position that the assessee had taken loan fro m the lender in the earlier year s, a part of whic h has been repaid during the yea r albeit in cash. The a mount of loan has been consequently reduced. A confir mation whereof fro m the lender has been filed. The assessment was carried out under Section 143(3) and no question on bona fides of the transaction was raised but however the penalt y was i mposed me chanically. I.T.A. No.5394/Del/2019 4 9. Having regard to the series of judicial precedents and the totality of the facts and circu mstances noted above, we take a benign view in the matter and cancel the penalty i mp osed under Section 271E of the Act. The orde r of the CIT(A) i s thus set aside and the penalty i mposed is thus reversed and cancelled. 10. In the result, the a ppeal of the assessee is allowed. Order pronounced in the open Court on 17/01/2023. Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /01/2023 Prabhat