Dipak Kondiba Jadhav, Satara V. Assistant Commissioner of Income Tax, Ward-2, Satara, Satara

ITA 563/PUN/2022

AI Insights

The case involves Dipak Kondiba Jadhav, who appealed against a penalty imposed by the National Faceless Assessment Centre (NFAC) for repaying a vehicle loan in cash, which violated section 269T of the Income-tax Act, 1961. The penalty was initially confirmed by the CIT(A) but was contested in the ITAT. The appellant argued that the penalty was unwarranted as the cash repayment was due to unavoidable circumstances, including financial crises and limited banking facilities in his remote village. The ITAT, after considering the facts and circumstances, ruled in favor of the appellant, emphasizing that the penalty was not justified as the contravention was technical and did not affect revenue.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136317 (ITAT-PUNE)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 26-12-2022
• Assessment Year: 2013-2014
• Appeal Filed On: 19-07-2022
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: SERVICE OF NOTICE DT
• Keywords: Reasonable cause
• Section: 273B; 271E; 250; 274

Judgement Text

॥ आयकर अपीलीय न्यायाधिकरण, पुणे “सी” न्यायपीठ, पुणे में ॥ ITAT-Pune Page 1 of 5 IN THE INCOME TAX APPELLATE TRIBUNAL, PUNE “C” BENCH, PUNE BEFORE HON’BLE SHRI S. S. GODARA, JUDICIAL MEMBER AND SHRI G. D. PADMAHSHALI, ACCOUNTANT MEMBER आयकर अपऩल सं. / ITA No.563/PUN/2022 ननधधारण वषा / Assessment Year : 2016-17 Dipak Kondiba Jadhav, A/P Tapola, Tal- Mahabaleshwar, Satara. PAN : AQHPJ2370F . . . . . . . अपऩलधथी / Appellant बनधम / V/s. National Faceless Assessment Centre Delhi. . . . . . . . प्रत्यथी / Respondent द्वारा / Appearances Assessee by : None Revenue by : Shri Suhas Kulkarni सपनवधई की तधरऩख / Date of conclusive Hearing : 27/12/2022 घोषणध की तधरऩख / Date of Pronouncement : 20/01/2023 आदेश / ORDER PER G.D. PADMAHSHALI, AM; The present appeal of the assessee for the assessment year [for short “AY”] 2013-14 is assailed against the first appellate order of National Faceless Appeal Centre, Delhi [for short “CIT(A) /NFAC”] dt. 14/06/2022 passed u/s 250 of the Income-tax Act, 1961 [for short “the Act”] which emanated out of penalty order [for short “PO”] of National Faceless Assessment Centre, Delhi u/s 271E of the Act dt.15/02/2022 [for short “AO”]. Dipak Kondiba Jadhav, ITA No.563/PUN/2022 AY: 2013-14 ITAT-Pune Page 2 of 5 2. Facts of the case borne out of case records are; 2.1 Assessee in the calendar year 2011 had availed a vehicle loan from M/s Mahindra & Mahindra Finance Services Pvt. Ltd. a non-banking financial company [in short “NBFC”] and instalments due thereon till November, 2012 were paid. However, due to personal financial crises the assessee could not honour further instalments and bounced all the subsequent cheques issued to NBFC. When NBFC pressurized for repayment otherwise than cheque, the assessee had no option but to dispose of the vehicle on immediate basis for cash and paid off entire dues in cash. 2.2 On the receipt information of cash repayment shared through investigation report by DIT(Investigation & Criminal Investigation), the range head initiated the penal action against the assessee by service of notice dt 03/09/2021 u/s 271E r.w.s. 274 of the Act. When such notices remained unresponded with reasonable cause behind such cash repayment, the proceedings were culminated imposing penalty equivalent to amount of loan repaid in cash i.e. ₹2,29,610/-. Dipak Kondiba Jadhav, ITA No.563/PUN/2022 AY: 2013-14 ITAT-Pune Page 3 of 5 2.3 Aggrieved by the order of penalty, the assessee carried the matter before first appellate authority, however of no success, the appellant brought up the appeal before the Tribunal alleging the imposition on penalty in his case unwarranted on the following grounds; “1. The learned CIT(A) erred in confirming the penalty u/s 271E of the IT Act. The same is deleted. 2. The learned CIT(A) erred in law and on facts in confirming penalty without appreciating the reasonable cause of the appellant. 3. Your appellant craves leave to add, modify or delete any of the above grounds of appeal”. 3. In the absence of appellant, we proceeded u/r 24 of the Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”], to adjudicate the matters ex-parte and heard the Ld. DR Mr Suhas Kulkarni at length and subject to the provisions of rule 18 of Income Tax Appellate Tribunal Rules, 1963 [for short “ITAT, Rules”] perused the material placed on records till the date of conclusive hearing and duly considered the facts of the case in the light of settled legal position and are forewarned to the parties present. Dipak Kondiba Jadhav, ITA No.563/PUN/2022 AY: 2013-14 ITAT-Pune Page 4 of 5 4. It shall suffice to state that, section 271E empowers the imposition of penalty for violating the provisions of section 269T of the Act, which in turn restricts the repayment of loan or deposit by any mode other than account payee banking instruments and such other electronic mode prescribed u/s 6ABBA of Income Tax Rules, 1962. Whereas, section 273B comes to rescue in cases where contravention of provisions of section 269T is satisfactorily supported with reasonable cause. 5. Undisputedly, the appellant is a small shopkeeper in a remote village area with less banking facilities available at given point of time, was constrained to dispose-off funded vehicle for cash and repay the defaulted vehicle loan availed from NBFC. We note that, the said contravention of section of 269T beyond appellants control was occasioned for threefold reasons such as; default in repayment of regular instalments on account of financial crises of FY 2011-12, pressure for recovery in a mode otherwise than cheque and disadvantaged situation as regards to price and availability of customers for immediate or urgent sell. Dipak Kondiba Jadhav, ITA No.563/PUN/2022 AY: 2013-14 ITAT-Pune Page 5 of 5 6. We also note that, although the aforestated situation do no fall within the exceptional circumstance envisaged by second proviso to section 269T of the Act, however we are of the considered view that, the circumstances which triggered the contravention closely forms reasonable cause for the purpose of section 273B of the Act and such default being merely technical and venial in nature which had not resulted in loss to the revenue, therefore penalty was not warranted. Consequently we set-aside the order of Ld. NFAC and quash the order of penalty passed u/s 271E of the Act. 7. Resultantly, the appeal of the appellant assessee is ALLOWED in terms of aforestated observation. In terms of rule 34 of ITAT Rules, 1963 the order is pronounced in the open court on this Friday 20th day of January, 2023. -S/d- -S/d- S. S. GODARA G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे / PUNE ; दिन ांक / Dated : 20 th day of January, 2023. आदेश की प्रधिधलधप अग्रेधिि / Copy of the Order forwarded to : 1. अपऩलधथी / The Appellant. 2.प्रत्यथी / The Respondent. 3. The NFAC, Delhi (India) 4. The CPC Bengaluru (Ka-India) 5. DR, ITAT, “C” Bench, Pune. 6. गधर्ाफ़धइल / Guard File. आदेशधनपसधर / By Order वररष्ठ ननजऩ सनिव / Sr. Private Secretary आयकर अपऩलऩय न्यधयधनधकरण, पपणे / ITAT, Pune.