SANJEEVKUMAR JAYANTILAL SHAH,IDAR V. THE JT.CIT., HIMATNAGAR RANGE, HIMATNAGAR

ITA 1073/AHD/2023

AI Insights

The case involves Sanjeevkumar Jayantilal Shah, the appellant, who contested a penalty levied by the Assessing Officer under Section 271E for repaying a loan in cash, contrary to the provisions of Section 269T of the Income Tax Act, 1961. The penalty of INR 22,90,148 was challenged on the grounds that there was a reasonable cause for the cash transactions, as these were demanded by the NBFCs due to defaults. The CIT(A) upheld the penalty, leading to the appeal before the Income Tax Appellate Tribunal. The Tribunal, after considering the submissions and the unique circumstances of the case, decided in favor of the appellant, highlighting the absence of malafide intentions and the common practice of cash transactions by the involved NBFCs.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 34047 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-01-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NITIN VISHNU KULKARNI
• Keywords: Reasonable cause
• Section: 143(3); 274; 273B; 271E

Judgement Text

"ITA No.1073/Ahd/2023 Assessment Year: 2014-15 Sanjeevkumar Jayantilal Shaha vs. JCIT Page 1 of 3 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “SMC” BENCH, AHMEDABAD BEFORE Ms. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI MAKARAND VASANT MAHADEOKAR, ACCOUNTANT MEMBER ITA No.1073/Ahd/2023 Assessment Year: 2014-15 Sanjeevkumar Jayantilal Shah, A-8, Asha Shopping Centre, Srinagar, Idar – 383 430. Gujarat. [PAN – AEJPS 5688 F] Vs. The Joint Commissioner of Income Tax, Range Himatnagar. (Appellant) (Respondent) Assessee by None Revenue by Shri Nitin Vishnu Kulkarni, Sr. DR Date of Hearing 09.12.2024 Date of Pronouncement 01.01.2025 O R D E R This appeal is filed by the assessee against order dated 20.10.2023 passed by the CIT(A), National Faceless Appeal Centre (NFAC), Delhi for the Assessment Year 2014-15. 2. The assessee has raised the following grounds of appeal :- “1. Assessing Officer erred in levying penalty under section 271E for repayment of INR 22,90,148/- since there was reasonable cause for making such payment. During the year, INR 47,36,724/- (59,81,866- 12,45,142(Table B) have been paid through ECS/Cheques. Appellant never had malafide intentions to hide. 2. Order under Section 271E may be dropped since Assessing Officer failed to assess the amount of repayment of loan. Out of total payment of INR 59,81,866/-, total principal amount paid in cash is 12,45,142/-. While as per the order penalty levied for INR 22,90,148/-. Assessing Officer had not bifurcated amount of interest and principal on payment of EMI.” 3. The assessee filed return of income for the assessment year 2014-15 on 31.10.2015 declaring total loss of Rs.24,84,405/-. The Assessing Officer passed the ITA No.1073/Ahd/2023 Assessment Year: 2014-15 Sanjeevkumar Jayantilal Shaha vs. JCIT Page 2 of 3 Assessment Order under Section 143(3) of the Income Tax Act, 1961 on 21.12.2016 thereby assessing total loss at Rs.15,61,641/-. The Assessing Officer observed that the assessee repaid the loan of Rs.22,90,148/- otherwise than by an account payee cheque/account payee bank draft/electronic clearing system through bank account in contravention to the provisions of Section 269T of the Act. The assessee repaid the loan in cash as stated by the Assessing Officer and, therefore, penalty proceedings under Section 271E of the Act were initiated by issuing notice under Section 274 read with Section 271E of the Act dated 24.05.2019. The assessee filed adjournment application but has not filed any explanation to the notice. Therefore, the Assessing Officer levied penalty of Rs.22,90,148/- under Section 271E of the Act for repayment of loan otherwise than by account payee cheque/account payee bank draft/electronic clearing system through bank account in contravention to the provisions of Section 269T of the Act. 4. Being aggrieved by the Assessment Order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee. 5. At the time of hearing, none appeared on behalf of the assessee despite giving several notices and the last notice was received by the assessee on 15th September, 2024. Therefore, we are proceeding on the basis of submissions made by the assessee before the CIT(A) which is quoted in paragraph no.4 of the order of the CIT(A). 6. The Ld. DR submitted that the CIT(A) has rightly imposed the penalty as the claim made by the assessee for making substantial repayment in cash on difference occasions does not constitute reasonable cause under Section 273B of the Act. 7. We have heard the Ld. DR and perused all the relevant material available on record. It is pertinent to note that the assessee has taken loan from NBFC that of Bajaj Finserve Lending and Capital First Limited as well as Future Capital Holdings Limited, Magma Fincorp Limited, Religare, Tata Capital Finance Service which are all NBFCs and this NBFCs when there is a default on the part of any party who is lending the loan demands the cash component of the repayment of EMI which is a practice. Merely ITA No.1073/Ahd/2023 Assessment Year: 2014-15 Sanjeevkumar Jayantilal Shaha vs. JCIT Page 3 of 3 stating that the claim of the assessee for making substantial repayment in cash does not constitute reasonable cause under Section 273B of the Act is not justified on the part of the CIT(A) as the assessee has demonstrated before the Assessing Officer as well as before the CIT(A) as to why the repayment was made in cash. Besides this, the penalty imposed under Section 271E of the Act is that of entire addition. Thus, looking into the present assessee’s situation, the penalty is deleted. Due to the peculiar circumstances in the present assessee’s case, we have taken this decision and the same should not be taken as precedent in any other matter. 8. In the result, appeal filed by the assessee is allowed. Order pronounced in the open Court on this 1st January, 2025. Sd/- Sd/- (MAKARAND VASANT MAHADEOKAR) (SUCHITRA KAMBLE) Accountant Member Judicial Member Ahmedabad, the 1st January, 2025 PBN/* Copies to: (1) The appellant (2) The respondent (3) CIT (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPYE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad "