THE COMMISSIONER OF INCOME TAX V. SHRI K SRINIVASULU REDDY

ITA/320/2012

AI Insights

The case involves appeals by the revenue against the order of the Income Tax Appellate Tribunal, which had remanded the matter to the Assessing Officer. The original issue pertained to penalties levied under Section 271E of the Income Tax Act for non-compliance with Section 269T, which mandates that any repayment of loan or deposit exceeding Rs. 20,000 should be made through banking channels. The Tribunal found that the assessee was not given an opportunity to prove the absence of banking facilities, which was a reasonable cause for non-compliance. Consequently, the Tribunal set aside the order of the Commissioner of Income Tax (Appeals) and remanded the matter for further examination.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 701110 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 17-07-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: HIGH COURT
• Department Lawyers: C V MUDRA B ETTU
• Assessee Lawyers: G KAMALADHAR
• Keywords: Assessment year 2005-2006; Banking facilities; Cash payment; Income Tax; Penalty
• Section: 271E; 260-A; 269-T

Judgement Text

" 1 IN THE HIGH COURT OF KARNATAKA AT BANGALORE DATED THIS THE 17TH DAY OF JULY, 2013 PRESENT THE HON’BLE MR. JUSTICE D. V. SHYLENDRA KUMAR AND THE HON’BLE MRS. JUSTICE B.S. INDRAKALA Income Tax Appeal Nos.320-321/2012 BETWEEN: 1. The Commissioner of Income-Tax, C.R. Building, Queens Road, Bangalore. 2. The Joint Commissioner of Income-Tax, Range-3, C.R. Building, Queens Road, Bangalore. 3. The Income Tax Officer, Ward 3(1), Bangalore. …APPELLANTS (By Sri. G. Kamaladhar, Standing Counsel) AND: Shri. K. Srinivasulu Reddy, K.V. Enterprises, 1542/41, ‘Sri Srinivasa Nilaya’, South End ‘B’ Cross, 9th Block Jayanagar, Near East End Circle, Bangalore-560 069. …RESPONDENT (By Sri. C.V. Mudrabettu, Advocate) 2 These ITAs are filed under Section 260-A of the Income Tax Act, 1961 praying to set aside the order dated 02.05.2012 passed in I.T.A. Nos.1132/Bang/2010 and 571/Bang/2012 by the Income Tax Appellate Tribunal, Bangalore and confirm the order of the Appellate Commissioner confirming the order passed by the Joint Commissioner Income Tax, Range-3, Bangalore for the assessment year 2005-2006. These ITAs coming on for Admission this day, Shylendra Kumar. J., delivered the following: JUDGEMENT These appeals by the revenue under Section 260-A of the Income Tax Act, 1961 (for short ‘the Act’) are directed against the order dated 2nd May 2012 passed by the Income Tax Appellate Tribunal, ‘A’ Bench, Bangalore in ITA No. 1132/Bang/2010 relating to the assessment year 2005-06 of the assessee. 2. During the assessment year under question, the assessee had made certain payments to the creditors which were beyond a sum of Rs.20,000/- and which were not in cheque form but in cash. The Assessing Officer 3 applying the provisions of Section 269-T of the Act levied penalty of Rs. 4,64,540/- under Section 271E of the Act claiming it as expenditure in question and repayment of loan was not in cheque form but in cash. 3. The assessment was concluded on such premise resulting in penalty under Section 269T. The assessee appealed to the Commissioner of Income Tax (Appeals), Bangalore and got substantial relief to sustain the penalty of Rs.1,80,000/- and allowed the relief to the extent of Rs.2,84,540/-. The revenue appealed against this order to the Tribunal questioning the granting of relief to the extent of Rs.2,84,540/- and so also the assessee questioning the sustainance of penalty of Rs.1,80,000/-. 4. The Tribunal in terms of the order dated 2nd May, 2012 passed in ITA No. 1132/Bang/2010 found that the assessee should have been given some opportunity to prove that there was reasonable cause for non compliance with the statutory provisions of Section 269T of the Act and there being no finding about the availability or otherwise of the banking facilities in and around the place 4 where payment of loan had been made and the Assessing Officer also not having discussed about the same, thought it proper to set aside the order of the CIT (Appeals) and has remanded the matter to the Assessing Authority to record a finding and then to pass appropriate orders and in that sense both the appeals were allowed for statistical purposes. It is aggrieved by this order, the revenue is in appeals before this Court purporting to raise the following substantial question of law: “Whether the Tribunal was correct in setting aside the order under Section 271E by admitting a ground which was never pleaded before the authority who levied the penalty that there were no banking facilities available to the creditors to whom the repayments were made when the loan outstanding was in excess of Rs.20,000/-?” 5. Notice had been issued to the respondent who is represented by Sri C.V. Mudrabettu, Advocate. We have heard Sri G. Kamaladhar, learned Standing Counsel for 5 the appellants and Sri C.V. Mudrabettu, learned Counsel for the respondent/assessee. 6. We notice that the impugned order is only an order of remand to the Assessing Officer to record a finding about the availability of the banking facilities in the place where the payments had been made and to record a finding, if the matter is still covered under Section 269T of the Act and to pass orders. 7. In a matter of this nature, even assuming some question of law is sought to be raised and the matter having been remanded, we do not propose to interfere to examine such questions even before the Assessing Authority records a finding on the circumstances about the availability of the banking facilities and other explanation offered by the assessee in making the payment by cash instead of payment by way of cheque and it is open to the Assessing Authority to examine all aspects and to pass appropriate orders afresh as the entire matter is remanded 6 to the Assessing Officer and therefore, we do not propose to admit these appeals for further examination. Appeals dismissed. Sd/- Judge Sd/- Judge Nsu/- "