Income Tax Penalty on alleged Cash Loan based on Loose Papers: ITAT quashes Order against Deceased Assessee since Authenticity of Transaction can’t be Vouched [Read Order]

The Delhi bench of the ITAT has quashed a penalty order whereby the income tax authorities imposed a penalty under section 271D of the Income Tax Act, 1961 as the order was based on loose papers and since the assessee is deceased, it is impossible to verify the authenticity of the transactions.

The counsel for the assessee submitted that the assessee is since deceased, and therefore, in the absence of any signature from the assessee and in the absence of any particular of the person from whom the money was allegedly received etc., the document i.e., loose paper cannot be conceived more than a flippant or dumb document and thus cannot be relied upon for the purposes and thus urged for cancellation of penalty under Section 271D of the Act.

The Tribunal bench consists of Shri Kul Bharat, Judicial Member & Shri Pradip Kumar Kedia, Accountant Member observed that the loose paper no.98 also does not spell out as to with whom the alleged cash transactions as entered into the loose paper has been carried out, i.e., the corresponding party to the transaction is not known.

“The assessee is since deceased and thus the authenticity of the transaction cannot vouched. Under these mitigating circumstances, we find that plausible cause exists to question the propriety of allegations. The assessee thus deserves to be exonerated from the clutches of Section 269T r.w. Section 271E of the Act,” the Tribunal said.

“While recording the reasons for reopening of the assessment, it is noticed that, as per paragraph 7 of the assessment order under Section 143(3) r.w. Section 147 of the Act, the Assessing Officer himself has held that no addition is required to be made on the basis of document no.98 concerning Rs.7.50 lakhs as the loan was received by the assessee on 12.09.2009, i.e., in the Financial Year 2009-10. Thus, the imposition of penalty on alleged cash loan of Rs.7,50,000/- arising out of loose paper no.98 does not arise in Assessment Year 2011- 12 in question,” the Tribunal said.

To Read the full text of the Order CLICK HERE

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