Income Tax Penalty u/s 271E cannot be levied in the absence of Regular Assessment: ITAT [Read Order]

The Ahmedabad bench of the Income Tax Appellate Tribunal (ITAT) has held that the income tax penalty under section 271E of the Income Tax Act, 1961 cannot be levied in the absence of a regular assessment against the assessee.

A division bench of the Tribunal was considering a second appeal filed by the assessee, Vijayaben G. Zalavadia, an agriculturist who took loan from one Berna Gamni Seva Sahakari Mandli Ltd., a cooperative society. The assessee is a member of the said cooperative society. However, out of the sales of the agricultural produce the assessee repaid those laons of Rs. 1,42,000/- during the assessment year under consideration in cash.

The AO was of the opinion that such action of the assessee is in contravention of the provision of Section 269T and consequently, penalty under Section 271E of the Act to the entire amount of Rs. 1,42,000/- was imposed against the assessee.

The division bench comprising Shri Waseem Ahmed, Accountant Member & Ms. Madhumita Roy, Judicial Member relied on the decision in the order passed by the Punjab and Haryana High Court and held that the impugned penalty under Section 271E is not permissible in the absence of regular assessment framed against the assessee by the Revenue.

‘Hence, the same is not found to be sustainable in the eye of law and, thus, quashed. The appeal preferred by the assessee is, therefore, allowed,” the Tribunal said.

Shri Mahesh Chhajed appeared for the assessee.

To Read the full text of the Order CLICK HERE

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