The Bangalore of the Income Tax Appellate Tribunal ( ITAT ) deleted the penalty under section 271 D of the Income Tax Act, 1961 as it proved reasonable cause to treat the assessee as bonafide. The words ‘reasonable cause’ would mean a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bona fides, from doing the act of which he, called on to act reasonably, knows or ought to know.
Laxmilal Badolla, the assessee is an individual, had sold two properties for a consideration of Rs.8,39,000/- in cash. Consequent to the filing of his return, the assessee received a notice under section 271D. Though the assessee contended that there was a reasonable cause for accepting the sale consideration in cash, the AO levied a penalty of the equivalent amount of cash received by the assessee.
The ITAT deleted the penalty levied by AO under section 271D on the assessee for receiving excessive cash in contravention of the taxation statute, upon the sale of property. Section 271D of the Income Tax Act lays down the penalty to be imposed on a taxpayer for accepting or taking any loans, deposits, or other specified amounts in contravention of Section 269SS, as per which all loans or deposits of over Rs.20,000 must be taken through banking channels.
Section 273B of the Income Tax Act provides that no penalty shall be levied under section 271F of the Act if the taxpayer proves that there was reasonable cause for the said failure. The words ‘reasonable cause’ would mean a cause which prevents a reasonable man of ordinary prudence acting under normal circumstances, without negligence or inaction or want of bona fides, from doing the act of which he, called on to act reasonably, knows or ought to know.
The two-member Bench of Chandra Poojari (Accountant Member) and Prakash Chandra Yadav (Judicial Member) observed that “there was reasonable cause and explanation of the assessee would be treated as bonafide, hence in this case, no penalty is leviable as section 273B. Section 273B categorically excludes the operations of section 271D”. (Part 10)
The Bench found that the assessee filed his return on Aug 07, 2017. The Department after a month processed and issued a penalty notice after almost four years of the processing return. The Bench opined that the penalty was not initiated by the Revenue in a reasonable time as the Departmental Representative had failed to point out anything contrary to the facts of the case.
It was noted that the assessee has also filed confirmations from the buyers who confirmed that they could not be able to get the Demand Draft due to restricted banking hours.
The Bench also observed that other persons have also received cash in very similar transactions, but were spared by the department without any plausible reasons. Hence the ITAT deleted the penalty and allowed the assessee’s appeal.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
