The Delhi bench of the Income Tax Appellate Tribunal (ITAT) held that no penalty can be imposed under Section 271D of the Income Tax Act, 1961 without any evident reason.
The Commissioner of Income Tax has erred in deleting the penalty under Section 271D of the Income Tax Act relying on the order of the ITAT wherein it was held that the payment of Rs.2,38,00,000/- made by M/s Spaze Towers Put. Ltd. to the assessee was not a loan transaction made in contravention of the provisions of section 269SS of the Income Tax Act.
Further, submitted that the Commissioner of Income Tax (Appeal) [CIT(A)] has erred in deleting the penalty under Section 271D of the Income Tax Act despite the fact that from the fund’s flow submitted by Ms. Spaze Tower Put. Ltd. before the Settlement Commission.
It was evident that Ms. Spaze Tower Put. Ltd. had discharged the liabilities of the assessee by making payments in cash which is a violation of the provisions of section 269SS of the Income Tax Act.
The Commissioner of Income Tax (Departmental representative) pointed out that the Commissioner of Income Tax (Appeal) has erred in deleting the penalty relying on the order of the ITAT wherein it was held that the penalty under Section 271D of the Income Tax Act is without any satisfaction and therefore, no such penalty can be levied.
It was finally submitted that the first appellate authority has deleted the penalty without any justified reason therefore the same will be set aside by restoring that to the Assessing Officer.
The assessee’s authorized representative (AR), supporting the first appellate order, submitted that the penalty was imposed by ignoring the fund flow statement submitted before the income tax settlement commission.
The Commissioner of Income Tax (Appeal) considered the same on the right perspective by considering the order of ITAT Delhi Bench in the case of M/s. K S Chawla & Sons in ITA No. 5614/Del/2019 dated 28.08.2019 and therefore the same may kindly be upheld.
The two-bench member consisting of Chandra Mohan Garg (Judicial member) and Pradip Kumar Kedia (Accountant member) observed that the Commissioner of Income Tax (Appeal) has deleted the additions made by the assessing officer in the hands of the appellant in view of the order of ITSC in the case M/s. Spaze Towers Pvt. Ltd.
Therefore, it was concluded that the penalty imposed on the assessee and two other persons by JCIT Central Range Gurgaon after said assessment order is not sustainable.
There was no ambiguity perversity or any valid reason to interfere with the findings arrived by the Commissioner of Income Tax (Appeal), therefore, the grounds of revenue are dismissed.
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