The Bangalore bench of Income Tax Appellate Tribunal (ITAT) while deleting the penalty under section 271D of Income Tax Act 1961 held that reasonable cause under section 269SS of Income Tax Act 1961 should be related to meet exigency of business.
269SS of Income Tax Act 1961 provides that no person should be accepted or received any loan amount or loan or money other than by any account payee bank draft or through any electronic clearing system via bank ,If the specified amount is more than Rupees 20,000/-.
section 271D of Income Tax Act 1961 states that if any one accepts or receives any amount or loan by contravention of the section 269SS of Income Tax Act 1961 shall be liable to pay a penalty and sum equal to the loan amount or deposit accepted.
Assessee Padmanabha Mangalore Chowta an individual whose assessment has been completed for the assessment year 2017-18 on 31.10.2019. There was an audit objection raised by ITO that the assessee has sold an immovable property for a consideration of Rupees.19.2 lakhs and received sale consideration of Rupees.15.70 lakhs in cash. The acceptance of cash was in violation of section 269SS read with section 271D of the Income Tax Act 1961.The assessing officer levied penalty and accordingly passed order. Aggrieved assessee filed an appeal before the Commissioner of Income Tax Appeal CIT(A) .But the CIT(A) confirmed the levy of penalty under section 271D of the Income Tax Act 1961. Against this assessee filed an appeal before ITAT.
Counsel for the assessee V. Srinivasan, A.R submitted that , assessee in this case has no intention to evade the tax and it has truly disclosed all the details for the purpose of assessment and there was no loss to the Government exchequer.
Further Penalty like 271D of the Income Tax Act 1961 Act would not be imposed unless the party concerned has acted deliberately in defiance of law or was guilty of contumacious or dishonest conduct or acted in conscious disregard of its obligation and penalty will not be imposed merely because it is lawful to do so.
Gudimella VP Pavan Kumar, counsel for the revenue corroborate the contentions o f lower authorities.
The tribunal consisting the members of Chandra Poojari, (Accountant Member) and Beena Pillai, (Judicial Member) allowed the appeal filed by the assessee and observed that “provisions of section 269SS of the Income Tax Act 1961 Act could not be applied as the assessee’s transaction is genuine and also constituted with “reasonable cause” and in such case, default on the part of assessee is merely a technical and venial nature and no penalty under section 271D of the Income Tax Act, 1961 could be levied”.
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