Revenue Ignores Registry’s Defect Memo and Reminders sent by Registry: ITAT dismisses Revenue’s Appeal [Read Order]

The Income Tax Appellate Tribunal (ITAT), Lucknow, dismissed the Revenue’s appeal relating to penalty under Section 271D of the Income Tax Act, 1961, after noting that the Registry had issued a defect memo and repeated reminders which remained unaddressed. The Tribunal, however, granted liberty to the Revenue to seek restoration of the appeal once the defects are cured.

The issue was whether the cancellation of penalty of Rs. 3.10 crore under Section 271D, imposed for contravention of Section 269SS of the Income Tax Act, 1961, could be contested when the Revenue’s appeal itself remained defective.

The appellant in the matter was the Additional Commissioner of Income Tax, Range-3, Lucknow. The dispute arose from the imposition of penalty of Rs. 3,10,08,681 under Section 271D for violation of Section 269SS, which prohibits acceptance of loans, deposits, or specified sums in cash exceeding Rs. 20,000.

The Commissioner of Income Tax (Appeals) [CIT(A)] cancelled the penalty. Aggrieved by this the Revenue filed an appeal before the ITAT. However, the Registry pointed out that the appeal had not been filed in the prescribed form.

Despite reminders and directions, including a specific instruction on 16 May 2024 to file a revised Form 36, the Revenue failed to rectify the defects.

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Namita S. Pandey, CIT-DR appearing for the Revenue, contended that the CIT(A) erred in cancelling the penalty under Section 271D despite clear violation of Section 269SS of the Act. It was argued that the provisions clearly prohibit taking or accepting any loan or deposit in cash exceeding Rs. 20,000, and the assessee’s actions warranted penalty.

The respondent, Vijay Pandey, was represented by none before the Tribunal and remained unrepresented at the hearing.

The Bench comprising Kul Bharat Vice President and Anadee Nath Misshra Accountant Member noted that the appeal filed by the Revenue continued to suffer from defects despite several reminders and sufficient opportunities. Observing that the requirement of filing a revised Form 36 was not complied with, the Bench held that the defective appeal could not be entertained.

The Tribunal relied on the defect memo and subsequent reminders issued by the Registry, which conclusively established that the Revenue failed to comply with procedural requirements for filing the appeal.

It was also clarified that the Revenue would be at liberty to approach the Tribunal for restoration of the appeal after curing the defects in accordance with law.

Accordingly, the Tribunal dismissed the appeal for failure to remove defects.

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