C I T vs. WAHEGURU SINGH

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ITA/710/2008HC Punjab & HaryanaPHHC01080729200822 December 2008Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE L.N. MITTAL2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the finding recorded by the ITAT was a finding of fact. The Tribunal had observed that the assessee did not act deliberately in defiance of the law, nor was the conduct dishonest. The ITAT found that the transactions were genuine and necessitated by business exigency. Even if there was a breach of Section 269T (loans exceeding Rs. 20,000 not received/paid through cheques), it was considered a venial breach stemming from a bonafide belief. Consequently, the Tribunal concluded that the assessee was not liable for the penalties. The High Court agreed with the ITAT's assessment, finding no substantial question of law arising from the ITAT's order. Therefore, the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue, Commissioner of Income Tax-I, Chandigarh, has filed an appeal under Section 260A of the Income Tax Act, 1961, against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The ITAT's order, dated September 17, 2007, pertained to Assessment Year 2001-02. The appeal challenges the ITAT's decision to delete penalties imposed on the assessee, Shri Waheguru Singh, under Section 271E of the Act. The Assessing Officer had initiated penalty proceedings alleging repayment of cash loans in violation of Section 269T of the Act. The penalty was initially levied, upheld by the CIT(A), but subsequently set aside by the ITAT.

What were the issues?

1. Whether, on the facts and in the circumstances of the case and in law, the ITAT was justified in deleting the penalties imposed under Section 271E of the Income-tax Act, 1961, especially since the assessee had repaid loans in cash in violation of the provisions of Section 269T of the Act? (Question of law) Assessee's Contention: The judgment does not record any specific arguments made by the assessee before the High Court. However, the ITAT's reasoning, which was upheld by the High Court, suggests the assessee argued that the breach was venial, stemming from a bonafide belief, and that the transactions were genuine due to business exigency. The assessee contended that the conduct was not dishonest and there was no deliberate defiance of law or conscious disregard of obligations. Revenue's Contention: The Revenue argued that the assessee had repaid loans in cash in violation of Section 269T of the Act, which should warrant the imposition of penalties under Section 271E.

Which sections of the Income-tax Act were involved?

Section 260A,Section 271E,Section 269T

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH. Case No. : I. T. A. No. 710 of 2008 Date of Decision : December 22, 2008. Commissioner of Income Tax-I, CORAM : HON'BLE MR. JUSTICE ADARSH KUMAR GOEL HON'BLE MR. JUSTICE L. N. MITTAL * * * Present : Ms. Urvashi Dhugga, Standing Counsel for the Revenue. * * * ADARSH KUMAR GOEL, J. (Oral) :

1.

Revenue has preferred this appeal under Section 260A of the Income Tax Act, 1961 (for short, “the Act”) against the order of the Income Tax Appellate Tribunal, Chandigarh Bench `B', Chandigarh dated 17.09.2007 passed in I.T.A. No.238/Chandi/2006 for the Assessment Year 2001-02, proposing to raise following substantial question of law :- “Whether on the facts and in the circumstances of the case and in law, the Hon'ble ITAT was justified in deleting the penalties imposed under section 271E of the Income-tax Act, 1961, especially since the assessee had repaid loans in cash in violation of the provisions of sections 269T of the Act ?”

2.

The Assessing Officer initiated penalty proceedings under Section 271E on the allegation that the assessee had made repayment of cash loan in violation of Section 269T of the Act. The penalty was thereafter levied. The CIT (A) upheld the penalty, but the Tribunal set aside the same. The Tribunal observed as under :- “In the present case also the assessee did not act deliberately in defiance of law and his conduct was not dishonest, neither he acted in conscious disregard of its obligation, since the transactions were genuine and entered due to business exigency and even if there was any breach of the provisions of the Act i.e. the loan exceeding Rs.20,000/- were not received and paid through cheques, this breach was a venial breach and flows from a bonafide belief. Therefore, the assessee was not liable to the penalties.”

3.

We have heard leaned counsel for the Revenue.

4.

We are of the view that the finding recorded by the Tribunal is a finding of fact.

5.

No substantial question of law arises.

6.

The appeal is dismissed. (ADARSH KUMAR GOEL) JUDGE December 22, 2008

( L. N. MITTAL ) monika JUDGE

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