MAHESHKUMAR LALJIDAS PATEL,VISNAGAR vs. INCOME TAX OFFICER, WARD 1 PATAN, PATAN

Facts

The assessee was subjected to a penalty under Section 271E of the Income-tax Act, 1961, for cash repayment of a loan totaling Rs. 5,79,075/-. The assessee appealed, arguing a violation of natural justice due to lack of reasonable opportunity to be heard and that the penalty under Section 271E should not stand if the connected Section 271D penalty is not sustainable.

Held

Given that the penalty proceedings under Section 271D were already remanded for de novo consideration and the inter-related nature of Sections 271D and 271E, the Tribunal remanded the penalty proceedings under Section 271E to the JCIT. The JCIT is to conduct fresh proceedings and decide on levying or dropping the penalty after considering the assessee's submissions.

Key Issues

Whether the penalty under Section 271E was imposed in violation of natural justice, specifically regarding the right to be heard, and its sustainability given the remand of the related Section 271D penalty.