INCOME TAX OFFICER, INDORE vs. SEWA SAHKARI SANSTHA MARYADIT TILLOR KHURAD, INDORE

ITA 327/IND/2024Status: DisposedITAT Indore11 March 2025AY 2015-1620 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the penalty under Section 271E was illegal and bad in law on the limited legal ground that no satisfaction was recorded in the assessment order dated 28.07.2017 under Section 143(3) of the Act for initiating penalty proceedings. The Tribunal respectfully concurred with the ratio laid down by the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Jai Laxmi Rice Mills and the Hon'ble High Court in the cited case, which held that penalty proceedings under Section 271D/271E cannot be imposed in the absence of satisfaction recorded by the AO in the assessment proceedings. The Tribunal noted that the Revenue did not bring any contrary decision to its notice. Therefore, following the doctrine of precedent, the Tribunal dismissed the appeal of the Revenue. The Tribunal explicitly stated that while statutorily there might not be a specific requirement for satisfaction in the assessment order for initiating penalty under Section 271E, it had to follow judicial discipline. The issue of whether the assessee was an agricultural credit cooperative society not covered by Section 269SS/269T was not expressly decided, as the appeal was dismissed on the ground of lack of satisfaction.

What were the facts?

The assessee, Sewa Sahakari Sanstha Maryadit, an AOP, is in appeal against an order of the CIT(A) for Assessment Year 2015-16. The Revenue is aggrieved by the CIT(A)'s deletion of penalty under Section 271E. The assessee had made repayments of deposits exceeding Rs. 20,000/- in cash, totaling Rs. 1,03,15,781/-, otherwise than through account payee cheque, draft, or ECS. This violation of Section 269T was noted by the assessee's auditor. The Assessing Officer (AO), after issuing penalty notices and considering the assessee's reply, imposed a penalty of Rs. 1,03,05,731/- under Section 271E. The assessee appealed to the CIT(A), who allowed the appeal, leading to the present appeal by the Revenue.

What were the issues?

1. Whether the CIT(A) was justified in deleting the penalty under Section 271E of the Income Tax Act, 1961, levied for violating the provisions of Section 269T of the Act, considering the assessee's claim of being an agricultural credit co-operative society not covered by Sections 269SS/269T. Assessee's Contention: The assessee contended that as an agricultural credit cooperative society, it is not covered by the provisions of Section 269SS/269T of the Act. Revenue's Contention: The Revenue argued that the CIT(A)'s order deleting the penalty is illegal and bad in law. It contended that the assessee's own auditor pointed out the violation of Section 269T, and the assessee did not dispute the audit report. The Revenue further argued that the CIT(A) misinterpreted the law by relying on distinguishable judicial precedents and erroneously concluded that the assessee demonstrated a reasonable cause. The Revenue emphasized that the assessee repaid deposits contrary to the statutory scheme, constituting a clear violation of Section 269T, making the penalty under Section 271E justified. The Revenue also highlighted that the CIT(A) observed the violation of Section 269T but still deleted the penalty.

Which sections of the Income-tax Act were involved?

Section 271E,Section 269T,Section 250,Section 246A,Section 253,Section 143(3),Section 271(1)(c),Section 148,Section 69A,Section 69C,Section 271D

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, INDORE BENCH, INDORE

Before: SHRI BHAGIRATH MAL BIYANI, ACCOUNTANT & SHRI PARESH M JOSHIMEMBER

For Appellant: Shri Ashish Goyal & N.D. Patwa, ARs
For Respondent: Shri Ram Kumar Yadav, CIT-DR
Hearing: 06.03.2025Pronounced: 11.03.2025

Per Paresh M Joshi, J.M.:

This is an appeal filed by the Revenue who is aggrieved by order bearing Number ITBA/CSR/F/74/2024-25/1 06406481 8(1) dated 12.04.2024 passed by Ld. CIT(A) Under Section 250 of the Act, 1961 (hereinafter referred to as the ‘Act” for sake of convenience and ease). The relevant Assessment Year is 2015-16

and the corresponding previous year period is from 01.04.2014 to Sewa Sahkari Sanstha Maryadit ITA No. 327/Ind/2024 - AY 2015-16

31.03.

2015. The aforesaid order of Ld. CIT(A) is hereinafter

referred to as the “Impugned Order”.

2.

FACTUAL MATRIX

2.

1 That the assessee is M/s Sew

The order continues below.

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