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Facts
The appellant, engaged in fruit trading, voluntarily reported cash transactions exceeding Rs. 2 lacs from three parties, claiming these retailers were unaware of income tax provisions and directly deposited cash after selling fruits. The Assessing Officer imposed a penalty of Rs. 1,450,936/- under Section 271DA for non-compliance with Section 269ST, which was upheld by the CIT(A). The appellant contended that the transactions were recorded in books, identities were confirmed, and there was no malafide intention.
Held
The Tribunal found that the transactions were duly recorded, parties' identities were confirmed, and no unaccounted money or malafide intention was involved. Considering the appellant's business of helping farmers, its status as a young company, and the bonafide mistake concerning new legislation, the Tribunal concluded that these circumstances constituted a 'reasonable cause' under Section 273B. Consequently, the appeal was allowed, and the imposed penalty was quashed.
Key Issues
Whether the penalty imposed under Section 271DA for cash receipts violating Section 269ST should be quashed due to the existence of a 'reasonable cause' under Section 273B of the Income Tax Act.
Sections Cited
Section 271DA, Section 269ST, Section 273B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘A’: NEW DELHI
Before: SHRI G.S. PANNU, HON’BLE & SHRI ANUBHAV SHARMA
Assessee by Shri Deepak Kataria, CA Department by Shri Kanv Bali, Sr. DR Date of Hearing 29/02/2024 Date of Pronouncement 21/05/2024 ORDER PER ANUBHAV SHARMA, JM:
The appeal is filed by the assessee against order dated 10.05.2023 of Learned Commissioner of Income Tax (Appeals)-23, New Delhi [hereinafter referred to as ‘Ld. CIT(A)’] who has sustained the penalty imposed by Learned Assessing Officer under section 271DA of the Income Tax Act, 1961 (hereinafter called “the Act”).
Heard and perused the records.
Appellant company, is engaged in the business of trading in fruits and dealing with small farmers as well as with small retailers/traders. The appellant company voluntarily reported the 3 parties cash transactions in Form 61A under clause cash receipt exceeding Rs. 2 lacs for sale of goods for the F.Y. 2017-18. It is claimed that these retailers/traders were not aware of the income tax provision and deposited the cash in appellant company bank account directly since they received cash only from retail customers after selling the fruits. On the basis of aforesaid transactions, Assessing Officer has issued the penalty notice regarding failure to comply with prevision of section 269ST by the appellant company and later on the AO has passed the order u/s 271DA of the Act wherein penalty was imposed of Rs. 1,450,936/-, i.e. a sum equal to the amount of such receipts which is sustained by CIT(A).
Ld. AR has pointed out that the 3 parties (Ambrish, Paramdeep Khurana and B Kranthy Prabhat Reddy) have deposited cash directly in appellant company bank account Rs. 206,000/- Rs. 944,936/- Rs. 300,000/- respectively and appellant company came to know the transactions after cash deposited by the aforesaid parties. Ld. AR has submitted that thereafter, the appellant company duly communicated to all parties and ensure that no cash deposited/acceptance from any vendor for more than 2 lakhs as per the new law enactment from financial year 2017-18. The aforesaid transactions were reported by appellant company on self- declaration basis through SFT transactions since the small retailers/traders were not aware about the new section 2695T which prohibits to accept cash more than Rs. 2 lakhs. All the aforesaid cash deposited directly in the bank account by such retailers/traders have been duly considered in books of accounts ie. in financial statement and moreover the appellant company is having huge losses. Further, it is submitted that the company is dealing in trading of agricultural produce like fruits which is one of the priority sectors for Indian economy.
We have taken into consideration the facts and circumstances and it comes up that the transaction is duly recorded in books of accounts of appellant company. Identity and confirmation of parties to the transaction is on record. No unaccounted money/tax evasion/malafide intention is involved in the transaction. The company is helping in improving farmer's incomes by way of providing them direct access to market for their fruits by purchasing and supplying the same to external market. It is a very young company started by first time entrepreneurs. Penalizing a bonafide mistake related to a new legislation will adversely affect the company which eventually may cause losses to large number of farmers with whom the company is dealing. These circumstances constitutes a "reasonable cause" within the meaning of section 273B read with provision to Section 271DA of the Act.
The appeal is allowed. The impugned penalty is quashed.
Order pronounced in the Open Court on 21/05/2024.