RAMAN KUMAR MALHOTRA,KOLKATA vs. ITO, WARD-36(1), KOLKATA, KOLKATA

आदेश /O R D E R PER Waseem Ahmed, Accountant Member:- This appeal by the assessee is directed against the order of Commissioner of Income Tax (Appeals)-XX, Kolkata dated 01.07.2014 for assessment year 2006-07, challenging the cancellation of penalty levied u/s 271E of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) The grounds of assessee are reproduced:- “X For that the Ld. Commissioner (Appeal)XX dismissed the appeal and confirmed the order passed by the Ld. Joint Commission of Income Tax Range imposing penalty of Rs.6,50,000/- which is illegal and vitiated by errors of jurisdiction. X That the Ld. Joint Commission of Income Tax misunderstood facts and there by misapplied law and imposed penalty u/s. 271E out of conjecture and surmised. The penalty needs to be deleted.

ITA No.2082/Kol/2014 A.Y. 2006-07 Raman KR. Malhotra Vs. ITO Wd-36(1) Kol. Page 2 X That the transactions of Rs.6,50,000/- was kept with appellant time to time by his wife for the purpose of making residential house habitable. X It was neither deposit or loan. The penalty u/s 271E is not called for. The penalty was imposed by the Ld. JCIT, Range-36 when the quantum of appeal was pending before the Ld. CIT(A) XX/Kol. X That the ITO did not initiate any penalty proceeding u/s. 271E of the IT Act, 1961. The appellant craves leave to adduce further ground or grounds as the time of hearing.” Shri S.M. Surana, Ld. Advocate appeared on behalf of assessee and Shri Saurabh Kumar, Ld. Departmental Representative represented on behalf of Revenue. 2. All the grounds are inter-related and therefore being taken up together. The inter-related issue raised by assessee is that Ld. CIT(A) erred in confirming the order of Assessing Officer by sustaining penalty of ₹6.50 lakh u/s. 271E of the Act.

ITA No.2082/Kol/2014 A.Y. 2006-07 Raman KR. Malhotra Vs. ITO Wd-36(1) Kol. Page 3 a) No documentary evidence has been filed by assessee to substantiate the claim that the money was required for the purpose of repairing of assessee’s wife house; b) The assessee and his wife were maintaining bank account in same branch of Jammu and Kashmir bank. Therefore, the amount would have been easily repaid by the assessee through banking channel that there was no reason which prevented the assessee to make the payment other than banking channel. In view of above, AO was of the view that the provision of Section 269T of the Act has been violated and accordingly the AO levied the penalty u/s. 271E of the Act for ₹6.50 lacs.

ITA No.2082/Kol/2014 A.Y. 2006-07 Raman KR. Malhotra Vs. ITO Wd-36(1) Kol. Page 4 of Jharkhand in the case of Omec Engineers vs. CIT reported in 217 CTR 144 (Jar) where the Hon'ble High Court has held that:- “There being no finding of AO, CIT(A) or Tribunal that the transactions in violation of s. 269SSs were not genuine, assessee’s return having been accepted under s. 143(3) after scrutiny, the being also no finding that transactions were mala fide aimed at disclosing concealed money, imposition of penalty under s. 271D merely for technical mistake could not be sustained” Ld. AR also relied on the judgment of Hon'ble High Court of Punjab & Haryana in the case of CIT Sunil Kumar Goel reported in 315 ITR 163 (P&H) where the Hon'ble Court held as under:- “A family transaction between two independent assessees based on an act of casualness, specially in a case where the disclosure thereof is contained in the compilation of accounts and which has no tax effect establishes 'reasonable cause' under section 273B. Since the assessee had satisfactorily established 'reasonable cause' under section 273B, he must be deemed to have established sufficient cause for not invoking the penal provisions of sections 271D and 271E against him. [Paras 13, 14] Hence, there was no merit in the appeal filed by the revenue and the same deserved to be dismissed.”

Ld. AR further submitted that the penalty proceedings u/s. 271E of the Act was not initiated at the time of assessment proceedings u/s 147/143(3) of the Act. In view of above Ld. AR before us prayed to quash the penalty proceedings. On the other hand, Ld. Heavily relied on the order of Authorities Below.

7.1 We observe that in many cases Courts have taken a view that no penalty u/s 271E of the Act can be levied if genuineness of the transactions

ITA No.2082/Kol/2014 A.Y. 2006-07 Raman KR. Malhotra Vs. ITO Wd-36(1) Kol. Page 5 has not been doubted. In holding so, we find support and guidance from the judgment of Hon'ble High Court of Jharkand in the case of Omec Engineers (supra) where the principle laid down by the Court discussed above are exactly identical to the facts and circumstances of the present case. In the instant case, none of the Authorities Below has doubted the genuineness of transactions. Therefore, respectfully the decision in the case of Omec Engineers (supra) we delete the penalty of ₹ 6.50 lakh levied u/s 271E of the Act. Thus we allow the ground of appeal of the assessee.