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Income Tax Appellate Tribunal, NAGPUR BENCH, NAGPUR
Before: SHRI V. DURGA RAO & SHRI K.M. ROY, ACCOUNTANT, MEMBER
Date of Hearing – 09/07/2024 Date of Order – 09/07/2024
O R D E R PER K.M.ROY, A.M.
The present appeal has been preferred by the assessee challenging the impugned order dated 14/09/2021, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Joint Commissioner of Income Tax, Amravati Range, Amravati, [“learned CIT”], for the assessment year 2011-12.
Sanjay Nanasaheb Bharsakale vs JCIT Amravati ITA no.142/Nag./2021
The assessee has raised following grounds of appeal:– “1. The penalty imposed u/s 271E of the Income Tax Act, 1961 is illegal, invalid and bad in law.
2. On the facts and circumstances of the case the learned CIT (A) erred in not considering the adjournment filed by the assessee specifically on 20/08/2021 vide transaction ID : F05000144487978 which was duly shown in Portal “Adjournment Details” and dismissed appeal without considering the same & without going into the merits of the case; therefore, the order passed is unjustified, unwarranted and excessive.
3. On the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erred in confirming penalty of Rs.15,00,000/- is unjustified, unwarranted and excessive.
4. On the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erred in not accepting that the repayment were made through bearer Cheque and same were booking advances against sand sale and erred in treating the same as repayment made in cash being in contravention to the provisions of Section 269T through the aforesaid aspect were accepted in the Appellate Order of CIT(A); Therefore order passed is illegal, invalid and bad in law.
5. On the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erred in not accepting the contention of assessee that the transaction is genuine transaction and case fall under reasonable cause and erred in confirming penalty u/s 271E is unjustified, unwarranted and excessive.
6. On the facts and circumstances of the case the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre erred in not considering that assessing officer has not pointed out any defect in the books of accounts of the assessee during the course of assessment proceedings and finalized the assessment u/s 143(3) by making addition of Rs.15,00,000/- & no such finding with respect of contravention of 269T has been recorded; therefore penalty imposed u/s 271E is unjustified, unwarranted and excessive.
7. The appellant seeks permission to add any other ground of appeal or amend or alter the aforesaid ground of appeal.
3. The fact of the case of the appellant as culled out from the order of the CIT(A) is as follows;
Sanjay Nanasaheb Bharsakale vs JCIT Amravati ITA no.142/Nag./2021
“5. …The appellant has taken a loan of Rs.15,00,000 apparently for the purpose of sand business. This loan was repaid to three parties, namely Mr. S.C.Chavan, Mr. G.R.Sheike and Mr. R.S.Mesre, each Rs.5 lakh on 25.03,.2011, 17.03.2011 and 22.03.2011 respectively. These payments were made through bearer cheque of Central Bank of India, Daryapur branch, ACC No. 2159902651. As the repayments of loan exceeds Rs.20,000/- and not paid through the mode of payment prescribed in the Section 269T of the Act, the appellant was found liable to pay penalty as per Section 271E of the Act.”
We find that in the Assessment Order a sum of Rs.2,05,00,000/- was added u/s 68 towards unexplained cash credits. Now, the department is trying to levying penalty when a part of such advances amounting to Rs.15,00,000/- have been repaid by the assessee. Once such advances is treated as an unexplained cash credit and considered as part of income, penalty proceedings cannot be initiated. Even otherwise, the impugned transaction is in nature of advance and cannot be brought under the ambit of “loan or deposit”. When it is the stand of the department that the advances are nothing but undisclosed income, any repayment of such alleged advance is nothing but withdrawal of income already offered for tax. By any means, the penalty proceedings cannot be initiated on such withdrawals which is nothing but drawings.
The learned AR has drawn our attention to the following two judgments to amplify that penalty u/s 271E is not leviable on undisclosed income: "[1] CIT Vs. R.P.Singh & Co. (P) Ltd. [2012] 21 taxmann.com 50 (Delhi) [2] CIT Vs. Shyam Corporation [2013] 35 taxmann.com 519/218 Taxman 136 (Mag) (Guj). The learned DR failed to rebut the above contention and relied upon the impugned penalty order passed.
Sanjay Nanasaheb Bharsakale vs JCIT Amravati ITA no.142/Nag./2021
Upon review of the material and record and considering the detailed arguments, there is no merit in levying penalty of Rs.15,00,000/-. The CIT(A)’s order is overturned and AO is directed to delete penalty of Rs.15,00,000/- . Accordingly the appeal of the assessee is allowed.
In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 09/07/2024.