Commissioner of Income Tax vs Ratna Agencies

P.D. Dinakaran, J.—The above tax case appeals are directed against the order of the Income Tax Appellate Tribunal dated 3.4.2002 made

in ITA.Nos.2565 and 2566(Mds)/1991 respectively.

The Revenue is the appellant. The assessment year involved in the present appeals is 1989-1990.

The short facts of the case are that the assessee Company is a partnership firm and it filed returns for the assessment year 1989-1990. The

assessing Officer while processing the returns, noticed that the assessee had contravened the provisions of Section 269SS and 269T by accepting

cash loans exceeding Rs. 20,000/- and hence levied penalty under Sections 271D and 271E of the Income Tax Act, 1961. Against such levy of

penalty the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who deleted the penalty imposed by the assessing officer

holding that the contravention alleged against the assessee did not result in any unaccounted transaction such as lending and repayment and that

both lending and repayment were entered in the books of the assessee and the figure involved was meagre and that the same was incurred only for

meeting the sudden demand of over-draft account. Aggrieved against the said deletion of penalty, the revenue went before the Tribunal, which

endorsed the views of the Commissioner of Income Tax (Appeals) and dismissed the appeal. It is against the said order dated 3.4.2002 of the

Tribunal, the present appeals have been preferred raising the following substantial question of law,

Whether in the facts and under the circumstances of the case, the appellate Tribunal was right in holding that penalty u/s 271D and 271E cannot

be imposed for violation of Section 269SS and 269T ?

A similar question arose before the Delhi High Court and while answering the question by its Judgment reported in Commissioner of Income

Tax Vs. Parma Nand, , after extracting the relevant portions from the order of the Tribunal, the Court held as under,

The afore-extracted portion of the Tribunal''s order shows that the conclusion of the Tribunal that there was a reasonable cause in not strictly

complying with the provisions of Section 269SS of the Act is based on relevant factors. We find it difficult to hold that the view taken by the

Tribunal is either perverse or so irrational that no reasonable person, on the given facts, would have come to the same conclusion. The findings

recorded by the Tribunal are essentially factual giving rise to no question of law much less a substantial question of law.

In the case on hand, the Tribunal after endorsing the findings of the Commissioner of Income Tax (Appeals) that the contravention alleged

against the assessee did not result in any unaccounted transaction such as lending and repayment and that both the transactions were entered in the

books of the assessee and the figure involved was also meagre and that the same was incurred only for meeting the sudden demand of over-draft

account, found that the order of Commissioner of Income Tax (Appeals) is well reasoned one and the same does not suffer from any infirmity

requiring any interference. The said findings by the Tribunal were essentially factual and no question of law much less substantial question of law

arises for consideration.

In this view of the matter, we hold that there is no reason whatsoever to interfere with the findings of the Tribunal that there was reasonable

cause for the assessee for not strictly complying with the provisions of Section 269SS of the Act.

Consequently, we answer the question in the affirmative against the revenue and in favour of the assessee, that in the facts and circumstances of

the case, the Tribunal was right in holding that the penalty u/s 271D and 271E cannot be imposed for violation of Section 269SS and 269T of the

Act. Accordingly, the appeals are dismissed. No costs.