Penalty 271E-Cash repayment of FDR by Bank for violation u/s 269T deleted The penal provisions are to curb black money and benami transactions and not genuine ones – ITAT
ABCAUS Case Law Citation:
957 2016 (06) ITAT
Assessment Year: 2009-10
Date/Month of Judgment: June, 2016
Brief Facts of the Case:
The assessee was a Bank. During the course of assessment proceedings, the Assessing Officer observed that repayments of fixed deposits in excess of Rs.20,000/- had been made by the assessee in violation of the provisions of Section 269T and therefore, imposed the penalty u/s 271E of the Income Tax Act, 1961.
Aggrieved with the penalty order the assessee filed appeal before CIT(A) and argued that the depositors had no account with any bank and as such there was a reasonable cause for said failure. However CIT(A) did not consider the arguments and upheld the penalty.
Contentions of the Assessee:
That the Branch Manager of the bank had made the repayments in cash on the request of the depositors as there was no Bank Accounts of depositors and due to genuine hardships the repayments were made and the intention was not to violate any provisions of the Act. Also that genuineness of transaction were not in dispute and entries represent genuine repayments of depositors.
The Tribunal Observed as under:
- That the genuineness of repayments of depositors had not been doubted.
- non-payment would have resulted in hardships on the depositor and it was is a reasonable cause for failure to comply with the provisions of section 269T.
- The purpose of introduction of the penal provisions in the legislature were to curb black money and benami transactions and it can never be to impose penalty in case of genuine transactions.
- The penal provisions of section 271D and 271E confer a discretion on the authorities to levy or not to levy penalty and such discretion needs to be exercised with wisdom and in a fair and just manner.
- Even if the relevant provisions of law prescribe levy of a minimum penalty, it does not mean that penalty must necessarily be imposed in every case falling within Sections 269SS and 269T.
- Even if the minimum penalty is prescribed the higher authorities will be justified in refusing to impose penalty when there is a technical breach or violation of the provisions of the Act.
- That ITAT, Amritsar Bench in ITA No.73 to 75(Asr)/2014 under similar facts and circumstances has deleted the peanlty.
- The Punjab & Haryana High Court in the case of CIT vs. Saini Medical Store 277 ITR 420 (P&H) has in quite similar instance deleted the peanlty
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