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M/s Khizaria Leathers Versus The Deputy Commissioner of Income Tax Special Range III, Chennai

2015 (10) TMI 321 - MADRAS HIGH COURT

Levy of penalty under Section 271D - Whether the Tribunal is correct in concluding that the provisions of Section 269SS of the Act were attracted to the transactions under consideration with a view to levy penalty under Section 271D of the Act? - whether the exercise of discretion to find out the existence or nonexistence of a reasonable cause was properly explained by the authorities or not? - Held that:- It is true that certain amount of discretion is vested in the assessing officer as well as .....

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erversity in the approach of the Tribunal. As a matter of fact, instead of distinguishing the correctness of the discretion exercised by the assessing officer, the Tribunal has independently decided the question as to whether there was a reasonable cause or not. The Tribunal has independently applied its mind and come to the conclusion that there was no reasonable cause. In the circumstances, we do not think that question Nos.1 and 3 are to be answered in favour of the assessee. Accordingly, que .....

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er Section 271D of the Act in the assessment year 1992-93 was justified on the facts and in the circumstances of the case? 2. Whether the Tribunal is correct in concluding that the provisions of Section 269SS of the Act were attracted to the transactions under consideration with a view to levy penalty under Section 271D of the Act? 3. Whether the Tribunal is correct in concluding that there was no reasonable cause existed/made out in terms of Section 273B of the Act with a view to consider the d .....

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ty proceedings under section 271D were initiated The appellant gave its submissions. Thereafter, the assessing officer passed an order dated 30.6.1994, imposing a penalty equivalent to 100% of the cash receipts. 4. The appeal filed by the appellant was dismissed by the Commissioner of Income Tax (Appeals) III by order dated 23.8.1995. A further appeal filed by the appellant was dismissed by the Tribunal, by order dated 19.10.2004. Therefore, the assessee is on appeal. 5. On the second question a .....

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ified sum" is also included alongwith the words "loan or deposit". 6. The original authority as well as the first appellate authority recorded a factual finding that the amounts received by the appellant in excess of the specified sum, were indicated even in their balance sheet as "unsecured loan". Once it is found that cash received by the appellant on various dates were accounted in the balance sheet, as unsecured loan, it is not possible for us to come to any conclusi .....

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ion 273B, the authorities are empowered not to levy penalty, if the assessee is able to prove that there was a reasonable cause for the failure to comply with the provisions of section 269SS. In support of his contention that the moment the assessee proves the existence of a reasonable cause, the authorities are obliged to exercise a discretion not to levy penalty under section 271D, the learned counsel for the appellant relied upon the following decisions: 1) COMMISSIONER OF INCOME TAX v. T.R.R .....

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NER OF INCOME TAX v. V.SIVAKUMAR ((2013) 354 ITR 9 9) COMMISSIONER OF INCOME TAX v. PRIDE REMEDIES PRIVATE LIMITED ((2014) 91 CCH 6 CHENHC 8. We have carefully considered the decisions relied upon by the learned counsel for the appellant. 9. It is true that certain amount of discretion is vested in the assessing officer as well as the appellate authority and the Tribunal to choose not to impose penalty if the assessee proves that there was reasonable cause for the failure. But, what is reasonabl .....

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