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TMI Blog2025 (3) TMI 140X X X X Extracts X X X X X X X X Extracts X X X X ..... action of Ld. AO in passing the impugned penalty order is contrary to law and has further erred in observing that there had been contravention of the provisions laid down in section 269ST of the Income Tax Act. 3. That having regard to the facts and circumstances of the case, Ld. CIT(A) has erred in law and on facts in confirming the action of Ld. AO in imposing penalty u/s 27IDA and that too by recording incorrect facts and findings and not appreciating the facts and circumstances of the case and without observing the principles of natural justice. 4. That in any case and in any view of the matter, action of Ld. CIT(A) in confirming the action of Ld. AO in passing the impugned penalty order u/s 27IDA is illegal and against the fact and circumstances of the case and the same is not sustainable on various legal and factual grounds. 5. That the appellant craves the leave to add, modify, amend or delete any of the grounds of appeal at the time of hearing and all the above grounds are without prejudice to each other." 2. Brief facts are that the assessee M/s Delta Farm Services is engaged in the business of trading in tractors and its spare parts filed returns of income for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was entered, absence of satisfaction in the assessment proceedings/order as mandated by the Hon'ble Supreme Court penalty cannot be imposed. Alternative plea it is the submission that in each case benefit of Rs. 2 lakhs be allowed. 5. The Ld. Counsel for the assessee further submits that there is a reasonable cause for accepting the sale consideration of the tractors in cash from the farmers and therefore there cannot be any penalty u/s 271DA of the Act. Ld. Counsel submits that if there are good and sufficient reasons for accepting cash penalty may not be imposed as per the provisions of section 269ST of the Act. 6. Ld. Counsel further made his submission as under: "In the case of M/s Delta Farm Services for AY 2018-19 Only issue in the present appeal is against the levy of penalty of Rs. 4,69,52,797/- u/s 27 IDA on the ground that the appellant has received cash more than Rs. 2 Lacs in respect of its sale from its customers in violation of section 269ST. Section 269ST introduced by the Finance Act, 2017 w.e.f. 1.4.2017 i.e. the present year is the first year, is reproduced here as under: 269ST. No person shall receive an amount of two lakh rupees or more- (a) in aggre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etation before the Hon'ble Courts on several occasions and Hon'ble Courts have held that the object and purport of these sections is to prevent the circulation of black money and unaccounted money to counteract tax evasion. Deposit or loan in cash exceeding prescribed limit-Finding that transaction was bona fide and default was technical- Penalty could not be imposed-CIT vs. Speedways Rubber P. Ltd. 326ITR 31 (P&H) Asstt Director of Inspection vs. Kumari A B Shanthi 255 ITR 258, 263 (SC)- CLC 12-21 Page 13877-78 of Chaturvedi & Pithisaria 7th edition, Volume 9- caption- 'Object of enacting section 269SS' CIT vs. Bhagwati Prasad Bajoria 263 ITR 487 (Gau)-CLC 70- 75- it cannot be said that the assessee entered the transactions to avoid the payment of tax or to defraud the revenue. CIT vs. Manoj Lalwani 260 ITR 590 - it cannot be said that the assessee entered the transactions to avoid the payment of tax or to defraud the revenue. CIT vs. Triumph International 345 ITR 270 (Bom) CLC 41-51 CIT vs. Dimple Yadav 379 ITR 177 (All) Delhi State Taxi Operators vs. AO (Del) (ITAT) ACIT vs. Lilavati Kirti Lai Mehta (Mum) (ITAT) CLC 52-67 Since, section 269ST too falls under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eding prescribed limit-Finding that transaction was bona fide and default was technical- Penalty could not be imposed-CIT vs. Speedways Rubber P. Ltd. 326 ITR 31 (P&H) Finesse International Design Pvt. Ltd. vs. Addl. CIT in ITA No.2561/Del/2022 dated 02.04.2024 (ITAT Delhi Bench) in the context of section 269ST itself. PB 17-20 is the copy of written submissions before Ld. CIT(A) on this issue. 4. There is a proviso to section 269ST which says that if there are good and sufficient reasons, penalty may not be imposed and this position of law has been accepted in Asst. Director of Inspection (Inv.) vs. Kum. AdEL Shanthi, (2002) 255 ITR 0258 (SC) (CLC 12-21) In the instant case, sale has been made to farmers who have paid in cash for purchase of farm tractors and there were other dealers in the town and insistence would have caused loss of business and hence there was good and sufficient reason for the default, if any. PB 2-5, 9-17 are the copy of written submissions before the Ld. CIT(A) to this effect. Penalty under ss. 27ID and 27IE-Contravention of ss. 269SS and 269T Reasonable cause vis-a-vis journal entries-Though the assessee violated provisions of s. 269SS/269T in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as to be cancelled - Held, yes - MUSLIM URBAN CO- OP.CREDIT SOCIETY LTD. VS. JT.CIT 96 ITD 83 (PUNE). 5. In fact, there was even a bona fide belief that cash could be accepted at any point of time not exceeding Rs. 2 Lakhs and that is how cash was accepted at any given point of time within this limit of Rs. 2 lacs. To entertain this belief was quite plausible in view of language of section 269ST which refers to 'single transaction' and whereas section 40A(3), 269SS, 269T used the expression 'aggregate'. Even at one place, section 269ST too uses the expression 'aggregate" Section 269ST was the new provision and this was the first year and therefore to entertain this belief was not something which was impossible. In fact, receipt of cash in sale of farm tractors from the farmers was a practice since the inception of the assessee. PB 10-12 is the copy of written submissions before Ld. CIT(A) on this issue. 6. Absence of satisfaction as to the impugned penalty is fatal to the levy of penalty. CIT vs. Jai Laxmi Rice Mills, Civil Appeal No. 1457 of2008 and 3614 of 2012 dates 20.11.2015 (SC) (CLC 1-4) 7. Alternative submission of the assessee on without prejudice basis i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is for one event or occasion which normally happens in the cases of weddings, engagements, birthday functions etc.. 10. Heard rival submissions, perused the orders of the authorities below and the voluminous documents placed before us. Perusal of the penalty order passed u/s 271DA of the Act by the Assessing Officer suggests that it was levied for the contravention of the provisions of section 269ST. The Assessing Officer is of the view that since the assessee has received sale consideration over and above Rs. 2 lakhs in cash from the purchasers the assessee is violated the provisions of section 269ST. Accordingly penalty was levied. The Assessing Officer never doubted the genuineness of the transactions of cash sales. The assessee has furnished all the details in respect of the sales made by the assessee to various farmers who purchased tractors with the assessee. The sample details furnished by the assessee in respect of the sale of tractors to farmer Shri Satendra S/o Nain Singh Village Nagla Kabir District, Muzaffarnagar is as under: - "REPORT SERIAL NO.-39 NAME AND ADDRESS OF CUSTOMER- SATENDRA S/O NAIN SINGH VILL NAGLA KABIR DIST. MUZAFFARNAGAR AADHAR NO. -70996385876 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Assessee duly accounted for cash receipts, particulars of farmers are kept proving their identity, aadhar, land revenue record and agricultural land holding of all the farmers, Form 60, etc. and all the statements in this regard were duly and regularly filed by the assessee. In such circumstances it cannot be said that there is any intention to evade tax. 14. As held by the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. Vs. State of Orissa (83 ITR 26) penalty is quasi criminal in character and therefore it should not be imposed for technical or venial breach. In the case of CIT Vs. Speedways Rubber Pvt. Ltd. (326 ITR 31) the Hon'ble Punjab & Haryana High Court held that when the transactions are bona fide and the default was technical imposing penalty u/s 271D is not justified. Similar view has been taken by the various High Courts referred to above. 15. The coordinate bench of the Delhi Tribunal in the case of Finesse International Design Pvt. Ltd. Vs. Add. CIT in ITA No. 2561/Del/2022 dated 02.04.2024 for the AY 2018-19 deleted the penalty levied u/s 271DA of the Act for the technical and venial breach in accepting cash over and above Rs. 2 lakhs observing as under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venting the provisions of section 269ST. The ld. CIT(A) held that no person issues two bills to the same customer for two different items. The ld. CIT(A) opined that if anyone goes to a shop and purchases 10 items, the bill is one for all the items and the payment is also made in one go. 7. Heard the arguments of both the parties and perused the material available on record. 8. The details are as under: S.No. Name of the Customer Item purchased Date of Invoice Bill Value (in Rs. ) 1. Anubhav Gupta Sherwani Kurta Churidar 23.08.2017 155066 2. Anubhav Gupta Shoe 23.08.2017 3400 3. Anubhav Gupta Jodhpuri Trouser 23.08.2017 80500 4. Anubhav Gupta Sherwani Purqree 23.08.2017 22800 5. Anubhav Gupta Shoe 23.08.2017 22000 6. Nisha Bhalla Anarkali Gown and Saree Blouse Petticoat 19.12.2017 81000 7. Nisha Bhalla Gown and Saree Blouse Petticoat 19.12.2017 188000 8. Rohan Kiara 2 pair Lehnga, Choli Dupatta, 2 pair Sherwani, Kurta Churidar and 2 pair Waistcoat Kurta Churidar 10.11.2017 1153000 9. Rohan Kiara 3 pair shoes 10.11.2017 79000 10. Fahainda Islam Sherwani Kurta Churidar Stole ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of Addl.CIT Vs. Smt. Prahati Baruah in ITA No. 418/Guwahati/1998 has held as under: "5. Further, section 269T was inserted in the Income- tax Act, 1961, originally by the Income- tax (Second Amendment) Act, 1981 with effect from July 11, 1981. The s cope and effect of section 269T have been elaborated the C. B. D. T.'s Circular No. 345, dated June 28, 1982 at para 2. 1 & 2. 2. A reading of the same shows that the introduction of section 269T and section 271E in the statute are to prevent proliferation of black/unaccounted money deposited with banks and other persons by introducing the system of repayment through account payee cheques and drafts and, thus ensure that the identity of the payees is established. In the instant case, it cannot be held that there was any such intention of the assessee to hide the identity of the lender. In the facts and circumstances of the case, the identity of the lender to whom repayment has been made is known to the Department and the genuineness of the loan transaction is not in doubt. Hence, in our considered opinion, it cannot be held that the breach of law, if any was deliberate. T he default, if any, at most be said to be a technic ..... X X X X Extracts X X X X X X X X Extracts X X X X
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