INCOME TAX ACT, 1961

Section 271E

Penalty under section 271E - Contravention of provisions of section 269SS - Funds needed for an urgent requirement made at the hospital towards treatment of mother -

Assessee firm derived income from Purchase and sale of Cotton Bales, Cotton Cloth, apart from deriving income from Commission. Its assessment was done under section 143(3) and AO alleged that assessee repaid some loans exceeding Rs. 20,000 to cash creditors during the year under consideration, which was in contravention of provisions of section 269T and imposed penalty under section 271E. Held: Provision of 269T and 269SS has been enacted in order to prevent the increase in black money and to stop tax evasion. The intention of the legislature was not to cover the bona fide and genuine transaction wherein the assessing officer himself was satisfied and no tax evasion/use of the black money was involved. A genuine transaction made in an emergency, does not attract penalty under section 271E. Since funds were needed for an urgent requirement made at the hospital towards treatment of mother, thus, assessee paid the amount through different family members, who were close relative of partners of firm to meet with urgent need of medical treatment expenditure in emergency and it did not attract penalty.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. :

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