The Tax Publishers2021 TaxPub(DT) 0278 (Kol-Trib)

INCOME TAX ACT, 1961

Section 271E

Where assessee was prevented by reasonable cause in making the repayment of finances otherwise than by way of cheque and even otherwise the transactions are genuine and assessee had explained the urgency leading to payment of instalment in cash, when the transactions were genuine, then the violation of question was only a technical and venial, therefore, penalty under section 271E was to be deleted.

Penalty under section 271E - Cash paid towards repayment of finance obtained for purchase of trucks - Assessee was prevented by reasonable cause in making repayment - Cash payment made on due dates to avoid the default in repayment of loan, which would effect assessee's credibility in CIBIL

AO levied penalty under section 271E on assessee on the ground that assessee had paid four installments of a sum on different dates in cash, towards the re-payment of finance taken by him from M/s. S for the purchase of lorry. Further, AO found that assessee had paid in cash an amount to M/s. L towards repayment of finance obtained by him for purchase of trucks. The assessee explained the urgency for the payment and also submitted that the transactions were genuine. The payment was made in cash on due dates to avoid the default in repayment of loan, which would effect assessee's credibility in CIBIL and to avoid penalty for default. However, AO rejected this explanation and levied penalty. Held: Penalty in this case had to be deleted as assessee was prevented by the reasonable cause in making the repayment of finances otherwise than by way of cheque. Even otherwise the transactions are genuine. Both AO as well as CIT(A) had not doubted the genuineness of the transactions. It was also not clear whether the finance obtained is, a lease finance or hire purchase finance. Assessee had explained the urgency leading to payment of instalment in cash. When the transactions were genuine, then the violation of question was only a technical and venial. Therefore, penalty under section 271E was to be deleted.

Followed:Hindustan Steel Limited v. State of Orissa 1972 TaxPub(DT) 9 (SC)

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2013-14



IN THE ITAT, KOLKATA BENCH

SUBSCRIBE TaxPublishers.inSUBSCRIBE FOR FULL CONTENT

TaxPublishers.in

'Kedarnath', 7, Avadh Vihar, Near Nirali Dhani,

Chopasni Road

Jodhpur - 342 008 (Rajasthan) INDIA

Phones : 9785602619 (11 am - 5 pm)

E-Mail : mail@taxpublishers.in / mail.taxpublishers@gmail.com