November 2008
Penalty : Deposits/loans in cash in excess of prescribed limits : S. 269SS, S. 269T, S. 271D and S. 271E : Finding that the amounts were mere book entries and transactions on behalf of family members : No violation of S. 269SS and S. 269T : Penalty could
By K. B. Bhujle, Advocate
Reading Time 2 mins
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17 Penalty : Deposits/loans in cash in
excess of prescribed limits : S. 269SS, S. 269T, S. 271D and S. 271E of
Income-tax Act, 1961 : A.Y. 1991-92 : Finding that the amounts were mere book
entries and transactions on behalf of family members : No violation of S. 269SS
and S. 269T : Penalty could not be imposed.
[CIT v. Natwarlal Purshottamdas Parekh, 303 ITR 5 (Guj.)]
The assessee was carrying on the business of money-lending
and trading in jewellery. For the A.Y. 1991-92, the AO imposed penalty u/s.271D
and u/s.271E of the Income-tax Act, 1961 on account of receipt/repayment of
deposits/loans otherwise than by way of account-payee cheque. The Tribunal found
that most of the amounts represented book entries except amounts of NSCs of
family members which had matured and which were reinvested. The Tribunal also
found that the assessee had acted under bona fide belief in view of the
opinion of an advocate and income-tax practitioner of standing of 33 years who
had opined that the assessee would not violate the provisions of S. 269SS and S.
269T of the Act if the assessee receives amounts from the family members and
repays to different family members. Accordingly the Tribunal cancelled the
penalty.
On appeal by the Revenue, the Punjab and Haryana High Court
upheld the decision of the Tribunal and held as under :
“(i) The Tribunal had found on the facts and in the light
of the evidence on record that there was no violation of either the provisions
of S. 269SS or S. 269T of the Act.
(ii) The Tribunal had further found that there was
reasonable cause, assuming that there was any violation by the assessee.
(iii) Hence the Tribunal had rightly deleted the penalties
levied u/s.271D and u/s.271E.”
