Smt. Anita Sunil Mahajan Vs ACIT (ITAT Pune)
Definition of ‘relative’ for Specified Domestic Transactions (SDTs) should be as per Section 2(41) of Income Tax Act, 1961 and Section 56(2)(v) would not apply.
Case Summary: –
Facts of the case:
- During AY 2013-14, Smt. Anita Sunil Mahajan (Assessee), filed her return declaring total income at Rs.18.61 lakhs.
- The Assessee reported four payments totaling Rs.19.64 crores in the tax audit report, as having been made to persons specified u/s 40A(2)(b). AO observed that total of such transactions in the nature of Specified Domestic Transactions (SDTs) exceeded the qualifying limit of Rs.5 crore, requiring the Assessee to maintain documents and information in terms of Sec.92D and furnish audit report as per Sec.92E.
- AO called upon the Assessee to furnish the same, in reply to which the Assessee stated that the tax auditor inadvertently reported such payments as having been made to persons specified u/s. 40A(2)(b).
- Not convinced, the AO held that since the Assessee had herself reported transactions u/s.40A(2)(b) in the tax audit report u/s.44AB and further there was no admission of error by the auditor, the Assessee was liable to be visited with penalty u/s.271AA for not complying with the provisions of Sec.92D and 92E.
- Total of such transactions given in the tax audit report u/s 40A(2)(b) at Rs.19.64 crore was considered for levying penalty of Rs.39.28 lakhs @ 2%.
- The Assessee reiterated her stand before the CIT(A) that payments were made to such persons who were not covered within the definition of ‘relative’. Rejecting the Assessee’s contention, CIT(A) affirmed the penalty.
- Aggrieved, Assessee filed an appeal before the ITAT.
Ruling:
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