Case Law Details
SVT Wholesale Pvt. Ltd. Vs JCIT (ITAT Bangalore)
The case of SVT Wholesale Pvt. Ltd. Vs JCIT revolves around the imposition of a penalty under Section 271D of the Income Tax Act, 1961. The appellant, SVT Wholesale Pvt. Ltd., contested the penalty upheld by the Commissioner of Income Tax (Appeals) (CIT(A)), arguing against its justification. This article provides an in-depth analysis of the case, highlighting the legal issues, contentions of the parties involved, and the decision rendered by the Income Tax Appellate Tribunal (ITAT) Bangalore.
Background: SVT Wholesale Pvt. Ltd., a private limited company engaged in the wholesale trade of garments, faced assessment under Section 143(3) of the Income Tax Act for the Assessment Year 2015-16. During the assessment, it was revealed that the company had accepted a loan from its director, N. Krishna, in violation of Section 269SS of the Act. Consequently, a penalty under Section 271D was imposed by the Assessing Officer (AO), leading to an appeal before the CIT(A). The CIT(A) partially allowed the appeal, reducing the penalty amount, which prompted SVT Wholesale Pvt. Ltd. to appeal further to the ITAT Bangalore.
Contention of the Assessee: SVT Wholesale Pvt. Ltd. argued that the loans were obtained to meet urgent business exigencies, emphasizing the first year of its business operations. The company relied on the judgment of the Karnataka High Court in CIT Vs. Sree Krishna Promoters and Builders, asserting that there was reasonable cause for availing cash loans. The company contended that the penalty under Section 271D should be waived considering the circumstances.
Contention of Revenue: The Revenue authority supported the penalty imposed by the AO and upheld by the CIT(A). It argued that the loans were obtained in cash, violating the provisions of Section 269SS of the Act. The Revenue relied on the literal interpretation of the law and contended that the penalty was justified based on the statutory provisions.
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