Explore a landmark Income Tax Appellate Tribunal case from Chennai where a penalty under Section 271D of the Income-tax Act was successfully deleted. The tribunal found that the undisclosed income, as declared in the block return, remained the assessed income. Discover the rationale behind the tribunal’s decision, emphasizing the genuine nature of credits, the agricultural background of creditors, and the firm’s non-professional management. Learn how the tribunal concluded that the acceptance of cash loans was due to business exigencies, establishing a reasonable cause for the exemption from penalties. #IncomeTax #LegalCase #ChennaiTribunal
ORDER M.K. Chaturvedi, Vice President
1. This appeal by the Revenue is directed against the deletion of penalty amounting to Rs. 1,65,85,000/- levied Under Section 271D of the Income-tax Act, 1961 (hereinafter called as ‘the Act’) and relates to the block period from 1.4.1988 to 2.9.1998.
2. We have heard the rival submissions in the light of material placed before us and precedents relied upon. The assessee is a firm comprising of 4 partners. It is engaged in the business of real estate. The firm is constructing and selling flats at Trichy. Search and seizure operations Under Section 132 of the Act were conducted in the business premises of the assessee as well as the residential premises of its partners. During the course of search certain books of account and diaries were found and seized. In response to notice issued Under Section 158BC on 4.1.1999 assessee filed its block Return on 15.3.2000 declaring undisclosed income at Rs. 59,07,160/-. AO finalized the block assessment proceedings on 29.7.2000 determining the total undisclosed income at Rs. 99,5 8,020/- as under:
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