Case Law Details
Assessee had contravened the provisions of section 269T of the Act during the financial year 1992-93 relevant to the assessment year 1993-94 by making repayment of loan/deposits in cash to 7 Persons of Rs. 2,30,400/-. DCIT vide order dated August 20, 1998. levied penalty of Rs. 1,71,800 which was equal to the amounts repaid in cash by the assessee-firm.
On appeal CIT (Appeals) while deleting the penalty in its order dated January 18, 1999, had accepted the explanation of the assessee that breach of the provisions of the Act was on account of bona fide belief of the assessee and the same was not with any intention to avoid or evade the tax. The observations of the Commissioner of Income-tax (Appeals) in paras. 6 and 6.1 are relevant and are reproduced as under :
“6. I have carefully considered the conspectus of this matter and facts on record. No loss of revenue has occurred in this case and the genuineness of the transaction has not been doubted. The apex court in Hindustan Steel Ltd. v. State of Orissa had long ago settled the law that penalty is not to be ordinarily imposed unless the party either acted deliberately in defiance of law and was guilty of conduct contumacious or dishonest or acted in conscious disregard of its obligations. Penalty will also not be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. The authority competent to impose the penalty will be justified in refusing to do so, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute.
6.1 As pointed out earlier, there is no doubt about the genuineness of the transactions which have been fully accepted in the assessment made for the year under consideration. Even if, there is any ignorance, which resulted in the infraction of law, the default is technical or venial which did not prejudice the interests of the Revenue as no tax avoidance or tax evasion was involved. To my mind, bona fide belief coupled with the genuineness of the transactions would constitute reasonable cause under Section 273B for not invoking the provisions of Section 271E of the Act, The impugned order of penalty is cancelled.”
The findings of the Commissioner of Income-tax (Appeals) have been confirmed in appeal by the Tribunal.
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