Case Law Details

Case Name : Smt. Parin K. Rajwani Vs JCIT (ITAT Mumbai)
Appeal Number : ITA No. 1076/Mum/2013
Date of Judgement/Order : 30/06/2015
Related Assessment Year : 2007-08 & 2008-09
Courts : All ITAT (5013) ITAT Mumbai (1603)

Brief of the Case

In the present case the Hon’ble Tribunal held that penalty could not be levied if it is barred by limitation or if the intention of going against the Law is absent.

Facts of the Case

These are the two appeals relating to two different AYs which have been agitated by the Assessee against the common order against the confirmation of the penalty levied u/s 271D of the income Tax Act. The Assessee was the small tailor took loan in cash from her daughter in law without taking receipts.

Contention of the Assessee

The ld. Counsel for the assessee for the year AY 2007-08 regarding the imposition of penalty contended that the Assessee were not aware of the provisions of Law in which the receipt of loan through cheque or bank draft was required. It was further contended that the Assessee was engaged in the work of tailoring and she was not having any intention to go against the Law. Also, after the receipt of loan the amount was deposited in the bank. Hence, the imposition of penalty u/s 271D could not be made.

The ld. Counsel for the Assessee contended that the order of the Ld. AO is barred by limitation as provided u/s 275(1)(c) of the Act.

Contention of the Revenue

It was contended by the Revenue that the ignorance of Law is no excuse.

Held by CIT(A)

The ld. CIT(A) held that the penalty would be levied u/s 271D r/w s. 269SS as it is the settled principle that the ignorance of Law is no Excuse. A person should be aware of the legal formalities regarding the transaction they are undertaking.

Held by the Hon’ble Tribunal

The Hon’ble Tribunal while giving decision in the favour of Assessee for the AY 2007-08 held that as Assessee is a small time tailor and was earning only Rs. 1.5 lakhs annually and was not aware of the technicalities of Law while accepting Rs. 40000 in cash as a loan. Therefore, intention in breaching the provision of Law can’t be made out. For, any contravention a malafide intention is needed and in this case if the person doesn’t know about the technicalities of that particular Law then how can she be expected to infringe it. Therefore, penalty could not be levied u/s 271D.

For the AY 2008-09, the Hon’ble Tribunal relied on the Judgment of Hon’ble Rajasthan High Court in the case of CIT vs. Jitendra Singh Rathore [2013] 352 ITR 327 in which it was held that proceedings u/s 271(1)(c) could be initiated after the date of issue of first show cause notice by AO not by the show cause notice issued by Joint Commissioner. The Hon’ble Tribunal while relying on this Judgment held that the penalty proceedings are against section 271(1)(c) and therefore, it cannot be initiated.

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