Ms. Orison Transport Vs DCIT (ITAT Cuttak)
Conclusion: Penalty u/s.271E was not leviable as the belief of assessee that return of advance from customers was not prohibited by section 269T was a bonafide belief.
Held: Assessee had paid a sum to 25 different parties which were in excess of 20,000/ at a time and were not made through cheques. AO therefore, believed that the payments were hit by section 269T and resultantly, assessee was liable to penalty under section 271E. Assessee’s case was that such amounts were neither loans nor deposits and therefore, section 269T would not be applicable. It was held the belief of assessee that return of advance from customers was not prohibited by section 269T was a bonafide belief, therefore, the levy of penalty u/s.271E could not be sustained.
FULL TEXT OF THE ITAT JUDGMENT
This is an appeal filed by the assessee against the order of the CIT(A)-2, Bhubaneswar dated 29.3.2017 for the assessment year 2008-2009.
2. The sole issue involved in this appeal is that the CIT(A) erred in confirming the levy of penalty of Rs.21,49,943/- u/s.271E of the Act.
3. According to the Assessing Officer, the assessee has violated the provisions of section 269T by refunding the advance received from the customers in cash of Rs.21,49,943/-. Therefore, he levied penalty u/s.271E of the Act 100% of the amount paid in cash of Rs.21,49,943/-.
4. On appeal, the CIT(A) confirmed the action of the Assessing Officer.
5. Ld A.R. argued that Section 269T of the Act talks of repayment of loan or deposit in cash and not of advance received from customers. Therefore, the case of the assessee is not covered u/s.269T of the Act and hence, the assessee is liable for penalty u/s.271E of the Act.
6. On the other hand, ld D.R. relied on the orders of lower authorities.
7. We have heard the rival submissions, perused the orders of lower authorities and materials available on record. The Assessing Officer levied penalty u/s.271E of the Act for repayment of advance by the assessee in cash of Rs.21,49,943/-.
8. On appeal, the CIT(A) confirmed the same.
9. Ld A.R. contended that provisions of section 269T is applicable in a case where the assessee repaid the advance received from the customers.
10. Ld D.R. supported the orders of lower authorities.
11. We find that the Assessing Officer has observed as under:
“The assessment u/s. 143(3) was made in the case of the assessee on 15.04.2010. The assessee is carrying on the business of transportation fit logistic services. The Assessing Officer has assessed the total income of Rs.88,000/- as against the returned income of Rs.57,7.62/-. The Assessing Officer has called for various details from the assessee in respect of gross receipt of the assessee. During the course of assessment proceeding it was noticed that assessee had shown gross receipt of Rs.71,61,363/- whereas the total receipt in its bank account was at Rs.89,06,387/-. To reconcile the difference in respect of above discrepancy, the assessee has submitted during the course of assessment proceedings that 3 parties had advanced money for transportation of their goods, but later on they had taken back their advances since the work could not be undertaken.
2. After completion of the assessment proceedings the Assessing Officer has proposed the penalty u/s.271E for the payment made in contravention to the provisions of Section 269T of the l.T. Act. It is observed that the assessee had re-paid the advances to the following parties in cash in contravention to the provisions of section 269T of the Act.
