Sandeep Kaur Gill Vs Union of India (Chhattisgarh High Court)
Conclusion: Penalty under section 273B could not be imposed for cash repayment of a loan on the lender’s instruction to curb interest escalation as all the three authorities ignored the provision contained in Section 273B and proceeded to levy a penalty under Section 271E rendering the provision contained in Section 273B even after there was reasonable cause for non-compliance with the provisions contained in Section 269T.
Held: Assessee’s assessment under Section 143(3) read with Section 147 for the assessment year 2015-16 was completed. However, in the assessment proceeding, AO held that assessee had made repayment of the loan to M/s. Tata Finance Corporation in that financial year to the extent of Rs. 6,71,939 in cash against the loan taken for commercial vehicle. Accordingly proceeded to initiate penalty proceeding under Section 271E on the ground that repayment of loan to the extent of more than Rs. 20,000 by assessee violated provisions contained in Section 269T, which assessee replied stating that due to failure on her part to pay installments in time, the financer by letter insisted upon her to make cash payment, which assessee also, in turn, filed copy of the financer’s letter issued by M/s. Tata Finance Corporation, however, AO did not accept the explanation of the assessee and an order imposing a penalty under Section 271E was passed. Feeling aggrieved and dissatisfied with the order of penalty under Section 271E for non-compliance of Section 269T, assessee has filed an appeal before CIT (Appeals), NFAC, which dismissed the appeal, leading to the filing of a further appeal before the ITAT. Tribunal dismissed the appeal, holding that non-compliance of the provisions contained in Section 269T would invite a penalty under Section 271E which AO had rightly levied and the appellate authority i.e. the CIT (Appeals) had dismissed the appeal filed by assessee. Assessee submitted that the AO had accepted the transaction of repayment of loan to M/s. Tata Finance Corporation and the transaction was duly reflected in the books of account i.e. the ledger maintained by assessee. He would further submit that return of the assessee was also accepted during the assessment proceeding under Section 143(3). It was held that all the three authorities had concurrently committed a grave legal error in holding that non-compliance of Section 269T owould straightway result in imposition of penalty under Section 271E overlooking the provisions contained in 273B which clearly provided that no penalty should be imposable on the person or the assessee for any failure referred to in the said provisions. Admittedly and undisputedly, assessment under Section 143(3) read with Section 147 for the assessment year 2015-16 was completed and the transaction entered into by assessee was accepted as genuine transaction duly reflected in the books of account, return of income of the assessee for the assessment year 2015-16 was also accepted, and none of the three authorities had recorded a finding that same was not genuine and bona fide transaction. The court held that since assessee had shown the reasonable cause within the meaning of Section 273B, assessee was not liable to pay penalty under Section 271E of the Income Act for non-compliance with Section 269T.
