Case Law Details
B. P. Patel and Co. Vs ITO (ITAT Ahmedabad)
It is elementary to say that the ‘satisfaction’ can only be formed by the person who is competent to impose penalty and not a lower ranking authority. The law provides for imposition of penalty by an officer of the rank of the Joint Commissioner. Thus, the AO is statutorily debarred for forming any ‘satisfaction’ either at the time of assessment order or subsequent thereto.
Ld. AR mentioned that although the outstanding liability was shown under the ‘head loans’ in the balance sheet, such declaration by itself cannot be taken as sacrosanct and true character of transaction has to be determined from facts instead of nomenclature assigned.
The assessee has narrated the circumstances in relation to the cash payments to four parties. The assessee has attempted to demonstrate from the ledger account that the outstanding has been carried forward from the earlier years and a part payment was also made in the preceding years as a measure of discharge of liability arising from purchase of tobacco products. The similar payment in cash has been made in the earlier year which has not been disputed by the Revenue. The presumption of bona fide & good faith would, thus, arise in favour of the assessee. Mere nomenclature in a particular manner in a balance sheet will not be conclusive for determination of nature of transaction. The stand of the assessee towards purchase of tobacco is consistent and emanating from the orders of the lower authorities. We, thus, are inclined to appreciate the stand of the assessee in affirmative on merits. Consequently, on merits, the case of the assessee deserves to be accepted. Hence, the penalty imposed under Section 271E by the competent authority (JCIT) is set-aside and quashed.
FULL TEXT OF THE ITAT JUDGEMENT
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