Bona Fide Belief With Genuineness Of Transaction Constitutes Reasonable Cause U/S 273B: Chhattisgarh HC
Sandeep Kaur Gill v. Union of India
Case Number: TAXC No. 98 of 2023
Facts:
1. In the assessment proceeding, the Assessing Officer held that the assessee has made repayment of loan to M/s. Tata Finance Corporation in that financial year to the extent of 6,71,939/- in cash against the loan taken for commercial vehicle.
2. The assessing officer proceeded to initiate penalty proceeding under Section 271E of the Act on the ground that repayment of loan to the extent of more than twenty thousand rupees by the assessee is in violation of provisions contained in Section 269T of the Act.
3. The assessee replied stating that due to failure on her part to pay installments in time, the financer insisted upon her to make cash payment, which the assessee also, in turn, filed copy of the financer’s letter issued by M/s. Tata Finance Corporation.
4. The Assessing Officer did not accept the explanation of the assessee and order imposing penalty under Section 271E of the Income Tax Act was passed.
Hon Chhattisgarh HC held as below:
1. The Assessing Officer, the CIT (Appeals) and the ITAT have proceeded on the basis that breach of provisions contained in Section 269SS of the Act shall lead automatically to penal provisions contained in Section 271E of the Act and completely ignored the provisions contained in Section 273B of the Act.
2. Sec 273B requires that on proof of reasonable cause, the penalty imposable under Section 271E(1) would not be imposable.
3. They have further ignored the fact that the imposition of penalty merely on technical mistake committed by the assessee, which has not resulted in any loss of revenue, would not be sustainable.
4. Under Section 273B the word ‘reasonable cause’ has not been defined in the Income Tax Act, 1961. Therefore, in the context of the penalty provisions, the words ‘reasonable cause’ would mean a cause which is beyond the control of the assessee.
5. So, bona fide belief coupled with genuineness of transactions constitutes a reasonable cause under section 273B of the Income Tax Act for not invoking Section 271E of the Act.
The copy of the order is as under:
