ITAT deletes penalty for violation of Sec 269ST when cash deposited is duly accounted & offered for taxation

Kolkata Tribunal has deleted the penalty for violation of Sec 269ST as there was reasonable cause where cash deposited is duly accounted & offered for taxation with a warning that this relief should not be construed as precedence and leeway for accepting the money in the manner as in the present case.

Shri Anil Kochar (Ld. Counsel) submitted that the assessee is an operating company having a significant volume of business and its sales are spread over a wide range of geographical locations. With such a magnitude of business volumes, it is but natural that some debtor/buyer of its products, more particularly when it deals in breeders, birds, and chicks, may deposit the sale proceeds directly into the bank account of the assessee. Against a total volume of sales of Rs.56.93 Cr., one such party has deposited an amount of Rs.2,04,000/- in the assessee’s bank account at a location in the state of Assam whereas the assessee maintained its regular bank accounts at Kolkata.

Ld. Counsel further stated that the assessee has evidently demonstrated that such a deposit in its bank account by a party in the state of Assam is against its sales realization and is duly accounted in its books of account and offered for taxation. According to the council, the provisions of section 271DA of the Act contain a proviso according to which no penalty shall be imposable if such a person proves that there was good and sufficient reason for the contravention.

The Income Tax Appellant Tribunal (ITAT) after hearing the rival contentions and from the perusal of material placed on record, agreed that there exists a good and sufficient reason in terms of proviso to section 271DA for deleting the penalty of Rs. 2,04,000/- imposed by the Ld. AO.

“Considering the nature of business of the assessee and one of such transaction of deposit of cash by a party to a remote location in the bank account of the assessee against a sales volume of Rs. 56. 93 Cr., we direct to delete the penalty imposed u/s. 271DA of the Act.” Said the bench comprising of Shri Rajpal Yadav and Shri Girish Agrawal.

Citation: Amrit Breeder Farms Pvt. Ltd. v/s The ACIT; ITA No. 594/Kol/2022; Assessment Year 2019-20