Penalty u/s 271E not permissible in absence of regular assessment framed against assessee: ITAT

The Income Tax Appellate Tribunal (ITAT Ahmedabad) in the matter of Vijayaben G. Zalavadia Vs. JCIT ruled out that Penalty u/s 271E not permissible in absence of regular assessment framed against assessee.

The assessee, an agriculturist had taken loan from one Berna Gamni Seva Sahakari Mandli Ltd., a cooperative society. It is relevant to mention that the assessee is a member of the said cooperative society. However, out of the sales of the agricultural produce the assessee repaid those laons of Rs. 1,42,000/- during the assessment year under consideration in cash.

It was argued that the payment made by the assessee was not found to be ingenuine neither there was any allegation of evasion of tax by the assessee. No regular assessment was framed in respect of the assessee as submitted by the Ld. A.R which has not been controverted by the Ld. D.R. Thus, the applicability of Section 269T and the consequent penalty under Section 271E is not sustainable as argued by the Ld. A.R. In support of his claim he has relied upon a judgment passed by the Punjab & Haryana High Court, in the case of CIT vs. Manohar Lal Thakral, reported in (2018) 93 taxmann.com 156 (Punjab & Haryana).

ITAT Order

We find substances in the submissions made by the Ld. A.R. particularly after considering the order passed by the Hon’ble Punjab and Haryana High Court as cited hereinabove. In fact, on the identical set of facts the penalty under Section 271E was deleted by the Tribunal and further upheld by the Hon’ble High Court.”

The Tribunal ruled out, “Having regard to the facts and circumstances of the case and the ratio laid down in the order passed by the Punjab and Haryana High Court we do not hesitate to hold that the impugned penalty under Section 271E is not permissible in the absence of regular assessment framed against the assessee by the Revenue. Hence, the same is not found to be sustainable in the eye of law and, thus, quashed. The appeal preferred by the assessee is, therefore, allowed.”

To Read Judgment Download PDF Given Below: