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Issues involved: The issues involved in the judgment are whether the transactions attracting provisions of section 269SS of the Income Tax Act, 1961 are genuine and whether penalty under section 271D can be imposed based on journal entries without actual receipt of cash loan.
Issue 1 - Section 269SS of the Act: The Assessing Officer treated a cash loan received by the assessee from M/s. Lahari Green Park as unexplained income under section 68 of the Act. However, the CIT(A) deleted the addition under section 68 after observing that the cash loan was taken by the assessee from M/s. Lahari Green Park based on receipts and payments statement. Subsequently, penalty proceedings under section 271D were initiated by the Assessing Officer due to alleged contravention of section 269SS. The assessee contended that no cash loan was received and the additions were made solely on the basis of journal entries. The CIT(A) directed the Assessing Officer to verify whether the cash loan was actually received or if there were only journal entries, citing a previous ITAT order in the assessee's favor for a different assessment year. Issue 2 - Penalty under section 271D: The Assessing Officer imposed a penalty under section 271D on the assessee for an amount equal to the alleged cash loan received, despite the assessee's explanation that no cash loan was actually received. The CIT(A) directed the Assessing Officer to delete the penalty if it was found that no cash loan was actually received and there were only journal entries, in line with the ITAT's previous decision. The ITAT upheld the CIT(A)'s direction, stating that no penalty can be imposed under section 271D based solely on journal entries without actual receipt of cash loan, as required by section 269SS. In conclusion, the ITAT upheld the CIT(A)'s decision and dismissed the department's appeal, emphasizing that penalty under section 271D cannot be imposed without actual receipt of cash loan, as per the provisions of section 269SS.
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