2013 (3) TMI 809 - AT - Income Tax

Summary

Issues involved: Appeal against penalty imposed u/s 271D for accepting cash deposits in violation of Section 269SS.

Facts and Decision by CIT(A): The penalty was confirmed as the assessee failed to comply with Section 269SS by accepting cash loans exceeding Rs. 20,000 without proving a reasonable cause. The CIT(A) observed that the transactions were genuine but upheld the penalty as no reasonable cause was shown for accepting the cash loans.

Assessee's Grounds: The assessee argued that the cash deposits were for business needs and transferred between accounts for immediate use, citing various judicial decisions where transactions between family members were not considered as loans. The assessee contended that the penalty should be dropped due to technical breaches and genuine transactions.

ITAT Judgment: After considering submissions, ITAT found that the penalty was imposed without considering the assessee's explanations. Referring to the assessee's grounds, ITAT noted that the transactions were genuine and not loans, as they involved the same person acting in different capacities. Citing relevant case law, ITAT concluded that the penalty was unjustified and deleted the penalty imposed u/s 271D.

Conclusion: The penalty imposed u/s 271D for accepting cash deposits in violation of Section 269SS was deleted by ITAT, emphasizing the genuine nature of transactions and the absence of a loan scenario. The appeal by the assessee was allowed.