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2022 (2) TMI 1205 - AT - Income TaxPenalty u/s 271D - transaction of acceptance of cash trading advances violative of provisions of section 269SS - HELD THAT - In the instant case it is undisputed fact the assessee during the course of his regular business found accepted deposit in cash from five persons and transferred for the urgency of his principal however the assessee dejectedly failed to establish vis- -vis substantiate his proposition such receipts were trading advances in the light of evidential material such as sales invoices delivery challans and vouchers etc. - the appellant also remained unsuccessful in proving any of the intractable circumstances which leads to acceptance of deposit in cash or even demonstrate his case falling within the realm of exceptions laid in the provision or evince of reasonable cause of led such violation consequently we obstinate with the findings of tax authorities below. Once the violation of provisions of section 269SS is manifested it inevitably triggers penalty provision as laid in section 271D unless the sheltered within the umbrella of 273B. Hon ble High Court of Judicature at Bombay in a similar circumstance in Manish Nitin Wadikar 2019 (6) TMI 444 - BOMBAY HIGH COURT held that where the assessee failed on a given sufficient opportunities to establish any reasonable cause of violation of provisions of section 269SS per contra makes mere assertion against the proposition of tax authorities without any supporting material in substantiating such assertion is essentially sufficient to draw conclusion against the assertion made by the assessee consequently the penal provision shall follow. Tribunal had occasioned to considered the correctness of levy of penalty u/s 271D for the violation of provisions of section 269SS triggered out of bonafide transaction but in the absence of any reasonable cause as contemplated in section 273B in the case of Deepak Sales Properties Pvt Ltd 2018 (7) TMI 1314 - ITAT MUMBAI Held that the penalty u/s 271D is invincible in the absence of reasonable cause. We find no illegality in the penalty order; consequently we upholding the order of Ld JCIT with no infirmity. - Decided against assessee.
Issues Involved:
1. Imposition of penalty under Section 271D for violating the provisions of Section 269SS of the Income-tax Act, 1961. 2. Justification of the penalty order by the Commissioner of Income Tax (Appeals) [CIT(A)]. 3. Assessment of whether the cash transactions were trading advances or loans/deposits. Issue-wise Detailed Analysis: 1. Imposition of Penalty under Section 271D for Violating Section 269SS: - The core issue in the appeal concerns whether the acceptance of cash trading advances violated Section 269SS, thereby attracting penal action under Section 271D. - The assessee, an individual engaged in wholesale trading, filed a return of income (ROI) for the Assessment Year (AY) 2010-2011, which was subsequently scrutinized under Section 143(3), resulting in an observed violation of Section 269SS due to cash deposits exceeding ?20,000. - During penalty proceedings, the Joint Commissioner of Income Tax (JCIT) imposed a penalty equivalent to the cash deposits accepted in violation of Section 269SS. - The assessee argued that the cash was received as advances towards sales from prospective buyers and deposited into his account for bank transfer to the principal supplier. 2. Justification of the Penalty Order by the CIT(A): - The CIT(A) confirmed the penalty order, noting that the assessee failed to prove any business necessity or urgency for accepting cash deposits and did not provide substantial evidence to support the claim that these were trading advances. - The CIT(A) referenced several judicial precedents, including R K Singhal Vs CIT, Nandi Dhall Mills Vs CIT, and Auto Piston Mfg Co Pvt Ltd Vs CIT, to uphold the penalty. 3. Assessment of Whether the Cash Transactions Were Trading Advances or Loans/Deposits: - The Tribunal analyzed the facts and legal positions, noting that the assessee accepted cash deposits from five parties totaling ?27,00,000, which was an unusual feature given the nature of the business. - The Tribunal found that the assessee did not substantiate the claim that the cash receipts were trading advances with necessary evidence such as sales invoices, delivery challans, or vouchers. - The Tribunal held that the assessee failed to demonstrate any reasonable cause for accepting cash deposits, thus violating Section 269SS, which mandates the mode of acceptance of loans or deposits through banking channels. Conclusion: - The Tribunal concluded that the assessee's failure to establish the genuineness of the cash receipts as trading advances or to provide reasonable cause for the violation of Section 269SS justified the imposition of penalty under Section 271D. - Consequently, the appeal of the assessee was dismissed, and the penalty order was upheld with no infirmity. Order Pronouncement: - The order was pronounced on 25th February 2022, dismissing the appeal of the assessee with no order as to cost.
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