2017 (1) TMI 1820 - AT - Income Tax

Penalty u/s. 271D and u/s. 271E - assessee company has taken loan in cash on different dates repaid the same in cash in contravention of section 269SS 269T - HELD THAT - We find that the assessee has taken diverse stands at different points of time. In the assessment proceedings initially the assessee stated that no cash payment has been received. In the penalty proceedings it was stated that cash payment was received as share application money and was repaid to Loan creditors on rejection of the offer by the Board of Directors. The appellant could not bring any evidence on record to support his claim regarding the amount received from Loan creditors towards share application money and the rejection of the share capital allotment by the Board. The appellant has also failed to rebut the finding of the authorities below that once both the depositors were the directors of assessee company there was no reason to believe that the proposed offer of share capital allotment was withdrawn for which no evidence is laid on record. The assessee also could not adduce any evidence before us to support its stand that the amount so received from Loan creditors was repaid by way of cheques or the amounts received was mentioned twice by the AO. The cash book submitted was not found authentic as it was an extract typed on A-4 size paper as mentioned by the CIT(A) in the impugned order. Thus no justification to interfere with the conclusions of the ld. Authorities below that the appellant has taken loan in contravention of section 269SS and has repaid the same in contravention of section 269T of the Act entailing penalty u/s. 271D and 271E - Decided against assessee.

Summary

Issues:
Penalty under section 271D and 271E for cash transactions violating sections 269SS and 269T.

Analysis:
The Appellate Tribunal ITAT Delhi heard two appeals filed by the assessee against penalty orders under sections 271D and 271E for the assessment year 2002-03. The Assessing Officer noted cash receipts from directors and a company, which the assessee initially denied. The AO found discrepancies in the cash book and non-reporting in the tax audit report. The AO imposed penalties for contravention of sections 269SS and 269T. The assessee argued the cash was share application money returned to a non-resident director. The Tribunal observed the inconsistent stands taken by the assessee, lack of evidence supporting claims, and failure to explain cash transactions. The Tribunal upheld the penalties, citing lack of justification for interference with the lower authorities' decisions. The Tribunal dismissed both appeals, affirming the penalties imposed.

This case highlights the importance of maintaining accurate records and adhering to legal provisions regarding cash transactions to avoid penalties under sections 271D and 271E. The Tribunal emphasized the need for consistent and supported explanations for cash dealings, as well as the significance of authentic documentation and compliance with tax audit reporting requirements. The judgment underscores the burden on the assessee to provide valid justifications for cash transactions and the consequences of non-compliance with sections 269SS and 269T of the Act. The Tribunal's decision to uphold the penalties serves as a reminder of the strict enforcement of financial regulations and the responsibility of taxpayers to adhere to statutory provisions to avoid legal consequences.