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2022 (3) TMI 1178 - AT - Income TaxPenalty u/s 271D - loan amount obtained in cash from Directors in emergency - violation of provision of section 269SS - HELD THAT - After perusal of the material on record, it is noticed that during the year under consideration directors of the assessee company, Anish Nagpal has given and other director Shri Amit Purswani different dates as per the copies of ledger account placed in the paper book filed by the assessee. We have considered the fact and material on record and noticed from the copy of ledger account submitted by the assessee that on the different dates assessee has obtained cash from the two directors and there was no repayment made by the assessee during the year, the aforesaid accounts cannot be said of the nature of current account as claimed by the assessee. The assessee has not brought any material to substantiate that assessee has not committed any violation of section 269SS of the act, we do not find any infirmity in the decision of ld. CIT(A) in sustaining the penalty levied u/s. 271D of the act, therefore, this ground of appeal of the assessee is dismissed.
Issues:
Violation of Section 271D of the Income Tax Act, 1961 - Validity of show cause notice - Time-barred assessment - Upholding of penalty by CIT(A) Analysis: 1. Violation of Section 271D: The case involved an appeal for the Assessment Year 2014-15 regarding the violation of Section 271D of the Income Tax Act, 1961. The additional CIT had imposed a penalty of ?4,00,000 on the assessee for accepting loans in cash, which was found to be in contravention of Section 269SS of the Act. The CIT(A) upheld the penalty, stating that the loans accepted in cash exceeded ?20,000, thus violating the provisions of Section 269SS. The CIT(A) concluded that the penalty was justified as the assessee failed to comply with the law. 2. Validity of Show Cause Notice: The assessee contended that the order by the CIT(A) was illegal as no valid and specific show cause notice was given, violating principles of natural justice. However, the CIT(A) dismissed this argument, stating that during the assessment proceedings, it was found that loans exceeding ?20,000 were accepted in cash, leading to the penalty under Section 271D. 3. Time-barred Assessment: The assessee claimed that the assessment order was time-barred as no tax payable was determined by the officer passing the penalty order. Despite this argument, the CIT(A) upheld the penalty, emphasizing the violation of Section 269SS and the justification for imposing the penalty under Section 271D. 4. Upholding of Penalty by CIT(A): During the appellate proceedings, the assessee argued that the loans were obtained in an emergency from the company's directors and did not violate Section 269SS. The department, however, contended that the transactions were loan accounts based on ledger entries. The ITAT observed that the loans were accepted in cash from the directors, and no repayment was made during the year. The ITAT found no evidence to support the claim that the transactions were exempted or that there was no violation of Section 269SS. Citing relevant case laws, the ITAT upheld the CIT(A)'s decision to sustain the penalty under Section 271D. In conclusion, the ITAT dismissed the appeal of the assessee, affirming the penalty imposed under Section 271D for accepting loans in cash, which violated the provisions of Section 269SS of the Income Tax Act. The judgment emphasized the importance of complying with tax laws and upheld the penalty based on the facts and evidence presented during the proceedings.
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