2023 (3) TMI 1303 - AT - Income Tax

Penalty u/s 271D - violation of provisions of Section 269 SS - assessee argued that the cash loan has been taken for urgent disbursal of the salary - HELD THAT - In the instant case, we find that though the assessee argued that the cash loan has been taken for urgent disbursal of the salary, the same fact could not be brought on record that the salary has been indeed paid from the loans taken. The assessee could not prove the fact of payment of salary subsequent to the receipt of loan and hence, we decline to interfere with the order of the ld. CIT(A). Appeal of the assessee is dismissed.

Summary

Issues:
1. Violation of provisions of section 269SS by accepting cash loan.
2. Imposition of penalty under section 271D by Addl. CIT.
3. Appeal against penalty order before ld. CIT(A).
4. Grounds of appeal raised by the assessee.
5. Arguments presented by the assessee before ld. CIT(A).
6. Decision of ld. CIT(A) on the penalty imposition.
7. Analysis of provisions of Section 271D and Section 269SS.
8. Review of judgments presented by the assessee.
9. Final dismissal of the appeal by the Tribunal.

The appellant violated section 269SS by accepting a cash loan of Rs. 15,60,000 from a concern, leading to penalty imposition under section 271D by the Addl. CIT. The appeal against the penalty order was made before the ld. CIT(A), where the appellant raised various grounds challenging the penalty. The appellant argued that the cash loan was necessary for urgent salary payments and was genuine, recorded in books, and did not cause revenue loss. However, the ld. CIT(A) affirmed the penalty, stating that the explanation for accepting the cash loan did not constitute a reasonable cause under the law. The ld. CIT(A) found no merit in the appellant's submission, leading to the confirmation of the penalty.

The provisions of Section 271D and Section 269SS were analyzed by the Tribunal. Section 271D imposes a penalty equal to the amount of the loan accepted in contravention of Section 269SS. Section 269SS prohibits taking loans in cash exceeding a specified amount except in certain exempted cases. The Tribunal reviewed the judgments cited by the appellant but found no proof that the loan was used for urgent salary payments. Consequently, the Tribunal declined to interfere with the ld. CIT(A)'s decision, leading to the dismissal of the appeal.

In conclusion, the Tribunal upheld the penalty imposed under section 271D due to the violation of section 269SS by accepting a cash loan. The Tribunal found the appellant's explanation insufficient to justify the acceptance of the cash loan, leading to the dismissal of the appeal against the penalty order. The decision was based on a detailed analysis of the legal provisions and arguments presented during the proceedings.