2023 (10) TMI 695 - 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 - Violation was of Section 269SS of the Act which deals with the modes of accepting certain loans deposits and specified sums and Section 269T of the Act which deals with the modes of repayment of certain loans for deposits are violation which are not to be examined from the perspective the person who has given the loan or to whom the loan was returned but from the perspective of the recipient of the loan. Thus, the innocence pleaded on account of ignorance of law of Directors who are claimed to be non-resident is insignificant. There is no question of any benefit to the assessee company on the basis of claim of bona fides of the Directors. The provisions of Section 269SS and 269T of the Act imposed statutory liability and cannot be said to held to be mere technical violation in case of companies. Appeal dismissed.

Summary

Issues involved: Appeal against penalty u/s. 271D and u/s. 271E for assessment year 2002-03.

Summary:

Issue 1: Penalty u/s. 271D and u/s. 271E

The Assessing Officer initiated penalty proceedings based on cash receipts and repayments by the assessee company, in contravention of section 269SS and 269T of the Act. The assessee claimed that the amounts were share application money and were repaid upon rejection of share capital allotment. However, the authorities found inconsistencies in the explanations and evidence provided by the assessee. The Tribunal noted that the appellant failed to provide sufficient evidence to support its claims and that the cash book submitted was deemed unauthentic. The Tribunal upheld the penalty orders, dismissing the appeals of the assessee.

Issue 2: Miscellaneous Application

The assessee filed a Miscellaneous Application citing two Supreme Court judgments that were not considered in the original order. The Tribunal recalled the order to consider these judgments. The assessee argued that the directors, who were non-residents, were unaware of the technicalities of the provisions, and therefore, should not be held liable for the violations. However, the Tribunal found that the judgments cited did not affect the merits of the case discussed in the original order. It was concluded that the violations of sections 269SS and 269T were substantive and not merely technical, and ignorance of the law by the directors did not absolve the company of liability. The appeals were dismissed.

This summary provides a detailed overview of the issues involved in the legal judgment, including the penalty proceedings and the subsequent Miscellaneous Application, along with the respective decisions and reasoning provided by the Tribunal.