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2024 (1) TMI 603 - AT - Income TaxPenalty u/s 271D - assessee had accepted loan in cash otherwise than an account payee cheque or draft, the amount of loans exceeded the limit prescribed u/s 269SS - HELD THAT - There is no evidence that the assessee has not violated the provisions of section 269SS of the Act and therefore, there is no factual error on the part of the lower authority. But as regards the contention of assessee that these transactions are not loan and accommodative transactions between the assessee and his employer. But the bench noted that on issue there is not material evidence made available by assessee. Assessee has placed on record only the ledger account, from that it is not clear whether the said transactions are considered as loan or the accommodative transactions or sales. It is also not clear whether the employer has received the cheque amount as sales consideration or as the amount as loan to employee in the books of the employer. This basic finding of the fact is not emanating from the records made available. Therefore, bench feels that the ld. AO in the interest of justice bring necessary evidence as to whether the transaction are on account of sales or on account of loan recorded will decide the applicability of the provision of section 269SS of the Act. It is also not clear as to whether the provision of section 269T is initiated at the other hand or not. Thus, fasting the liability on the assessee without bringing all the relevant facts on record is not correct and therefore, we are of the considered view that let the ld. JCIT should after giving proper opportunity to the assessee to decide the issue afresh but by providing adequate opportunity of being heard. The assessee is also directed not to take unnecessary adjournment on frivolous ground and submit the documents concerning the issue in question. Thus the appeal of the assessee is allowed for statistical purposes. Validity of penalty order on limitation - On being consistent to the view so taken in Seetharama Lakshmi Rice Groundnut Oil Mill Contractors 1977 (3) TMI 20 - ANDHRA PRADESH HIGH COURT we are of the considered view that looking to the present set of facts and circumstances the provision of section 275(1)(a) will apply so we see no merits in the arguments advanced by the ld. AR of the assessee and therefore, the ground no. 2 raised by the assessee stands dismissed.
Issues Involved:
1. Legality of Penalty under Section 271D of the Income Tax Act. 2. Validity of Penalty Order based on Limitation under Section 275(1)(c) of the Income Tax Act. 3. Nature of Transactions and Applicability of Section 269SS of the Income Tax Act. 4. Reasonable Cause for Cash Transactions and Applicability of Section 273B of the Income Tax Act. Summary: 1. Legality of Penalty under Section 271D of the Income Tax Act: The assessee was penalized under Section 271D for accepting a cash loan of Rs. 31,78,000/- from M/s Choudhary Bhuramal H. Jat, violating Section 269SS of the Income Tax Act, which mandates that loans exceeding Rs. 20,000/- must be taken through an account payee cheque or draft. The assessee contended that the transaction was an accommodation entry to avoid bank charges, supported by bank passbook and ledger account evidence. However, the AO and CIT(A) found the explanation unsatisfactory, noting no reasonable cause for such cash transactions and confirming the penalty. 2. Validity of Penalty Order based on Limitation under Section 275(1)(c) of the Income Tax Act: The assessee argued that the penalty order was barred by limitation under Section 275(1)(c). The penalty proceedings were initiated on 07.08.2019, and the order was passed on 05.03.2020. The assessee cited the Delhi High Court decision in Subodh Kumar Bharagava Vs. CIT, asserting that the penalty order should have been passed within six months from the end of the month in which the penalty action was initiated, making the order time-barred. However, the Tribunal concluded that the provision of Section 275(1)(a) applied, thus dismissing the limitation argument. 3. Nature of Transactions and Applicability of Section 269SS of the Income Tax Act: The assessee claimed that the cash deposits were not loans but accommodation entries for avoiding bank charges, supported by the employer's confirmation. The Tribunal noted that there was no clear evidence whether the transactions were loans or sales, and therefore, the applicability of Section 269SS could not be conclusively determined. The Tribunal remanded the matter back to the AO to ascertain the true nature of the transactions and decide the applicability of Section 269SS afresh. 4. Reasonable Cause for Cash Transactions and Applicability of Section 273B of the Income Tax Act: The assessee argued that the cash transactions were due to the employer's business needs and thus constituted a reasonable cause under Section 273B, which could exempt the assessee from penalty. The Tribunal noted that the assessee failed to provide sufficient evidence of urgency or necessity for cash transactions. However, considering the facts, the Tribunal directed the AO to re-examine the evidence and determine if there was a reasonable cause for the transactions, potentially exempting the assessee from penalty under Section 273B. Conclusion: The Tribunal partly allowed the appeal, remanding the matter back to the AO for a fresh decision on the nature of transactions and applicability of Sections 269SS and 273B, while dismissing the limitation argument under Section 275(1)(c).
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