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TMI Blog2011 (5) TMI 982X X X X Extracts X X X X X X X X Extracts X X X X ..... ontained in section 269SS. Likewise the Assessing Officer also observed that the assessee has repaid such loans and advances again in cash in excess of the limit prescribed and has thus violated the provisions of section 269T. The explanations offered by the assessee were not acceptable to the assessing authority. Penalties were thus levied. 3. The arithmetic details of the transactions are as follows :- (i) According to the Assessing Officer the assessee had accepted cash loans for an amount of ₹ 8,18,29,461/- for the assessment year 2004-05. Likewise for the assessment year 2005-06 the assessing authority computed such cash loans for a sum of ₹ 7,35,86,368/-. This is a case of alleged violation of section 269SS, which invited levy of penalty under section 271D. The Assessing Officer has levied penalty for the equal amounts of cash loans accepted by the assessee being the amount of ₹ 8,18,29,461/- and ₹ 7,35,86,368/- respectively for the assessment years 2004-05 and 2005- 06. (ii) In respect of repayments of loans in cash, the assessing authority has targeted an amount of ₹ 7,10,45,296/- for the assessment year 2004-05 and ₹ 4,89,91,032 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 1,04,37,986/- for the assessment year 2005-06 respectively as against the penalties of ₹ 8,18,29,461/- and ₹ 7,35,86,368/-, levied by the assessing authority. 8. Likewise in the matter of repayment of loans in cash, the Commissioner of Income-tax(Appeals) found that cash repayments amounted to ₹ 72,25,000/- and ₹ 23,39,000/- for the assessment years 2004-05 and 2005-06 respectively as against the amounts considered by the Assessing Officer at ₹ 7,10,45,296/- and ₹ 4,89,91,032/-. The differential amounts of ₹ 6,38,20,926/- and ₹ 4,66,52,032/- were adjusted by journal entries for the assessment years 2004-05 and 2005-06 respectively. Accordingly he modified the penalty under section 271E for the assessment year 2004-05 to ₹ 72,25,000/- as against the penalty of ₹ 7,10,45,296/- levied by the assessing authority. Similarly for the assessment year 2005-06 the Commissioner of Income-tax (Appeals) modified the penalty under section 271E to ₹ 23,39,000/- as against the penalty of ₹ 4,89,91,032/- levied by the assessing authority. The first appeals were thus disposed of by the Commissioner of Income-tax(Appeals) li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tertainment Pvt. Ltd. in ITA No.2048(Mds)/2008, in the case of Shri S.Durairaj in ITA No.2009(Mds)/2006, the decision of the Agra Bench in the case of ITO vs. Amar Nath Shivraj (HUF) and the decision of the Pune Bench in the case of Sunflower Builders(P) Ltd. vs. DCIT. He explained that in all the decisions mentioned above the Tribunal has taken a unanimous view that in order to attract the provisions of law contained in sections 269SS and 269T, it is necessary that money should pass from one person to another by way of loan or deposit or by way of repayment of loan or deposit. As in the case of journal entries, no money has been transferred from person to person, there cannot be a case of violation of sections 269SS and 269T. 13. Regarding the portion of penalty confirmed by the Commissioner of Income-tax(Appeals), the learned counsel for the assessee submitted that the Commissioner of Income-tax(Appeals) has not considered the basic facts of the present appeals even though explained to him in very much detail. He explained that all these loans and deposits, stated to be so have been transacted between the assessee as a director of the companies and with associate persons in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee as director with his companies and also with his associates for the purpose of meeting urgent financial requirements and especially in the circumstances where funds were not forthcoming, penalty should not have been levied not only on the ground of reasonableness and genuineness but also on the ground that these transactions were mainly between companies and directors on a current account basis. He therefore submitted that the orders of the Commissioner of Income-tax(Appeals) may be set aside and the entire penalties be deleted. 17. We heard both the sides in very detail and examined the facts of the case. Regarding the appeals filed by the Revenue, as already stated, the only issue is as to whether the Commissioner of Income-tax(Appeals) is justified in excluding the journal entry transactions from the ambit of sections 269SS and 269T or not. Section 269SS provides that no person shall take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if the aggregate of such loans or deposits exceed the prescribed limit. Section 269T provides that likewise no repayment of any loan or deposit shall be made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayam Publications Ltd., 285 ITR 221 has held that when the transactions between company and its directors are gone through current accounts between them, the provisions of law contained in section 269SS cannot be invoked. This principle was very much highlighted before the Commissioner of Income-tax(Appeals). But he has not stated anything regarding the fiduciary position of the assessee vis- -vis the company with which transaction had taken place. Again the Hon ble Madras High Court in the case of CIT vs. Lakshmi Trust Co., 303 ITR 99 has held that if the transactions were genuine and bona fide and the tax payer could not get a loan or deposit by account payee cheque or demand draft for bona fide reasons, the authority vested with the power to impose penalty has a discretion not to levy penalty. In order to examine whether the above decisions are applicable to the present case or not, the Commissioner of Income-tax(Appeals) should have considered the facts of the cases in the light of the provisions of law stated in section 273B. But the Commissioner of Income-tax(Appeals) has not made any such attempt in his orders. 22. In short, what we find is that the Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X
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