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TMI Blog2018 (10) TMI 1023X X X X Extracts X X X X X X X X Extracts X X X X ..... e loan on 28.02.2011 due to business exigencies. The AO has neither doubted the genuineness of the transaction nor disputed the source of the creditors. Therefore, we hold that there is sufficient and reasonable case for accepting the loans of ₹ 10,00,000/- otherwise than by crossed cheque. Hence we hold that the assessee’s case is covered u/s 273B for not imposing penalty u/s 271D of the Act. Accordingly, the order of the lower authorities is set aside and the appeal of the assessee is allowed. Levy of penalty u/s 271E - assessee had made the payment for medical treatment of his father in cash - eligibility of exemption u/s 40A(3)r.w. Rule 6D - reasonable cause to make the payment - Held that:- The amounts were used for the purpose of meeting the medical emergency expenses. There is no reason to disbelieve the submission of the assessee when the person was hospitalized and undergoing the treatment. The contention of the AO that the amount should have been paid by way of cheque on the same day or by way of bank draft on the next day is farfetched and unacceptable. The medical emergency has to be attended keeping in view of the prevailing circumstances. The sources for m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to drop the penalty proceedings. The assessee further submitted that the money was urgently needed for the purpose of business to meet the funds to honour the cheques and the loans were also taken from the sister and the nephew of the partner due to the pressing needs of the firm under the bonafide impression that the transactions would not attract the provisions of 269SS of the Act. The assessee submitted that it was purely technical mistake and the transactions were only between the blood relatives of the partners. He further submitted that the said transactions were recorded in the regular books of the assessee and the genuineness of the transactions was also beyond the doubt. The assessee argued before the AO, that once the transactions were recorded in the books of accounts and the genuineness of the transaction is not in doubt by the revenue, it would be a reasonable cause for non-levy of penalty u/s 271D of the Act. The assessee also relied on the following decisions: i. OMEC Engineers Vs. CIT (2007) 294 ITR 599 ii. Bhagwathi Prasad Bajoria (HUF) Vs. CIT (2003) 263 ITR 487 (Gauhati) iii. CITVs.Sunil Kumar Goel (2009) 315 ITR 99 (Madras) iv. Lakshmi Trust Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the firm and the creditors, but not between the partners and their relatives. Therefore, the AO observed that the case laws relied upon by the assessee in the facts and the circumstances of the case are distinguishable and does not help the assessee. Accordingly, the AO rejected the contentions of the assessee and imposed penalty of ₹ 10 lakhs u/s 271D of the Act. 4. Against the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) confirmed the penalty imposed by the AO. The Ld.CIT(A) relied on the observations made by the AO. 5. Aggrieved by the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. During the appeal hearing, the Ld.AR reiterated the submissions made before the AO and on the other hand, the Ld.DR relied on the orders of the lower authorities. 6. We have heard both the parties and perused the material placed on record. The Ld.AR has made three propositions for non levying the penalty u/s 271D. Firstly, the Ld.AR made the proposition that the loan was accepted from the close and blood relatives and the penalty is not leviable and relied on the various case laws cited supra. In this case, the assessee fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ia Ltd. was cleared on 04.03.2011 for an amount of ₹ 22,94,453/-. The AO/JCIT has not given any finding with regard to the availability of sufficient balances in the bank account to meet the cheques issued to Rallis India Ltd., during the intervening period from 28.02.2011 to 04.03.2011. The above observation establishes that the assessee had accepted the loans, otherwise than by account payee cheque to meet the dues payable to Rallis India Ltd. on 28.02.2011 due to business exigencies. Therefore, there is no reason to suspect the business exigency and pressing need of the assessee as explained by the assessee during the course of assessment proceedings. Therefore, we are of the considered opinion that the assessee had accepted the loan on 28.02.2011 due to business exigencies. The AO has neither doubted the genuineness of the transaction nor disputed the source of the creditors. Therefore, we hold that there is sufficient and reasonable case for accepting the loans of ₹ 10,00,000/- otherwise than by crossed cheque. Hence we hold that the assessee s case is covered u/s 273B for not imposing penalty u/s 271D of the Act. Accordingly, the order of the lower authoriti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee firm to repay the amount of ₹ 2,26,000/- to Sri Jami Durga Prasad on 24.10.2010 which happened to be Sunday. The amount can be paid by way of cheque on the same day or by way of bank draft on the next day. Further, the payment of ₹ 1,20,282/- was paid in a day other than Sunday in which banks are working. Accordingly the JCIT rejected the submission of the assessee that the payments made to Sri Jami Appa Rao and Sri Jami Durga Prasad are not covered as exception u/s 273B of the Act and there was no reasonable cause to make the payment. Hence, imposed penalty of ₹ 3,46,282/- u/s 271E of the Act. 8. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) dismissed the appeal and confirmed the order of the JCIT. Against the order of the Ld.CIT(A), the assessee is in appeal before this Tribunal. 9. During the appeal hearing, the Ld.AR submitted that the repayment of loan was made by the assessee due to medical emergency, since Sri Jami Appa Rao was hospitalized and he had to incur the expenditure to meet the medical expenses thus the creditor had pressed for payment of loan in cash to meet the medical e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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