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TMI Blog2019 (1) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... hased Machinery from the assessee company. AO has wrongly arrived at the conclusion that the assessee had obtained the amount in question in violation of section 269SS of the Act, on the basis of loose papers containing the questioned entries, without pointing out any corroboration. In any case, even if one is to go by this documents found by the search tem, the Ld. CIT (A) has rightly inferred that, the nature of transaction is not loan but a business advance for purchase of machinery. As per the settled principles of the law, penal provisions are required to be construed strictly. Hence, in our considered view, the material on record is not sufficient to sustain penalty imposed by the assessment officer u/s 271D read with section 269SS of the Act. Section 271E makes a person liable for penalty for repayment of loan or deposit or specified advance referred to in section 269T otherwise than in accordance with the said section. Since, we have dismissed the appeal of the revenue and upheld the findings of the Ld. CIT (A), holding that the assessee has not violated the provision u/s 269SS of the Act, there is no reason to hold the assessee liable for penalty u/s 271E of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ; 7,00,00,000/- holding that the assessee has violated the provisions u/s 269SS of the Act. In the first appeal, the Ld. CIT (A) deleted the addition holding that the evidence on record is not sufficient to impose penalty u/s 271D of the Act. The revenue is in appeal against the findings of the Ld. CIT (A). 3. The revenue has raised the following effective ground of appeal against the impugned order passed by the Ld. CIT (A):- On the facts and circumstances of the case and in law, Ld. CIT (A) has erred in deleting the penalty of ₹ 7,00,00,000/- levied u/s 271D of the I.t. Act on account of contravention of the provision of Section 269SS of the I.T. Act. 4. Before us, the Ld. Departmental Representative (DR) relying on the findings of the Addl. Commissioner of Income Tax submitted that since the amount in question was paid by M/s Tara Health Foods Ltd. amounting to ₹ 7,00,00,000/-, as per the incriminating document recovered during search action, the Ld. CIT (A) has wrongly held that the Addl. CIT-Range-12(3) was not having any other tangible material to confirm the said transaction. Therefore, the impugned order is liable to be set-aside. 5. On the ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SS and was liable for penalty u/s. 271D. During the course of appellate proceedings the A/R of the assessee has vehemently opposed the levy of penalty. It has been submitted that the learned Addl. CIT Range-12(3) was not having any other tangible material in his possession to confirm the said transactions but still he disregarded the submissions of the appellant and the statement of Tara Health Foods Ltd. that there proceedings based on the information received from Dy. Commissioner of Income Tax, Central Circle-I, Ludhiana. The learned officer also did not appreciate that the rough noting found was not a valid document to prove the existence of such transaction. In the present case the revenue does not have any material to prove that such transactions ever existed. Hence the action of the learned offer is bad in law in utter disregard of the legal provisions and hence it is prayed that the penalty levied be deleted and the penalty order be quashed. It is also submitted that without accepting, that if we proceed on an assumption that such transactions does exists between the said THFL and the appellant the learned officer has erred in misunderstanding the reported transactions of A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t by the Ld. counsel for the assessee, the Hon ble Supreme court has held in the case of Common Cause vs. Union of India (supra) that loose sheets of paper containing rough entries have no evidentiary value under Evidence Act. We notice that in the present case, except the presumption drawn by AO from the rough sheet containing the questioned entries, there is no other direct or circumstantial evidence to substantiate the conclusion of AO that the assessee has accepted loan or deposit in cash from Tata Health Food Ltd. within the meaning of section 269SS of the Act. We further notice that Sh. Balwant Singh, MD of Tata Health Food Ltd. has sworn an affidavit stating that the company Tata Health Food Ltd. had neither given any cash loan to the assessee company nor any amount was received by Tata Health Food Ltd. Sh. Balwant singh has further stated that only in the financial year 2008-09, the Tata Health Food Ltd had purchased Machinery from the assessee company. Under these circumstances, particularly in the light of the principles of law laid down by the Hon ble Supreme Court referred above, we are of the considered view that AO has wrongly arrived at the conclusion that the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was observed that assessee had violated provisions of section 269T and was liable for penalty u/s. 271E. During the course of appellate proceedings the A/R of the assessee has vehemently opposed the levy of penalty. It has been submitted that the learned Addl. CIT Range-12(3) was not having any other tangible material in his possession to confirm the said transactions but still he disregarded the submissions of the appellant and the statement of Tara Health Foods Ltd. that there were no such transactions ever executed and continued the proceedings based on the information received from Dy. Commissioner of Income Tax, Central Circle-I, Ludhiana. The learned officer also did not appreciate that the rough noting found was not a valid document to prove the existence of such transaction. In the present case the revenue does not have any material to prove that such transactions ever existed. Hence the action of the learned offer is bad in law in utter disregard of the legal provisions and hence it is prayed that the penalty levied be deleted and the penalty order be quashed. It is also submitted that without accepting, that if we proceed on an assumption that such transactions does ..... X X X X Extracts X X X X X X X X Extracts X X X X
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