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TMI Blog2019 (6) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... 271D of the Act for accepting the cash loans of Rs. 6,90,000/- from various persons otherwise than by account payee cheques. Hence, the JCIT has issued a show-cause notice dated 11/03/2016 for initiation of penalty under section 271D of the Act. In response to the notice issued, the assessee has filed the explanation vide its letter dated 12/04/2016. The JCIT did not satisfy with the explanation filed by the assessee, hence, imposed the penalty of Rs. 6,90,000/- under section 271D for violation of the provisions of section 269SS of the Act. The JCIT in his order passed under section 271D has stated that the assessee had admitted the acceptance of cash loans and voluntarily paid the penalty of Rs. 6,90,000/- and enclosed the challans also, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash loans penalty was levied u/s 271D of the Act. 3.1 The Ld.CIT(A) also considered the explanation offered by the assessee at the time of assessment proceedings, wherein it has furnished the reply to the questionnaire, before the Assessing Officer stating that the cash loans of Rs. 6,90,000/- was accepted from close relatives of the partners for purchase of car and all the creditors are assessed to tax. The ld. CIT(A) examined the explanation filed by the assessee and observed that the car was purchased from the HDFC loan and there were sufficient funds available with the assessee, hence, there was no exigency for accepting the cash loans. The assessee's alternative contention that the cash loans in fact, were received towards capital acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty is leviable when the explanation offered by the assessee is not satisfactory. In the instant case, the ld.JCIT has not applied his mind and examined the explanation offered by the assessee, hence, argued that there is no case for confirming the levy of penalty under section 271D of the Act. The ld.AR further submitted that the ld. CIT(A) tried to improve the facts and satisfaction but it is the JCIT who has to satisfy the reasons for levying penalty, but not the ld. CIT(A), hence, requested to set aside the order of the ld. CIT(A) and cancel the penalty imposed by the Ld.JCIT. 6. On the other hand, the Ld. Departmental Representative supported the orders of the authorities below. 7. We have head both the parties and perused the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling loan from HDFC Bank. The A.O confronted on this issue of accepting cash loan from individuals for purchase of car and proposed for levy of penalty of penalty u/s 271D. A copy of purchase invoice of the car is submitted herewith for kind perusal of the Commissioner of Income Tax (Appeals)-1, Guntur." As per the explanation, the assessee had reiterated the submissions made before the Assessing Officer at the time of assessment proceedings. Further it is observed from the explanation that the loans were accepted from the close relatives for purchase of car and the said loans were repaid during the Financial Year 2015-16, hence, requested not to impose penalty under section 271D of the Act. The assessee also furnished the confirmation le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f them are assessed to income tax and submitted the confirmations. It was stated by the assessee that the amounts were received as capital contribution and due to inadvertent mistake of the accountant the same was recorded as loans. This aspect neither examined by the JCIT nor the Ld.CIT(A) by making cross verification. No penalty is leviable without application of mind by the levying authority. It is incumbent upon the JCIT to appreciate the facts and merits of the case and to reach the satisfaction for levy of penalty. In the instant case it established that the JCIT has not considered the explanation of the assessee before levy of penalty and levied the penalty under mistaken impression and presumptions. Therefore, we hold that the JCIT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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