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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 ..... taken the cash loans for purchase of car from the close relatives i.e. sons-in-law of the Managing Partner through their spouses who are partners and all of 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. 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 has not made o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- and enclosed the challans also, hence, held that the case is a fit case for levy of penalty under section 271D of the Act. 3. Aggrieved by the order of the JCIT, the assessee went on appeal before the CIT(A) and submitted that he did not make the payment of penalty of ₹ 6,90,000/- and argued that there was no satisfaction reached by the Ld.JCIT for levy of penalty under section 271D of the Act. The assessee further argued that the findings of the Ld.JCIT that the payment of penalty of ₹ 6,90,000/- was incorrect. Hence argued that there is no case for levy of penalty under section 271D of the Act. The ld. CIT(A) called for remand report from the JCIT with regard to the factual position of payment of ͅ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s alternative contention that the cash loans in fact, were received towards capital account was also not accepted by the ld. CIT(A) since it was not substantiated with the entries in the books of accounts and thus observed that there is no business expediency as submitted by the ld.AR at the time of hearing. Hence, held that the JCIT rightly levied penalty and accordingly confirmed the order of the JCIT and dismissed the appeal of the assessee. 4. Against the order of the Ld. CIT(A), the assessee is in appeal before this Tribunal. 5. During the appeal hearing, ld.AR submitted that the assessee had accepted the cash loans from near relatives-Dr.Garlapati Krishna Kanth, Dr.Ch.V.Ramakrishna, P.V.N.S. Murthy a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the other hand, the Ld. Departmental Representative supported the orders of the authorities below. 7. We have head both the parties and perused the material placed on record. In the instant case, the JCIT issued a notice under section 271D calling for explanation of the assessee as to why the penalty should not be levied for violation of the provisions of section 269SS of the act. In response to the notice, the assessee has filed the explanation vide its letter dated 12/04/2016 which is extracted in page No.8 of the ld. CIT(A) s order and the same reads as under:- 4) During the course of assessment proceedings, the A.O. discussed the issue of accepting loans in cash amounting to ₹ 6,90,000/- and a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 letters from the creditors confirming the loans and furnishing their relationship with the Managing partner of the firm and their income tax particulars which is evident from page No.11 to 23 of paper book. The JCIT has not considered the explanation offered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 has not made out case for levy of penalty under section 271D of the Act, hence, we set aside the order of the ld. CIT(A) and cancel the penalty order passed by the JCIT. Thus, the appeal of the assessee is allowed. 8. In the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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