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TMI Blog2019 (9) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... urnish any evidence to establish that the transaction in question was related to the company, but not related to him. There is no dispute that the assessee has given promissory note and accepted the loan in cash in violation of provision 269SS of the act. The contention of the assessee that the transaction was related to the company was not established with any tangible evidence. AY 2004-05 - ledger account copies alone cannot establish that loans accepted by the assessee were related to the company. The entries of the books of accounts of the company and the seized documents should support the contention of the assessee. Against the opening balance of 85,000/- as on 01.04.2005 in the books of the company, the company has refunded the sum of 1,35,000/- and shown closing balance of 50,000/-. The opening balance in the company s accounts, the amount refunded to Shri Rao and Shravani and the cash loans of 60,000/- each does not match with the explanation and the entries in the books of accounts of the company and the claim of the assessee. Since the assessee could not substantiate with supporting evidence, we are unable to accept the contention of the assessee that the transactions we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .CIT(A) allowed partial relief. The Ld.CIT(A) confirmed the penalty of ₹ 2 lakhs for the A.Y.2002-03 against the levy of penalty of ₹ 3,58,04,875/-, for the A.Y. 2004-05, the Ld.CIT(A) confirmed the penalty of ₹ 1,20,000/- against the levy of penalty of ₹ 8,80,000/- and for the A.Y. 2006-07 the Ld.CIT(A) confirmed the penalty of ₹ 12,00,000/- against the levy of penalty of ₹ 61,05,000/-. 2.1. Against the order passed by the Ld.CIT(A), the department has filed appeal before ITAT, Visakhapatnam, which was disposed off by an order dated 09.092011. The assessee has filed appeal before ITAT, Hyderabad and the records were transferred from ITAT, Hyderabad to ITAT, Visakhapatnam in November 2017. Subsequently, the case was fixed for hearing on various dates. In the instant case, as discussed earlier, the revenue appeals were disposed off without hearing the assessee's case and the assessee's appeals remained pending. During the appeal hearing, the Ld.AR filed affidavit stating the fact of pendency of assessee's appeals at ITAT Hyderabad was brought to the notice of the ITAT at the time of hearing the departmental appeals. Both the Ld.AR and the Ld.DR s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d none of the transactions were related to him, all pertained to the company and further submitted that all the amounts of advances found as per the seized material were related to the advances for sale of plots of the company, hence there is no case for levy of penalty on him. Due to non allotment of plots to the buyers, the amounts were stated to be outstanding and promissory notes were given as security. Therefore, argued that since the transactions were related to the company, the penalty is not permissible to be levied on the assessee. However, the AO did not find merit in the argument of the assessee since, the assessee failed to establish that the transactions in question were related to the company but not related to the assessee and thus levied the penalty u/s 271D r.w.s. 269SS of the Act for the A.Y.s 2002-03,2004-05 and 2006-07. The facts are identical for the remaining years of 2004-05 and 2006-07. The assessment year wise details of penalties in appeal before the ITAT are as under : A.Y. Penalty Levied (Rs.) 2002-03 2,00,000 2004-05 1,20,000 2006-07 12,00,000 A.Y:2002-03 5. In the assessment year 2002-03, the assessee had accepted the cash loan of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the assessee's case. The Ld.AR taken our attention to page No.75, 44 and 86 of the paper book and argued that the transactions were related to the company but not related to the assessee. The Ld.AR contended that page No.75, the copy of sale agreement which proves that the company has purchased the land from K.Mallesh and others on 27.06.2001. Page No.44 establishes that the company has repaid the amount to the assessee. Therefore, submitted that the pro-note was related to the company but not pertaining to the assessee, hence, requested to cancel the penalty. 7. On the other hand, the Ld.DR supported the orders of the lower authorities. 8. We have heard both the parties and perused the material placed on record. The relevant pages referred by the AR in respect of loan taken from K.Mallesh was copy of the sale deed in page No.75 to 85, page No.44 ledger account of K.Mallesh, Page No.86 promissory note given by the assessee to K.Mallesh on 30.04.2005. As per the recitals of the sale deed dated 27.06.2001 between K.Mallesh and others and the company, Shri K.Mallesh and others have sold agricultural land to the company for a sum of ₹ 6,87,500/- and the entire sum was paid an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntion of the assessee and found that the transactions were not recorded in the books of accounts of the company. Therefore, the Ld.CIT(A) rejected the assessee's contention that the transaction with Mr.TPS Rao and Ms. T.Shravani were related the company and confirmed the penalty of ₹ 1,20,000/- u/s 271D r.w.s 269SS of the Act. 9.1. During the appeal hearing, the Ld.AR reiterated the arguments made before the Ld.CIT(A) and stated that the transactions in question were related to the company, but not related to the assessee, thus penalty is not leviable in his hands. Referring to page No.71 and 72 of the paper book, the Ld.AR submitted that page No.71 is account of the company of Shri TPS Rao in the books of the company and as per which the company has refunded the sum of ₹ 1,35,000/- to Shri TPS Rao on 01.09.2005. Similarly, as per page No.72 of the paper book in the ledger account, the company has refunded the plot advance of ₹ 1,35,000/- to Ms T.Shravani. Since there was an outstanding balances in the names of Shri Rao and Shravani and the company has refunded the advances to the creditors, the Ld.AR argued that the transactions in question were related to the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... explanation and the entries in the books of accounts of the company and the claim of the assessee. Since the assessee could not substantiate with supporting evidence, we are unable to accept the contention of the assessee that the transactions were related to the company. Therefore, we hold that the assessee failed to establish with tangible evidence that the transactions were pertaining to the company, but not to the assessee. The assessee also failed to assign reasonable cause for accepting the loan in cash in violation of provisions of section 269SS of the Act. Therefore, we do not find any error in the order of the Ld.CIT(A), hence, we decline to interfere with the order of the Ld.CIT(A) and uphold the same and dismiss the appeal of the assessee. 2006-07 12. In the impugned assessment year, the assessee has accepted the cash loans as under : K.Mallesh 30.04.2005 ₹ 1,00,000/- P.Rayappa 25.11.2005 ₹ 11,00,000/- The AO levied penalty u/s 271D r.w.s. 269SS of the Act and the Ld.CIT(A) confirmed the penalties, since the assessee failed to establish that the sum of ₹ 12 lakhs i.e. ₹ 11 Lakhs from Shri Rayappa and ₹ 1.00 lakh from Shri K.Mal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash loan of ₹ 1.00 lakhs from K.Mallesh in violation of provisions of section 269SS of the Act and the AO has rightly levied the penalty which the Ld.CIT(A) has confirmed. Therefore, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the assessee. 14. In respect of the cash loan from Rayappa, the assessee has referred page No.74 and 75 of the paper book. Page No.74 was the copy of promissory note which establishes that the assessee has taken the loan of ₹ 11 lakhs from P.Rayappa which was also acknowledged by the assessee. Page No.73 of the paper book is the copy of the cheque dated 24.12.2005 stated to be given for repayment of the loan and the same was issued by the company. The contention of the Ld.AR is that this loan was taken on behalf of the company which should be dealt in the company's hands but not in the assessee's hands. Further during the first appeal proceedings, the assessee failed to establish that the transaction was related to the company, hence, the Ld.CIT(A) confirmed the penalty. Before us also, except placing copy of the cheque issued in favour of P.Rayappa, the assessee did not furnish any evidence to show that the transaction in que ..... X X X X Extracts X X X X X X X X Extracts X X X X
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