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2015 (8) TMI 832 - AT - Income TaxPenalty u/s. 271D - Payment made by the Directors to the creditors to save the company from litigation - Violation of Section 269S and 269T - Transaction is reflected in the books of accounts through Journal Entries - CIT(A) deleted penalty levy - Held that:- From the perusal of ledger copy furnished by the Ld. AR, no cash entries in the ledger account of Shri K. Anil Kumar were passed. It is only through journal entries the transactions between the respondent assessee-company and the Managing Director Shri K. Anil Kumar were reflected. Further, we notice that Shri K. Anil Kumar had issued his personal cheques to meet the urgent business needs of the respondent assessee-company directly in favour of the persons to whom the respondent assessee-company owes money and no cash in any form either loan or deposit was directly given by him to the respondent, assessee-company. Case of CIT Vs. Preeti Fuels and Flames P. Ltd., [2010 (11) TMI 702 - CHHATTISGARH HIGH COURT ] had held that when the transactions in question went through bank and were deposited by some other Directors, the provisions of Section 269SS are not applicable. Case of Gururaj Mini Roller Flour Mills Vs. Additional Commissioner of Income Tax [2015 (2) TMI 362 - ANDHRA PRADESH HIGH COURT] held that, "Mere book adjustment of funds by the assessee vis-à-vis its sister concern can by no means be said to be violation of Section 269SS/269T so as to attract penalty u/s. 271D/271D. Where there is a reasonable cause for accepting the cash, penalty cannot be levied - See Srishti Life Needs (P) Ltd., Hyderabad Vs. Addl. CIT, Range- 3, Hyderabad [(2015) 2 TMI 245, ITAT, Hyderabad] - Decided in favour of assessee.
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