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2016 (4) TMI 902 - AT - Income TaxPenalty levied u/s 271D - volition of sec 269SS - Held that - It is an admitted fact that Sh. Tejinder Singh had made the deposits though in cash. there is no violation of the provisions of sec. 269SS of the Act in as much as the transactions have duly been recorded in the accounts of the company. There is no dispute that since the company was in urgent need of money considering the urgency Sh Tejinder Singh one of the directors of the company introduced the money with the assessee company. As we have already observed herein above that the object of introducing sec. 269SS is to ensure that a tax payer is not allowed to give false explanation for his unaccounted money or if he makes any false entry he shall have no escape by giving false explanation to the same. In the instant case it is clear that the cash transactions of the assessee were with the director of the company and due to business expediency. Nobody has doubted the genuineness of the transactions. It is an admitted fact that the money was deposited by Shri Tejinder Singh one of the directors of the company in the bank account of the assessee company. Rule 2(b)(ix) of the Companies (Acceptance of Deposits) Rules 1975 exempts any amount received from a person who at the time of receipt of the amount was a director of the company or any amount received from its shareholders by a private company or by a private company which has become a public company. In the instant case the amount was deposited by the director / share holder of the assessee company. Therefore in view of the provisions of Rule 2(b)(ix) of the Companies (Acceptance of Deposits) Rules 1975 it cannot be said that the assessee company has violated the provisions of section 269SS of the Act. Thus the assessee has proved throughout beyond any shadow of doubt that transactions are genuine and there is a reasonable cause within the meaning of section 273B of the Act which provides that no penalty shall be imposed on the person or the assessee as the case may be for any failure referred to in section 269SS of the Act if he / assessee proves that there was a reasonable cause for failure to take a loan or deposit otherwise than by account payee cheque or account payee bank draft then the penalty should not be levied. - Decided in favour of assessee
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