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2017 (7) TMI 654 - ITAT VISAKHAPATNAMLevy of penalty u/s 271D - Held that:- A.O. is right in invoking the provisions of section 271D of the Act. Considering the assessee has accepted the loans from close friends and relatives and also part of the amount has been accepted through banking channels by way of bearer cheques, we are of the view that the genuine transactions accepted from close friends and relatives through banking channel are not coming within the rigors of the provisions of section 271D of the Act. Therefore, we are of the view that out of the total credits of ₹ 53,55,925/-, a sum of ₹ 31,15,000/- has been accepted from close relatives through banking channels are not hit by the provisions of section 271D of the Act. Accordingly, we are of the view that the A.O. was erred in levying penalty u/s 271D of the Act, to the extent of ₹ 31,15,000/- loans accepted from close relatives through banking channel. Hence, we direct the A.O. to exclude a sum of ₹ 31,15,000/- out of the total credit of ₹ 53,55,925/- for the purpose of levy of penalty u/s 271D of the Act. Accordingly, out of total penalty of ₹ 53,55,925/- a sum of ₹ 31,15,000/- is deleted and balance of ₹ 22,40,925/- is confirmed. In so far as assessment years 2007-08 is concerned, the assessee has accepted cash loans of ₹ 10 lakhs from 2 persons. Though, the assessee claims to have accepted cash loans from the persons and repaid within the same financial year, the facts remain that the assessee has accepted the loans in cash in contravention of the provisions of section 269SS of the Act. The reasons given by the assessee that there is a business exigency in as much he needs to make the payment for purchase of landed properties, the reasons given by the assessee is not coming within the purview of reasonable cause as defined u/s 273B of the Act. Therefore, we are of the view that the A.O. was right in levying penalty of ₹ 10 lakhs u/s 271D of the Act, for contravention of the provisions of section 269SS of the Act. Accordingly, confirmed penalty levied by the A.O.
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