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2017 (8) TMI 447 - AT - Income TaxPenalty u/s. 271D - contravention of provision of Section 269SS - reasonable cause for not accepting loans by way of account payee cheque or demand draft - accepting loan by book adjustment, through journal entries - Held that:- The assessee has filed a paper book containing details of loan ledgers of parties appeared in the books of account of M/s. Atlanta International and also ledger accounts of loan creditors in the books of accounts. On perusal of details field by the assessee, we find that these loans have been transferred by book adjustment by way journal entries. We further noticed that the assessee has paid interest on these loans after duly deducting applicable TDS. We further observed that, it’s not a case of A.O that these loans are not genuine transactions. The AO neither doubted genuineness of the loan nor these are not a bonafide transaction or that the entries were made with a view to evade tax. In the absence of any finding as to genuineness of the transactions or the loans were accepted to evade taxes, penalty cannot be levied u/s. 271D of the Act, merely there is violation of Section 269SS of the Act. These loans are genuine transaction which were accepted by way of cheques by its sister concern. The assessee claims that it was under the bonafide belief that, acceptance of loans or deposit by book adjustment would not attract the provision of Sections 269SS of the Act. There is a reasonable cause, for failure to comply with the provision of Section 269SS of the Act, therefore penalty cannot be levied u/s. 271D of the Act. - Decided in favor of assessee.
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