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2019 (2) TMI 1000 - HC - Income TaxPenalty u/s 271D and 271E - Deposit of the cash by the Director into the bank account of the assessee - running account maintained between the promoter/director and the Appellant company in the context of the transactions covered in section 269SS - Held that:- Deposit of the cash by the Director received from Mr.J.D. into the bank account of the assessee on the same day and those amounts, being utilized for making several payments including salaries, apart from that the Director withdrawing money from the assessee's bank account and remitting to the Financier by cash can never be taken to be a bona fide transaction. It is not a solitary instance, as the same type of transactions have been carried on by the assessee and the Director from the assessment year 2012-13. Most of the cases, which were relied on by the assessee are of either individual or rare transactions of the assessee. Therefore, we are of the clear view that there is absolutely no genuinity or bonafideness in the transaction done by the assessee and it will not amount to reasonable cause for the purpose of exercise or discretion by the Assessing Officer under Section 273B of the Act. Alternate plea raised by Mr.A.S.Sriraman stating that the penalty should be restricted to the peak of the cash deposits, we find that such a plea did not find favour with the Tribunal and in the light of the reasons assigned by us in the preceding paragraphs, we reject such a plea raised by the assessee. The Tribunal while considering the correctness of levy of penalty under Section 271E of the Act found that it has been admitted that cash has been deposited into the bank account of the assessee, the funds having been routed through the bank accounts, why the same was withdrawn in cash for repayment to the Director and subsequently, to Mr.J.D. This transaction remained unexplained. Further, the Tribunal pointed out that perusal of the assessment order of the Financier, Mr.J.D., gives a picture that moneys were the unaccounted cash of Mr.J.D., and this cash was laundered through the accounts of the two assessee's herein. Thus, the Tribunal concluded that the assessees have been used as custodian of the unaccounted cash of Mr.J.D. by depositing it in the bank accounts of the assessee by their Director, Dr.A.M. The assessee was not able to give any explanation to substantiate with evidence for repayment of the deposits to Dr.A.M., Director in cash. Examining the transaction, the Tribunal noted that as and when Mr.J.D. required cash, which appears to have been withdrawn by Dr.A.M., Director from the bank accounts of the assessee and paid to Mr.J.D. Thus, after considering all the factual aspects, the Tribunal confirmed the levy of penalty under Section 271E. The assessee's have not been able to convince us to take a different view. If loan in cash is taken once or twice, in exceptional exigencies, may be a ground for interference, but when the fact remains that a lender not even licensed was illegally giving loans only in cash and accepting repayment in cash cannot be a ground for condonation of regular transaction with such unauthorised lender. Therefore, we find the findings and observations in M.Sougoumarin [2018 (5) TMI 1731 - MADRAS HIGH COURT] to aid the case of the Revenue. - Decided against assessee.
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