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2019 (9) TMI 1133 - AT - Income TaxPenalty u/s. 271D - receipt of loan and advances in cash - as per 2 agreements amount paid by the two buyers to the present assessee in cash - HELD THAT:- Whole allegation is on the basis of two agreements in question. This is true that in both these agreements, it is stated that an amount of ₹ 6 Lakhs and ₹ 2 Lakhs respectively was paid by the two buyers to the present assessee in cash but this is also true that these two agreements are although signed by the Director of the assessee company, these are not signed by the buyers. The department is asking the assessee to establish that the agreements were not executed which is the claim of the assessee. Merely because a proposed agreement was kept ready after typing and signature of the Director of the assessee company, it cannot be said that the agreement was executed and all the contents of such agreement were actually done when the agreements in question were admittedly not signed by the respective buyers. The complete name and address of both these buyers are available in those agreements to sale and if the AO wanted to establish that the agreements were in fact executed and the amount was paid by the respective buyers to assessee in cash, he could have examined these buyers but this is not done by the AO. In fact, even no effort was made by the AO to do so. we are of the considered opinion that the addition made by the AO on the basis of the two draft agreements is not justified in the facts of present case Penalty u/s u/s. 271D - whether there was reasonable cause which prompted the assessee to accept the loan in cash ? - HELD THAT:- As per the copy of cash book available on page no. 1 of the paper book, it is seen that opening balance is ₹ 40,423/- and this payment of ₹ 9 Lakhs was paid out of the money provided by the Director Shri Dinesh Ranka. Hence, this is the fact that no cash was available with the assessee company as per the cash book to make this cash payment and hence. Cash borrowing to make this urgent cash payments appears to be reasonable. Under these facts, we are satisfied that the assessee has been able to establish that there was reasonable cause for accepting this loan in cash and hence, in view of section 273B of the IT Act, we delete the penalty- Decided in favour of assessee.
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