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2022 (7) TMI 225 - HC - Income TaxPenalty u/s 271 D - default u/s 269SS - Assessee had accepted the loans in cash - as pe assessee both the entities from whom the cash loan was taken were partnership firms in which the Directors of the Assessee had controlling stake and other partners of the firms were family members and relatives of the Directors of the Assessee-Company - Since the genuineness of the loan transactions were not in doubt and the explanation offered by the Assessee was reasonable, the ITAT declined to interfere with the order of the CIT(A) - HELD THAT:- The Court finds that in P. Baskar v. CIT (2011 (4) TMI 1157 - MADRAS HIGH COURT] was not satisfied with the explanation offered by the Assessee for not complying with the provisions of Section 269 SS of the Act. It was specifically observed that “the Assessee had not shown any reasonable cause for taking cash loan”. However, in the present case, as noted by the CIT(A), the Assessee did offer a reasonable explanation for taking cash loan and the circumstances in which it was required. In Commissioner of Income Tax v. Deccan Designs (India)(P) Ltd. (2010 (7) TMI 818 - MADRAS HIGH COURT] where an Assessee accepted cash loans from a sister concern mainly for the purpose of disbursement of salaries to its employees, it was held that the penalty under Section 271D was uncalled for. In Commissioner of Income Tax v. Maheswari Nirman Udyog (2007 (7) TMI 216 - RAJASTHAN HIGH COURT] it was found that loans had been taken by the Assessee from a sister concern in cash to make payments to the labourers at site. This was held to be a reasonable explanation which was accepted by the CIT (A) and the ITAT and therefore, did not warrant any interference in appeal. No error has been committed either by the CIT (A) or the ITAT in deleting the penalty imposed on the Assessee. - Decided in favour of assessee.
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