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2023 (1) TMI 622 - AT - Income TaxPenalty u/s 271D read with section 269SS and Penalty u/s 271E read with section 269D - cash transaction undertaken for day to day cash adjustment of receipt of cash and payment in cash between two companies i.e., assessee and M/s Rajasthan Lok Vikas Finance Resources Ltd. - HELD THAT:- Both the companies are regularly assessed to tax. There is no dispute by the parties that the transactions between them are not genuine and unrecorded transaction in either of the assessee company. The source of cash already explained and there is no adverse observation on these aspects of cash recorded as paid and received from each other. The revenue has not controverted to the factual position that both the companies were operating from same premises and source of cash were out of the disclosed sources. As the cashier was operating for both the company used the cash of the either company and passed necessary entry to complete the books and record the correct state of affairs and there is no doubt about genuineness of the transactions recorded. The bench noted that cashier makes payment on behalf of both the company, i.e. assessee and M/s. Rajasthan Lok Vikas Finance Resources Ltd. The cashier made the payment without ascertaining the cash balance of each company. Based on this action it has happen that in one company there is excess cash and in another it is in short and vice versa. Cashier has completed the cash book and this excess cash receipt or paid to each company is accounted in cash as per the availability of cash in each company. There is no question about the source of cash in each company by the revenue. Merely, the amount paid or received is in cash and interest is paid the same is considered as advances in violation of section 269SS/T and consequent thereupon considered it for levy of penalty u/s. 271D/E of the Act. These transactions are made during the course of business and just to avoid the deficit of cash which is arisen on account of the common cashier. This regular transaction out of the disclosed sources and is not recorded with an intent to considered it as loan or deposit. Merely on the regular balance interest paid the transaction recorded by the cashier to settle the deficit in the cash between the two company is not a loan as it is construed with purpose for which the provisions are enacted in the law. The transfer of money from one company to another with a specific intention is a mere book adjustment and cannot be considered as loan or deposit. This regular, bonafide and genuine transaction recorded as book adjustment cannot be termed considered as loan or deposit and it is not in violation of provision of section 269SS/T. See MAHESHWARI NIRMAN UDYOG [2007 (7) TMI 216 - RAJASTHAN HIGH COURT] There exist a reasonable cause and plausible reason. The transactions are duly recorded in the books of the both companies and considering the explanation given the assessee and the judicial precedent of jurisdictional High Court we direct to delete the levy of penalty u/s. 271D and 271E of the Act in this case. Accordingly, the grounds of appeal raised by the assessee is allowed.
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