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2014 (12) TMI 522 - AT - Income TaxImposition of penalty u/s 271D - Cash received from one of the Directors of the company – Addition u/s 68 made by AO for violation of section 269SS - Held that:- Most of the High Courts are of the view that where loans and advances are accepted by the Director of company and which is not found to be in-genuine and assessee's return of income having been under scrutiny assessment u/s 143(3) and no addition having been made on account of such loan and there is no finding that transactions were malafide aimed at disclosing concealed money, imposition of penalty u/s 271D merely on technical mistake cannot be sustained - the money was accepted by the company from Director and it was explained that money was accepted through current account and was necessitated for ensuring meeting of funds requirement of company which arose suddenly - The transactions of receipt of cash was duly confirmed by the Director and the it was in the nature of current account - The Director used to pay the money in the current account and withdraw money from the current account as and when the need arises - It was also explained that such transactions were attributable to various exigencies and vicissitudes of the business - there are decisions of High Court wherein it was held that where assessee is unable to prove the exigency, the penalty is imposable. In Commissioner of Income-Tax, West Bengal Versus Vegetable Products Limited [1973 (1) TMI 1 - SUPREME Court] it was held that if in a case of taxing provision two reasonable constructions are possible, construction which favours the assessee must be adopted - cash book of the assessee company was produced before him wherein he found acceptance of cash from the Director - even after verifying the cash book there is no any adverse observation by the AO to the effect that on the date of accepting cash the company was not in any urgent need of funds - without any adverse observation and also the AO's action of acceptance of genuineness of loan u/s 68 and in not making any addition in the hands of the assessee company, puts the case at par with the OMEC ENGINEERS Versus COMMISSIONER OF INCOME-TAX [2007 (9) TMI 27 - HIGH COURT , JHARKHAND] wherein it was held that there being no finding of AO, CIT(A) or Tribunal that the transactions in violation of S.269SS were not genuine, assessee's return having been accepted u/s 143(3) after scrutiny, there being also no finding that transactions were mala fide aimed at disclosing concealed money, imposition of penalty u/s 271D merely for technical mistake could not be sustained – Decided in favour of assessee.
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