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2015 (11) TMI 535 - ITAT VISAKHAPATNAMPenalty u/s 271D and 271E - violation u/s 269SS&T - Held that:- The assessee is into the business of fertilizer in a remote place i.e. Jeelakarragudem. The explanation of the assessee is that funds are borrowed for the purpose of business necessity and borrowed funds are kept in the bank. So far as usage of the funds are concerned, it is the assessee who has to decide it has to be withdrawn immediately or thereafter according to the business necessities. The business of the assessee is relating to an urorganised sector deals with the needs of the farmers. When assessee has to buy fertilizer to a huge extent depend upon monsoon and necessity of the farmers also. Keeping in these aspects assessee has to carry his business. There is no doubt that assessee is having a bank account in Hyderabad. However, simply because he is having a bank account at Hyderabad, it cannot be said that he has to borrow the funds in the way of cheque or repayment also in the way of cheque. It depends upon the business necessity of the assessee, the assessee has to take a decision. The authorities below admitted that he is into the business of fertilizer and carrying his business in a remote village. There is nothing on record to disbelieve the explanation given by the assessee. In so far as usage of the funds are concerned, it is left to the assessee to decide to use the funds according to the business necessities/demands. In view of the above facts and circumstances of the case, we find that there is a reasonable cause for the assessee not strictly complied with the provisions of section 269SS of the Act. Therefore, the funds borrowed by the assessee for the business necessity more than the prescribed limit not amounting to violation u/s 269SS & 269T of the Act. Therefore, consequently no penalty u/s 271D&E of the Act can be imposed. - Decided in favour of assessee.
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