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2018 (2) TMI 265 - ITAT HYDERABADPenalty u/s 271D and penalty u/s 271E - accepting loans in cash and payment in cash of the loans received - Held that:- There is no dispute with the reference to amounts offered as income which are supported by letter written by Assessee to the Addl.CIT dated 28-09-2010 and subsequent filing of return on 05-08-2011. An amount of ₹ 13.50 lakhs has been admitted as income out of the amount received in cash. Payments made to Mr. D Raju and Mr. D Srinu to an extent of ₹ 6 lakhs are part of the amounts offered as income. Consequently, the repayment in cash does not arise. Accordingly levy of penalty u/s 271E of the Act becomes infructuous, in the light of the facts that borrowed amount was treated as income of the assessee. The repayment in cash does not violate the provisions of Sec. 269I, therefore levy of penalty u/s 271E is not warranted. Therefore the levy of penalty u/s 271E is cancelled and is accordingly allowed. Levy of penalty u/s 271D out of the borrowed amounts, there cannot be any penalty u/s 271D, therefore ₹ 13.50 lakhs admitted by Assessee should not have been considered for levy of penalty. Coming to the balance amount, it is the Assessee’s contentions that these are advances received for sale of apartments. The statement recorded in the course of survey do indicate that Assessee has taken over certain flats being constructed by the firm for individual trading / construction business, but assessee admitted in the course of survey that these are borrowed on promissory notes. Subsequently Assessee retracted statement to submit that these were advances received and relied on copies of the agreement of sale impounded along with promissory notes. During the course of present hearing, it was pointed out that there are only three promissory notes involving Sri Polisetty Venkateswarlu (Rs. 5 lakhs) Konda Venkateswalu (Rs. 2.50) lakhs and T. Harshavardhan (Rs. 3 lakhs) and for the balance of amounts, there were no promissory notes at all. A.O did not examine these aspects and relied on the statement alone holding that all the amounts were received by way of promissory notes. This aspect require examination by A.O. Thus set aside the order of the A.O U/s 271Dand restore the entire issue to the file of the A.O for examination of facts and decide the issue whether the amounts are received by way of agreement of sale or not and if so to, what extent.
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