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2019 (9) TMI 53 - AT - Income TaxLevy of penalty u/s 271D - violation of provision 269SS - assessee has given promissory note and accepted the loan in cash - AY 2002-03 - HELD THAT:- No amount was outstanding as per the recitals of the sale deed. There was no mention with regard to the fact that the Managing director has given promissory note towards part of sale consideration in the sale deed. As per CIT(A), there was no entry in the company’s books of accounts with regard to amounts received from Sri K.Mallesh for pending sale consideration. Therefore, we are unable to accept the contention of the assessee that the transactions were related to the company in respect of sale transaction of Agreement cum GPA dated 27.06.2001. The company has refunded the plot advance, but not the balance sale consideration. The account also does not relate to the impugned assessment year, but related to the financial year 01.04.2005 to 31.03.2006 relevant to the A.Y. 2006-07. The assessee could not furnish any evidence to establish that the transaction in question was related to the company, but not related to him. There is no dispute that the assessee has given promissory note and accepted the loan in cash in violation of provision 269SS of the act. The contention of the assessee that the transaction was related to the company was not established with any tangible evidence. AY 2004-05 - ledger account copies alone cannot establish that loans accepted by the assessee were related to the company. The entries of the books of accounts of the company and the seized documents should support the contention of the assessee. Against the opening balance of ₹ 85,000/- as on 01.04.2005 in the books of the company, the company has refunded the sum of ₹ 1,35,000/- and shown closing balance of ₹ 50,000/-. The opening balance in the company’s accounts, the amount refunded to Shri Rao and Shravani and the cash loans of ₹ 60,000/- each does not match with the explanation and the entries in the books of accounts of the company and the claim of the assessee. Since the assessee could not substantiate with supporting evidence, we are unable to accept the contention of the assessee that the transactions were related to the company. Therefore, we hold that the assessee failed to establish with tangible evidence that the transactions were pertaining to the company, but not to the assessee. The assessee also failed to assign reasonable cause for accepting the loan in cash in violation of provisions of section 269SS AY 2006-07 - As per the promissory note in page No.74 of the paper book, it is evident that the assessee has accepted the cash loan from Shri P.Rayappa on 25.11.2005. The said transaction was not recorded in the books of accounts of the company. Repayment of loan was not established with the bank account of the company. The Ld.CIT(A) has given finding that the transaction was not recorded in the books of accounts of the company. And the seized material also did not establish that the amount was related to the company and during the appeal hearing also, the assessee failed to produce any evidence to show that the cheque given to P.Rayappa for ₹ 11 lakhs was to square off the loan received by the assessee.. Therefore, we hold that the assessee has accepted the cash loan of ₹ 11 lakhs from P.Rayappa in violation of provisions of section 269SS and there is no evidence to establish that the transaction in question was related to the company, but not related to the assessee. The assessee also failed to submit reasonable cause for accepting the loan otherwise than account payee cheque Assessee's appeal dismissed.
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