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2021 (9) TMI 403 - AT - Income TaxPenalty u/s 271D - taking and repaying back of loan in cash - Relief granted by the CIT(A) based on under Negotiable Instrument act, for guilty for dishonouring of cheque given for repayment of loan - AO obligation to make necessary independent enquiry - HELD THAT:- The only conclusion drawn by the A.O. with regard to genuineness of the transaction was merely based on the ground that the Magistrate in a separate complaint filed U/s 138 of the N.I. Act had convicted the assessee but the said decision of the Magistrate cannot ipso facto leads to the conclusion that the assessee had taken or accepted any loan or deposit in contravention of provisions of Section 269SS of the Act, therefore, in our view, the A.O. was under an obligation to independently prove by carrying out necessary enquires or bringing on record evidence that the cash loan was taken by the assessee from Shri Aditya Kumar Sharma in contravention of provisions of Section 269SS. A.O. as well as the CIT(A) fell in error by merely relying upon the copies of the order of the Magistrate regarding conviction of the accused, more particularly when there was no independent evidence or material brought on record by the A.O. to the effect that the cash loan was taken or accepted by the assessee in contravention of Section 269SS of the Act. Merely because the Magistrate on a complaint filed had convicted the assessee on the ground of dishonoring of cheque U/s 138 of the N.I. Act it cannot automatically lead to presume that the assessee had in fact taken or accepted cash amount of ₹ 2.5 lacs as loan in contravention of provisions of Section 269SS The proceedings before Income tax authorities are independent proceedings and the A.O. being the adjudicator as well as investigator was under an obligation to carryout independent enquiries and to bring on record cogent and convincing independent evidence to specifically prove that the assessee had accepted loan or deposit in cash in contravention of provisions of Section 269SS of the Act but the said exercise has not been done by the A.O - merely relying on the decision of the Magistrate is not enough to presume that there was violation by the assessee of Section 269SS - Decided in favour of assessee.
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