TMI Blog2004 (1) TMI 632X X X X Extracts X X X X X X X X Extracts X X X X ..... ceedings for the assessment year 1997-98, the Assessing Officer noted that as per the remarks of the auditors, the assessee received a loan of Rs. 1,15,000 in cash from M/s. Regal Impex Pvt. Ltd. (RIPL) and thus the provisions of section 269SS were violated. The Assessing Officer, therefore, issued a show-cause notice to the assessee, proposing levy of penalty under section 271D of the IT Act. The assessee, in its defence, contended before the Assessing Officer that the company neither received nor repaid any loan or deposit in cash during the previous year relevant to the assessment year 1997-98 and that the remark in the tax audit report does not depict a correct factual position. It was explained that in the loan account of M/s. RIPL, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited our attention to copies of relevant extracts from books of account compiled in the paper book. Copy of the relevant cash book page is at page 17 of the PB. From the entries made in the cash book, it is seen that cash receipt of Rs. 1,15,000 is recorded in the name of RIPL on 6-5-1996. The opening cash balance is Rs. 7,64,689 and there are expenses of Rs. 53,836 in cash and thus when the cash of Rs. 1,15,000 is shown as received on 6-5-1996, the assessee company was already having a cash balance of around Rs. 7,11,000. In the loan account of RIPL, copy of which is at page 23 of the PB, the aforesaid sum of Rs. 1,15,000 is reflected on the credit side as cash receipt. The opening balance is Rs. 10,50,000 and on the debit side, on 31-3-19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material or evidence to substantiate the claim made before the Assessing Officer. It is also pointed out that in the month of May, 1996, the auditors could not have visited as the audit takes place after the close of the accounting year. It is argued that the cases relied upon are distinguishable on facts. It is also pointed out by the ld. DR that the assessee failed to furnish any confirmation either from M/s. RIPL or from Shri Ganguly in support of its version. 5. In his rejoinder, the ld. counsel for the assessee submitted that the assessee had filed detailed written submissions before the Assessing Officer as well as before the ld. CIT(A) wherein proper explanation was given and the Assessing Officer did not ask the assessee to furn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of section 271D should not be invoked in the present case. The assessee had no necessity of borrowing any loan or taking any deposit from the other company as it was already having substantial cash balance on the relevant date. It is a fact that Shri Ganguly was the common director and he was handling the business affairs of RIPL at Mumbai and therefore had to incur expenses on that account. It does not seem to be improbable that Shri Ganguly was holding sufficient cash on behalf of RIPL so as to enable him to meet out necessary expenses on behalf of that company. The entire facts and circumstances support the claim that the cashier, by mistake, entered the amount in the cash loan account of RIPL. In our view, penalty under secti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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