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TMI Blog2013 (8) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... pany took loan of Rs.5,00,000 in total from M/s Devang Industry Inc., its sister concern, with the break-up of Rs. 4,00,000/- on 27.06.2005 and Rs. 1,00,000/- on 01.04.2005. The AO noticed that there was violation of the provisions of section 269SS as this loan was taken otherwise than by A/c Payee cheque or A/c Payee Bank Draft. On being show caused as to why the penalty be not imposed u/s 271D, the assessee submitted that it was in urgent need of Rs.1,00,000 to settle some long standing dispute with M/s Prajvi Industrial Supplies, its supplier and of Rs.4,00,000 for purchasing some machinery from M/s Ravi Engineering, Delhi. For this purpose, the assessee stated to have requested M/s Devang Industries Inc., to make direct payments to thes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receive the amount through banking channel from its sister concern and then remitting it to the supplier. 5. There is no doubt that the violation of the provisions of section 269SS calls for penalty u/s 271D of the Act. However, it is pertinent to mention that the provisions of section 271D are not absolute and are to be read in conjunction with section 273B which, in turn, talk of waiver of penalty if reasonable cause for the failure in compliance is proved. In other words, where the assessee proves that there was a sufficient and reasonable reason for non-compliance with the provisions of section 269SS, then the penalty which is otherwise levaible u/s 271D, cannot be imposed due to the intervention of section 273B. 6. Adverting to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1,00,000/- to M/s Prajvi Industrial Supplies and Rs. 4,00,000/- to M/s Ravi Industrial Corporation on behalf of the assessee due to financial crunch on the assessee. In order to repay the said loan, the assessee made certain re-payments in cash over the period stated above, which totaled Rs.3.70 lacs. It has been vehemently argued that the business of the assessee was dwindling and it was suffering losses. Since its sister concern was continuously pressing for re-payments, the assessee was left with no alternative but to repay it in cash as and when some reasonable amount was collected. We find force in the submissions of the Ld. AR. that the sister concern was mounting pressure on the assessee to immediately repay the amount in cash, ev ..... X X X X Extracts X X X X X X X X Extracts X X X X
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