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TMI Blog2015 (9) TMI 1102X X X X Extracts X X X X X X X X Extracts X X X X ..... see company who is stated to be engaged in the manufacturing of furniture as per the assessment order u/s 143(2) dated 24.12.2008 claimed an increase in share capital. In view of the fact that the assessee received and repaid loans thereby violating the provisions of section 269SS and Section 269T as per page 1 & 2 of the assessment order penalties u/s 271D and 271E were initiated on the following facts:- "Loans Taken in cash-violation of section 269SS of Income Tax Act, 1961:- Date Name of the Person Amount 29.06.2005 Divas Jain 25,000/- 31.10.2005 -do- 10,000/- 08.03.2006 Gokul Chand Jain 1,00,000/- 31.10.2005 -do- 20,000/- 15.05.2005 Madhu Jain 20,000/- 29.03.2006 -do- 1,00,000/- 14.04.2005 Sweta Jain 40,000/- & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry and also explained the source of the same. 2. The amount is taken from director and one shareholder. All the persons are income tax assessees. 3. All the transactions are genuine and duly verified during the course of assessment. 4. Transactions made between the company and directors/shareholders were under exceptional circumstances to accommodate the emergency needs of the company for a very short and temporary period. 5. The assessee company is managed by the members of the same family. 6. The assessee had no intention to conceal any particulars of those transactions." 4. Not convinced with the explanation offered the penalty of Rs. 3,05,000/- was imposed. The assessee challenged the said order unsuccessfully in appeal befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ash was received from them and subsequently also paid to them. The assessee being ignorant of the legal consequences considering the fact that all persons were known, tax paying assessees from the same family made payment and were repaid in cash in a bonafide belief for business exigencies on account of ignorance of the provisions of law as they had tried to keep the family business running. In these circumstances, it was his submission that keeping in mind that the intention for introducing the section was to tackle unaccounted money moving in cash and the cases like the present case were not contemplated to be such a case as it is a case of identified persons who are Directors of the company and only one is shareholder who have establishe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eholders for meeting urgent cash requirements for running the business would not result in any violations. Considering the peculiar facts and circumstances of the case and the pleadings of the parties before the Bench and the mandate of Section 273B of the Act, we hold that the explanation offered by the assessee company being bonafide constitutes a reasonable cause and being satisfied by the same considering the judicial precedent cited, we accept the same. Accordingly, the impugned orders are set aside in both the appeals and the penalty imposed u/s 271D and 271E accordingly is quashed. The said order was announced in the open Court in the present of the parties. 10. In the result, the appeals of the assessee are allowed. The order is p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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