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2015 (12) TMI 553 - ITAT MUMBAI

2015 (12) TMI 553 - ITAT MUMBAI - TMI - Penalty under section 271D - Held that:- The assessee has tried to wriggle out from rigours of sections 269SS and 271D of the Act by contending that such entries in the Balance Sheet and books of account are as a result of mistake committed by the Accountant but, in our view, such plea of the assessee is not acceptable as it is not a bona fide plea. Though the assessee has made an endavour to project the loan taken as amount received as a trustee by virtue .....

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of section 269SS of the Act, it is very clear that it is applicable to a situation where cash loan is accepted in excess of the prescribed limit. Therefore, there is nothing in the said provision to show that it will apply only in a case where unaccounted cash is introduced or transaction is not bona fide. Therefore, in the facts of the present case, since it is proved that the assessee has received cash loan of ₹ 2.50 lakh in violation of provisions contained in section 269SS, imposition .....

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Act, 1961 (for short "the Act") for the assessment year 2007-08. 2. Briefly the facts are, the assessee is an individual. In the course of assessment proceedings for the impugned assessment year, the Assessing Officer, noticing that the assessee has accepted cash loan of ₹ 2.50 lakh in violation of provisions of section 269SS of the Act, forwarded information to the appropriate authority for initiating action for imposition of penalty under section 271D. As a consequence, proceed .....

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submitted after her husband s death, Ms. Edna Misquitta, also executed a power of attorney on 14th August 2001 in favour of the assessee for managing the property inherited by her. It was submitted that as a result of such power of attorney the relationship between the assessee with M/s. Edna Misquitta is that of a trust and trustee and not of a lender and borrower. It was submitted, the lady had advanced money to the assessee from time to time which as on 31st March 2007, aggregated to ₹ .....

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that due to mistake committed by the Accountant, the amount of ₹ 2.50 lakh was shown as loan in the Balance Sheet is not acceptable. He further observed on verification of books of account, he found that the assessee has shown the said amount as loan. He also observed, the assessee has not produced any evidence to indicate that the amount of ₹ 2.50 lakh was taken for purchase of any property in the name of Ms. Edna Misquitta. Thus, on the basis of the above, the authority concerned .....

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quitta, is in the nature of trustee and trust. He also observed that no documentary evidence could be produced by the assessee to demonstrate that the amount received was for the purpose of purchase of any property whereas the Balance Sheet and books of account of the assessee show the amount of ₹ 2.50 lakhs as loan. Therefore, opining that provision of section 269SS was violated by the assessee in accepting the cash loan, he sustained the imposition of penalty under section 271D of the Ac .....

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h was advanced by Ms. Edna Misquitta, suo-motu for meeting expenses to be incurred on her behalf, hence, it is not in the nature of loan, therefore, penalty under section 271D of the Act cannot be imposed. For such proposition, he relied upon the decision of the Hon'ble Delhi High Court in All India Deaf and Dumb Society, 283 ITR 113 (Del.). Further, he submitted that Ms. Edna Misquitta, is a distant relative of the assessee, therefore, the transaction between relatives do not invite the pro .....

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). 5. The learned Departmental Representative, on the other hand, submitted that the provisions of section 269SS puts a bar on cash transaction exceeding certain prescribed limit. Therefore, receipt of loan exceeding the prescribed limit in cash straight away attracts the provisions of section 269SS. The learned Departmental Representative submitted that power of attorney executed by Ms. Edna Misquitta, has no relationship with the cash loan as it was executed in the year 2001. Therefore, the as .....

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that the assessee in its Balance Sheet has shown the amount of ₹ 2.50 lakh as loan received in cash. Even the books of account of the assessee mention the aforesaid amount of ₹ 2.50 lakhs as loan. Therefore, as per assessee s own narration, since he has received cash loan of ₹ 2.50 lakh, prima-facie, there is a violation of provisions contained under section 269SS of the Act. Though, the assessee has tried to wriggle out from rigours of sections 269SS and 271D of the Act by con .....

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