TMI Blog1999 (10) TMI 731X X X X Extracts X X X X X X X X Extracts X X X X ..... 50,000 19-1-1991 20,000 6-2-1991 30,000 Total 1,00,000 Since taking of cash loans was in violation of the provisions of section 269SS of the Act, the AO initiated penalty proceedings under section 271D of the Act. To the show-cause notice issued, the assessee stated that the amount of ₹ 1,00,000 was withdrawn in cash from M/s Mehta Construction and given to the assessee, that by oversight the amount was shown as a loan, that no interest was paid on the said amount and the same was introduced as capital and, therefore, the provisions of section 269SS were not attracted. 3. The AO reject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) also noted that the explanation given before him was at variance with the explanation furnished before the AO and, therefore, it cannot be accepted. In this view of the matter, he confirmed the penalty and dismissed the appeal. 6. Before us the learned representative for the assessee submitted that a transfer of funds, though in cash, between sister-concerns was not hit by section 269SS and that the genuineness of the transactions coupled with the bona fide belief, prompted by the advice of the accountant, that the transactions were not violative of any provisions of law, took the case out of the sweep of the penal provisions. In support of the contention that the transaction was gone through under the advice of the accountant, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hta Construction to enable the partners of Mehta Construction to withdraw those amounts from the books of the assessee-firm which arrangement was gone through under the advice of the accountant in order to project a better picture of the financial position of Mehta Construction for the purpose of taking a loan from the bank for the proposed project at Nasik. The explanation furnished before the CIT(A) would appear to represent the correct facts. There are common partners between the assessee-firm and Mehta Construction. Mehta Construction drew monies from Kapole Co-operative Bank at Bombay for the purpose of advancing the funds to the assessee. ₹ 50,000 was withdrawn on 3rd Dec., 1990 and ₹ 30,000 was withdrawn on 16th Feb., 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time when presented, though there may be some inconvenience caused in the process of ascertaining and evaluating the facts and it would be open to the Tribunal to accept the explanation and the facts instead of remitting the matter to the Departmental authorities. These two decisions establish the position that though an explanation is given for the first time before the appellant authorities, it would be open to them to examine them for the purpose of ascertaining whether the factual background is correct and whether the explanation is plausible. In the present case, admittedly the explanation furnished before the CIT(A) was different from that furnished before the AO but still it was open to the CIT(A) to examine the veracity of the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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