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2015 (4) TMI 1077 - ITAT KOLKATA

2015 (4) TMI 1077 - ITAT KOLKATA - TMI - Penalty u/s. 271D - Deposits and loans in cash in excess of prescribed limit - Held that:- We find that the facts are that the assessee company Mahmood Associates (P) Ltd. received cash loan from its director Md. Mahmood. In view of the above proposition of law laid down by various High Courts i.e. Hon’ble M.P. High Court in the case of Indore Plastics P. Ltd. [2002 (7) TMI 19 - MADHYA PRADESH High Court ], Idhayam Publications Ltd. [2006 (1) TMI 97 - MAD .....

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012 - Dated:- 29-4-2015 - Shri Mahavir Singh, JM & Shri B. P. Jain, AM] For the Appellant: Shri Subhas Agarwal, Advocate For the Respondent: Shri Kanhiya Lal Kanak, JCIT, Sr. DR, ORDER Per Shri Mahavir Singh, JM: This appeal by assessee is arising out of order of CIT(A)-XXIV, Kolkata in Appeal No. 396/CIT(A)-XXIV/12(4)/08-09 dated 30.04.2012. Assessment was framed by ITO, Ward-12(4), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) for Assessment Year 200 .....

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assessee is engaged in the business of civil construction and filed its return of income on 11.10.2004 for AY 2004-05. During the course of assessment proceedings, while completing assessment u/s. 143(3) of the Act vide order dated 27.12.2006, the AO noticed that the assessee company took loans from its directors in cash in violation of the provisions of section 269SS of the Act. Accordingly, the AO initiated penalty proceedings u/s. 271D of the Act. The AO i.e. ITO, Ward-12(4), Kolkata referred .....

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er: An information was received from ITO, Ward-12(4) vide his letter No. ITOWd. 12(4)/AADCM2533L/06-07/589 dated 27.12.2006 in which it was intimated that during the course of scrutiny proceedings of the aforesaid assessee and assessment year, it was observed that the assessee company received cash loan of ₹ 6,00,000/- on different dates from his Directors and others as mentioned in the tax audit report filed along with the return of income, thereby violating the provision u/s. 269SS of th .....

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loan from its director Md. Mahmood and the relevant finding of fact by him in page 3 of penalty order reads as under: The assessee has also filed a copy of the ledger account of unsecured loan, a certificate from Rupanjan Associates, Chartered Accountant, the details of unsecured loan taken from director, copy of the bank account of the company M/s. Mahmood Associates Pvt. Ltd. with Allahabad Bank, Park Circus Branch and copy of the bank account of Md. Mahmood the director of the company with Al .....

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ssee Shri Subhas Agarwal contended that the admitted facts are that the unsecured loan of cash is taken from the director by the assessee company. He stated that the assessee company M/s. Mahmood Associates Pvt. Ltd. received a sum of ₹ 3,98,719/- in cash from Shri Md. Mahmood, who is director of the assessee company. He stated that the issue of receipt of cash loan by assessee company from its director is now settled issue by various High courts. First, he relied on the decision of Hon bl .....

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eals), the said payment was in contravention of section 269SS of the Income-tax Act, 1961, and the assessee was liable to pay penalty under section 271D. However, the Tribunal vacated the penalty so imposed on the finding that the said payment was not by way of deposit or loan, but towards adjustments of the amount drawn by the promoter from the company's account. On an application praying for an order calling for a reference from the order of the Tribunal: Held, that the finding arrived at .....

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of the lower authority clearly shows that there was a running current account in the books of account of the assessee in the name of Mr. S. V. S. Manian. Mr. S. V. S. Manian used to pay the money in the current account and used to withdraw the money also from the current account. The Revenue should establish that what was received by the assessee is a loan or deposit within the meaning of section 269SS. The deposit and the withdrawal of the money from the current account could not be considered .....

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ction between the appellant and the director cum shareholder is not a loan or deposit and it is only a current account in nature and no interest is being charged for the above transaction. In the foregoing conclusions, we are of the view that since the said transaction does not fall within the meaning of loan or advance, there is no violation of section 269SS of the Income-tax Act. We find no error in the order of the Tribunal and the same requires no interference. Hence, no substantial question .....

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h one of them was having sufficient opening balance as on April 1, 1990. After that we have to look into sources of the amounts received by the assessee on behalf of his family members as the same is an important factor. Handsome amount has been received on account of maturity of NSCs and then most of the amounts have been credited on account of gifts received from one family member to other and that was through journal entry except ₹ 32,000 which was gift by one family member to other. Th .....

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