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Commissioner of Income-Tax Versus M. Ramakrishnan and Vice Versa

2015 (7) TMI 1084 - MADRAS HIGH COURT

Penalty u/s 271E - Tribunal upheld the penalty under section 271D and set aside the penalty under section 271E - Held that:- . In so far as the order setting aside the penalty under section 271E, is concerned, we do agree with the findings rendered by the Tribunal by accepting the contention of the assessee, that he was constrained to repay the loan account as per the whims and fancies of A. Kannan and the repayment of loan amount by way of cash is out of compelling reasons.Having regard to the .....

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to defend his case for want of copy of the statement given by the financier Kannan and the copy of the materials seized from him and without giving him an opportunity to cross-examine Kannan is acceptable. The Commissioner of Income-tax (Appeals) as well the Appellate Tribunal though allowed the party to raise additional ground regarding the urgency for receiving the amount in cash and also to produce additional documents, have not duly applied their mind to ascertain the genuineness and releva .....

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ng the amount in cash and to defend his case properly and effectively. As such, we feel that it is a fit case, to give the assessee such an opportunity and for such purpose, set aside the impugned order and to remand the same for fresh disposal, after giving the copies of the relevant documents to the assessee and after giving him an opportunity to cross-examine the witness and after duly considering the additional grounds raised and additional documents produced by the assessee and the substant .....

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in accounts and supporting documents were impounded. As per the books of account in the office of Kannan, it was found out that the assessee received loan of ₹ 20,00,000 and repaid the same in cash. Following the same, the assessee was issued with a show- cause notice under section 271D read with section 269SS of the Income-tax Act and after receipt of notice dated February 21, 2012, and similar show- cause notice dated August 6, 2012, the assessee filed a letter along with the copies of l .....

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Pondicherry, levied penalty of equal amount in contravention of section 269SS for accepting the loan in cash and under section 269T for repayment of loan in cash. Aggrieved by the order of penalty, the assessee filed an appeal before the Commissioner of Income-tax under section 271D of the Income-tax Act. 3. One of the main grounds raised before the Commissioner of Income-tax (Appeals) is that he was not served with the copy of the statement recorded from A. Kannan and copies of the materials s .....

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of determination.-All the grounds of the appeal raised are against the action of the Assessing Officer in levying penalty of ₹ 20,00,000 under section 271D of the Income-tax Act. I have considered the assessee's submissions as well as the findings given in the order of penalty. The contention of the appellant that he had received ₹ 20 lakhs in its burden of proving with an evidence regarding its plea of reasonable cause to obtain the loan in cash. The insistence of the lender to .....

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dismissed." 5. Aggrieved against the same, the appellant-assessee preferred three appeals for the assessment year 2008-09 and for the assessment years 2008-09 and 2009-10 before the Income-tax Appellate Tribunal. Before the Tribunal, the appellant-assessee reiterated the same grounds as raised before the Commissioner (Appeals). The Tribunal has upheld the order of the Commissioner of Income-tax (Appeals) and confirmed the levy of penalty under section 271D on the ground that the different r .....

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king consistently inconsistent stand before different authorities and the explanation put forth are after thought and, hence, cannot be believed. The Income-tax Appellate Tribunal further deleted the penalty levied under section 271E by accepting the contention of the assessee, that he was constrained to repay the loan account as per the whims and fancies of A. Kannan and the repayment of loan amount by way of cash is out of compelling reasons. The Tribunal accordingly dismissed the appeal in I. .....

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. 6. The substantial questions of law that arise for consideration in all the three appeals are as follows : T. C. A. Nos. 291 and 292 "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the insistence of financier to repay the loan in cash is a compelling circumstances and is a reasonable cause for transacting the loan transaction in cash and thereby deleting the levy of penalty under section 271E ?" T. C. A. No. 325 of 2015 "1. Whe .....

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; 7. Heard the rival submissions made on both sides and perused the records. 8. Admittedly, the assessee received ₹ 20 lakhs from and repaid the same by way of cash to one Kannan, who was carrying on unlicensed financial activities. The assessee filed his return for the relevant assessment years for the cash loan transaction and repayment after receipt of notice under section 271D for the penalty proceedings. 9. As the loan transaction was disclosed in the accounts books seized from one A. .....

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with regarding the purpose for which the amount was received and regarding the nature of the transaction between A. Kannan and himself, different explanation before different authorities. It is his stand before the original authority that the amount was received in the land dealing and the same is again modified by stating that it was a loan transaction for personal purpose. The contention raised before the Commissioner (Appeals) is that he received the same by way of advance for land dealing an .....

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ppeals) did not accept his explanation regarding urgency purpose for which the amount was received in cash and the compelling reasons for which the same was repaid in cash, the Tribunal was not inclined to accept the reason for receiving the amount in cash but accepted the repayment of the same in cash, as out of compulsion by the financier and upheld the penalty under section 271D and set aside the penalty under section 271E. 10. In so far as the order setting aside the penalty under section 27 .....

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. In so far as the other appeal T. C. (A.) No. 325 of 2015 filed by the assessee is concerned, one consistent stand taken by the assessee before the authorities below is that the assessee was deprived of valuable opportunity to defend his case for want of copy of the statement given by the financier Kannan and the copy of the materials seized from him and without giving him an opportunity to cross-examine Kannan. The impugned order of the authorities below is based on two reasons (1) the assesse .....

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e notice received from the CTO for explaining the urgency for receiving the amount in cash produced at the later stage in proper perspective. The Division Bench of this court having one of us in the case in T. C. A. No. 916 of 2004 dated September 17, 2014-Ramco Cements Ltd. v. Deputy CIT [2015] 373 ITR 146 (Mad), Madurai have clearly upheld the right of the parties to produce additional documents and to raise additional grounds before the appellate authority. The Commissioner of Income-tax (App .....

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