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Dy. Commissioner of Income Tax Central Circle–1, Mumbai Versus Shri Sanju Kothari

2016 (3) TMI 1106 - ITAT MUMBAI

Penalty under section 271D - Held that:- Imposition of penalty under section 271D is neither automatic nor mandatory as section 273B provides that no penalty is imposable if the assessee proves that there was reasonable cause for failure in complying to the provisions of the Act. A conjoint reading of sections 269SS, 271D and 273B of the Act would demonstrate that every violation under section 269SS will not culminate in imposition of penalty under section 271D. If the assessee proves that there .....

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ns. Further, the authority concerned, while imposing the penalty has not established that the transaction relating to acceptance of cash loan is either non–genuine or not bonafide. On careful analysis of the decision cited by the learned Authorised Representative, it is found that ratio laid down therein squarely applies to the facts of the present case. In the aforesaid view of the matter, we do not see any reason to upset the order of the learned Commissioner (Appeals). Accordingly, upholding .....

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#8377; 17,25,000 under section 271D of the Income Tax Act, 1961 (for short "the Act"), for the assessment year 2008-09. 2. Briefly stated the facts ar, assessee is an individual. For the assessment year under consideration, a search and seizure operation under section 132(1) of the Act was conducted in case of the assessee as well as the company where she was a director. Consequent upon search, a notice under section 153A of the Act was issued to the assessee in response to which she f .....

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called upon the assessee to show cause as to why the loan amount received in cash in violation of section 269SS should not be added back to her income. In response to the notice, the assessee, though, explained the reason for receiving the said loans in cash but the Assessing Officer was not convinced. He observed that the assessee had not filed confirmation letter from the concerned persons from whom she claimed to have received the cash loan. Alleging that the assessee has failed to substantia .....

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Addl. CIT, Central-I, issued a notice calling upon the assessee to show cause as to why penalty under section 271D should not be imposed as the assessee has received cash loan of ₹ 17.25 lakh in violation of section 269SS. In response to the said show cause notice, it was submitted by the assessee that she is the director of several companies one amongst them being Corntstene Estate Developers Pvt. Ltd. It was submitted, the said company had to register deeds of assignment towards transact .....

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one when the pay orders are cleared by banks and as the documents were urgently required to be registered on 8th January 2008, there was no option but to avail cash loan of ₹ 17.25 lakh from the four companies and transfer it to M/s. Cornetstene Estate Developers Pvt. Ltd. for the purpose of payment of stamp duty on 8th January 2008, so that documents could be registered. It was submitted, the pay orders purchased for payment of stamp duties were ultimately cancelled on 9th January 2008. T .....

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penalty imposed before the learned Commissioner (Appeals). In the meanwhile, assessee s appeal against the addition of ₹ 17,25,000 as unexplained cash credit came up for consideration before the learned Commissioner (Appeals). The learned Commissioner (Appeals), after considering the submissions of the assessee in the context of facts and material on record, held that the amount received from the four companies cannot be treated as unexplained cash credit and, accordingly, deleted the addi .....

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tted there being clear violation of section 269SS, penalty has to be imposed under section 271D. He submitted, the provisions contained under section 269SS, do not restrict the application of section 271D to transactions which are not bonafide. Therefore, learned Departmental Representative submitted, the first appellate authority was not justified in deleting the penalty. 7. Learned A.R., on the other hand, reiterating the stand taken before the Departmental Authorities submitted, if at all the .....

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reated as income, it cannot again be treated as loan for the purpose of initiating penalty proceeding under section 271D. For such proposition, he relied upon the decision of the Hon'ble Delhi High Court in Diwan Enterprise v/s CIT, [2000] 246 ITR 571 (Del.). Learned A.R. submitted, imposition of penalty under section 271D is not automatic as it has to be r/w section 273B. He submitted, unless the transaction in cash is found to be not bonafied, penalty under section 271D cannot be imposed. .....

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). 8. We have considered the submissions of the parties and perused the material available on record. It is evident from material on record, the Assessing Officer, while completing the assessment had treated the cash loan received of ₹ 17,25,000 from the four companies as not genuine and held it as income of the assessee under section 68 of the Act. Thus, once, the Assessing Officer treats the amount in question as assessee s income, he cannot treat the same as loan for invoking the provis .....

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on made by the Assessing Officer stood and as per which the amount of ₹ 17,25,000 was income of the assessee. Thus, under no circumstances, proceeding for imposition of penalty under section 271D, could have been initiated when the amount in question was held as income of the assessee. For this reason alone, the imposition of penalty under section 271D cannot be sustained. Even otherwise also, as could be seen from the facts on record, the assessee had furnished a valid explanation explain .....

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