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2016 (9) TMI 546

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..... relating to penalty levied u/s 271D of the Act may be set aside to the file of the Addl. CIT for fresh examination. In respect of the loan/deposit repaid in cash, the explanation with regard to urgent business requirements shall not apply. However, since the issue relating to penalty levied u/s 271D has been set aside to the file of Addl, CIT, we are of the view that, in the interest of natural justice, the assessee should be provided with one more opportunity to show the reasonable cause in making payment of loan/deposit by way of cash.In view of the foregoing discussions, we set aside both the orders passed by Ld CIT(A) and restore the issue to the file of the Addl CIT with the direction to examine the same afresh by duly considering t .....

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..... the Act. The Ld CIT(A) also confirmed the same. 3. The assessee had submitted that the above said amounts were received as Share Application money from one of its directors and it was repaid, since the shares were not allotted. Accordingly it was contended before the tax authorities that the share application money cannot be equated with loan or deposit. However, the tax authorities noticed that the tax auditor has reported the same loan transaction only. Accordingly the tax authorities did not accept the claim of the assessee that the same represents Share application money. 4. Before us, the assessee raised a legal issue, i.e., according to the assessee, the assessing officer has not recorded satisfaction before initiating penalty p .....

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..... lation of provisions of sec.269SS and 269T in the set aside proceedings, the Tribunal deleted the penalty and the Hon ble High Court did not admit the appeal on the ground that no substantial questions of law arise therein. 5. Hence the limited question that was urged before Hon ble Supreme Court has been stated as under by Hon ble Supreme Court:- In these appeals, we are concerned with the question as to whether penalty proceeding under section 271D of the Income tax Act (hereinafter referred to as the Act ) is independent of the assessment proceeding and this question arises for consideration in respect of assessment years 1991-92 and 1992-93. It can be noticed that the issue urged before the Hon ble Supreme Court was not re .....

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..... ion rendered by Hon ble Supreme court in the case of Jai Laxmi Rice Mills (supra). Further, the provisions of sec. 271D and 271E also do not require recording of satisfaction. 7. On merits, the Ld A.R submitted that these amounts were received as Share Application money only and the same was wrongly disclosed as Loan account by the Tax auditor. Referring to the Statement of Facts filed before the Ld CIT(A), the Ld A.R submitted that the assessee had taken these amounts from the director of the assessee company to meet the urgent business requirements. 8. The Ld D.R submitted that the explanations given by the assessee have been proved to be wrong and the Ld A.R is making fresh submissions before the bench. Accordingly he submitted tha .....

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..... hat kind of situation the penalty u/s 271D cannot be levied. However, it is the responsibility of the assessee to prove that there was urgent business requirement on the day when the loan/deposit was received by way of cash. The assessee may prove the same on the basis of books of accounts and other documents. Accordingly, we are of the view that this issue relating to penalty levied u/s 271D of the Act may be set aside to the file of the Addl. CIT for fresh examination. 11. In respect of the loan/deposit repaid in cash, the explanation with regard to urgent business requirements shall not apply. However, since the issue relating to penalty levied u/s 271D has been set aside to the file of Addl, CIT, we are of the view that, in the inter .....

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