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M/s. Diastar Jewellery Private Limited Versus Add. CIT Range 8 (1) , Mumbai

Penalties levied u/s 271D and 271E - violation of the provisions of sec. 269SS and 269T - Held that:- The various case laws have held that the loan/deposit received by way of cash to meet the urgent business requirements can be considered to be a reasonable cause and in that 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 .....

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ew 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 the explanations and information that may be furnished by the assessee. - Decided in favour of assessee for statisti .....

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and 269T of the Act respectively. 2. The assessing officer, during the course of assessment proceedings, noticed that the assessee has received loan/deposits from its director named Shri K.L.Jain on several occasions by way of cash and also repaid them by way of cash. Since those transactions were in violation of the provisions of sec. 269SS & 269T of the Act, the AO sent the proposal to the Addl. CIT for initiating penalty proceedings u/s 271D and 271E of the Act. Accordingly, the addl. CIT .....

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ney 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., accor .....

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ice that the Tribunal has taken support of the decision rendered by Hon ble Supreme Court in the case of CIT Vs. Jai Laxmi Rice Mills (2015)(379 ITR 521). We have carefully gone through the order passed by Hon ble Supreme Court in the above cited case. We notice that, in the case before Hon ble Supreme Court, the penalty proceedings were initiated by the assessing officer during the course of assessment proceedings and the said assessment order was passed to the best of his judgement u/s 144 of .....

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der was set aside and the case was remanded for de nova assessment. Since the AO did not refer to the violation 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 q .....

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assessment order, in the course of which the impugned penalty proceeding was initiated, had been set aside, the Hon ble Supreme court upheld the view of the Hon ble High Court that the penalty proceeding should not have been continued on the strength of the assessment order so set aside. Hence, all the observations made by Hon ble Supreme Court were related to the question posed before it. In our considered view, the decision of Hon ble Supreme Court has to be understood in this context. It is .....

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stion did not even fall to be answered in that judgment. 6. In the instant case, the original assessment proceedings has not been set aside and the penalty proceedings have been initiated on the basis of facts noted by the AO in the said proceedings. Accordingly, we are of the view that the assessee cannot take support of the decision 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 satis .....

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.R is making fresh submissions before the bench. Accordingly he submitted that the fresh submissions should not be admitted. 9. We have heard the parties perused the record. We notice that the assessee could not substantiate its explanations that the amounts were received as Share application money. The details of cash received and repaid also shows that the loan/deposit has been received in smaller amounts on various dates. Generally share application money will not be given in piece meal manne .....

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