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2019 (6) TMI 669

..... e penalty and did not come to a conclusion whether the explanation offered by the assessee was acceptable or not. On such wrong impressions and surmises the penalty is not leviable. The ld.CIT(A) cannot improve the satisfaction reached by the JCIT for levying penalty applying his mind. In the instant case, JCIT has levied the penalty on incorrect assumption and without application of mind hence, the same is unsustainable. assessee had taken the cash loans for purchase of car from the close relatives i.e. sons-in-law of the Managing Partner through their spouses who are partners and all of them are assessed to income tax and submitted the confirmations. It was stated by the assessee that the amounts were received as capital contribution and .....

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..... see, hence, imposed the penalty of ₹ 6,90,000/- under section 271D for violation of the provisions of section 269SS of the Act. The JCIT in his order passed under section 271D has stated that the assessee had admitted the acceptance of cash loans and voluntarily paid the penalty of ₹ 6,90,000/- and enclosed the challans also, hence, held that the case is a fit case for levy of penalty under section 271D of the Act. 3. Aggrieved by the order of the JCIT, the assessee went on appeal before the CIT(A) and submitted that he did not make the payment of penalty of ₹ 6,90,000/- and argued that there was no satisfaction reached by the Ld.JCIT for levy of penalty under section 271D of the Act. The assessee further argued that the f .....

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..... ssed to tax. The ld. CIT(A) examined the explanation filed by the assessee and observed that the car was purchased from the HDFC loan and there were sufficient funds available with the assessee, hence, there was no exigency for accepting the cash loans. The assessee s alternative contention that the cash loans in fact, were received towards capital account was also not accepted by the ld. CIT(A) since it was not substantiated with the entries in the books of accounts and thus observed that there is no business expediency as submitted by the ld.AR at the time of hearing. Hence, held that the JCIT rightly levied penalty and accordingly confirmed the order of the JCIT and dismissed the appeal of the assessee. 4. Against the order of the Ld. CI .....

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..... s the JCIT who has to satisfy the reasons for levying penalty, but not the ld. CIT(A), hence, requested to set aside the order of the ld. CIT(A) and cancel the penalty imposed by the Ld.JCIT. 6. On the other hand, the Ld. Departmental Representative supported the orders of the authorities below. 7. We have head both the parties and perused the material placed on record. In the instant case, the JCIT issued a notice under section 271D calling for explanation of the assessee as to why the penalty should not be levied for violation of the provisions of section 269SS of the act. In response to the notice, the assessee has filed the explanation vide its letter dated 12/04/2016 which is extracted in page No.8 of the ld. CIT(A) s order and the sam .....

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..... Officer at the time of assessment proceedings. Further it is observed from the explanation that the loans were accepted from the close relatives for purchase of car and the said loans were repaid during the Financial Year 2015-16, hence, requested not to impose penalty under section 271D of the Act. The assessee also furnished the confirmation letters from the creditors confirming the loans and furnishing their relationship with the Managing partner of the firm and their income tax particulars which is evident from page No.11 to 23 of paper book. The JCIT has not considered the explanation offered by the assessee and made incorrect findings in the penalty order stating that the assessee had accepted the cash loans and voluntarily paid the .....

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