2022 (7) TMI 225

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..... 1st February 2018 of the Commissioner of Income Tax (Appeals) [CIT(A)] deleting the penalty of Rs.1.7crores levied on the Respondent-Assessee by the Additional CIT under Section 271 D read with Section 269 SS of the Income Tax Act, 1961 (Act). 2. The Assessing Officer reported the matter to the Additional CIT who the order dated 29th September 2016 levied the above penalty under Section 271 D of the Act on the ground that the Assessee had accepted the loans of 1.5crores in cash from M/s Laxmi Nrushingha Construction and Rs.20lakhs in cash from M/s S.S. Parida during the AY in question in violation of the provision of Section 269 SS of the Act. 3. The reason given by the Assessee in response to the show cause notice issued by the Additiona .....

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..... erns was the person who was handling cash for all the 3 entities. (iii) The amounts were taken in cash from the two sister concerns for making labour payments at far off places and there was an urgency to do so. (iv) There was business expediency which compelled the assessee to accept the amount in cash. (v) Sri S.S. Parida was not aware of the provisions of section 269SS." 6. Accordingly, the CIT (A) allowed the Assessee's appeal and deleted the penalty imposed. 7. The ITAT has in the impugned order concurred with the CIT (A) after referring to the decisions of the Jharkhand High Court in Engineers v. CIT 294 ITR 599; and of the Punjab and Haryana High Court in CIT v. Saini Medical Store [2005] 277 ITR 420 and CIT v. Sunil Kumar Go .....

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..... loan". However, in the present case, as noted by the CIT(A), the Assessee did offer a reasonable explanation for taking cash loan and the circumstances in which it was required. In Commissioner of Income Tax v. Deccan Designs (India)(P) Ltd. (supra), where an Assessee accepted cash loans from a sister concern mainly for the purpose of disbursement of salaries to its employees, it was held that the penalty under Section 271D was uncalled for. In Commissioner of Income Tax v. Maheswari Nirman Udyog (supra), it was found that loans had been taken by the Assessee from a sister concern in cash to make payments to the labourers at site. This was held to be a reasonable explanation which was accepted by the CIT (A) and the ITAT and therefore, did .....

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