Penalty u/s 271D for violation of Section 269SS can not be escaped by establishing genuineness or bona fides of the transactions – ITAT
ABCAUS Case Law Citation:
ABCAUS 3752 (2023) (05) ITAT
Important Case Laws relied upon:
Hareshkumar Bechardas Patel Vs. Jt. CIT (2019) 69 ITR 73 (SN) (Ahd.) (Trib.)
ITO vs. M/s. Bhandari Precession Forgings (P) Ltd.
JICE Academy for Excellence Pvt. Ltd. Vs. NFAC
Deepak Sales & Properties (P) Ltd. Vs. ACIT, (2018) 194 TTJ 690
CIT vs Shree Ambica Flour Mills 6 DTR 169 (Guj)
CIT vs Sunil Kumar Goel
Hindustan Steel Ltd. vs State of Orissa (1970) AIR 253
Listin Stephen Vs. DCIT, (2019) 418 ITR 524 (Ker.)
Al Ameen Educational Trust Vs. CIT, (2021) 283 Taxman 285
Vasan Healthcare (P.) Ltd. vs. Addl. CIT (2021) 278 Taxman 273
CIT vs. Bhagwatiprasad Bajoria, 263 ITR 487 (Guwahati HC) CIT Vs. Idhayam Publications Ltd., 285 ITR 221 (Madras HC.)
In the instant case, the assessee had challenged the order passed by the National Faceless Appeal Centre (NFAC) in confirming the levy of penalty under Section 271D of the Income Tax Act, 1961 (the Act).
The penalty had been levied by the Assessing Officer (AO) under Section 271D of the Act for contravention of the provisions of Section 269SS of the Act in accepting cash loans from the director of the assessee-company.
The contention of the assessee against the levy of penalty were that the genuineness of the transactions was not doubted and that the cash was taken for meeting business exigencies of paying salaries to employees.
The Tribunal was not convinced with the contention that, in view of the fact that the bona fides of the transactions were not doubted, the provisions of Section 269SS of the Act were not attracted. The Tribunal opined that as per the plain reading of the provision of Section 269SS does not provide an exception to genuine transactions for the invocation of the said section.
The Tribunal stated that a literal reading of the provisions of section 269SS shows that any amount received by modes other than cheques, as loans or advances, results in violation of the provisions of Section 269SS of the Act. There is no question of genuineness or bona fides of the transactions coming into picture.
The Tribunal found that this view is supported by the various decisions relied upon by the Department. Particularly, the Co-ordinate Bench categorically held that for escaping from the rigors from the Section 269SS of the Act, establishing genuineness or bona fides of the transactions is not sufficient. The ITAT noted that Similar decisions were rendered by the Hon’ble High Court and also by the Hon’ble Supreme Court.
Further, The Tribunal observed that in the Assessment Order the AO had given a clear finding that the cash loan had been taken on 4 occasions and the bank statements of the assessee shown sufficient balance in the bank accounts of the assessee on those dates; and the days on which the expenses were made were bank working days.
The Tribunal opined that in view of the findings of the AO, the plea of the assessee that the cash loans were taken in business urgency to meet the shortage of funds stood negated by the finding of fact by the Assessing Officer which remained uncontroverted.
The Tribunal stated that clearly, the assessee was unable to establish any reasonable cause for taking cash loans also so as to escape from the levy of penalty under Section 271D of the Act in view of Section 273B of the Act.
Accordingly, the Tribunal dismissed the appeal of the assessee and upheld the order of the CIT(A) confirming levy of penalty under Section 271D of the Act.
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