2013 (8) TMI 36

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....any took loan of Rs.5,00,000 in total from M/s Devang Industry Inc., its sister concern, with the break-up of Rs. 4,00,000/- on 27.06.2005 and Rs. 1,00,000/- on 01.04.2005. The AO noticed that there was violation of the provisions of section 269SS as this loan was taken otherwise than by A/c Payee cheque or A/c Payee Bank Draft. On being show caused as to why the penalty be not imposed u/s 271D, the assessee submitted that it was in urgent need of Rs.1,00,000 to settle some long standing dispute with M/s Prajvi Industrial Supplies, its supplier and of Rs.4,00,000 for purchasing some machinery from M/s Ravi Engineering, Delhi. For this purpose, the assessee stated to have requested M/s Devang Industries Inc., to make direct payments to these....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....receive the amount through banking channel from its sister concern and then remitting it to the supplier. 5. There is no doubt that the violation of the provisions of section 269SS calls for penalty u/s 271D of the Act. However, it is pertinent to mention that the provisions of section 271D are not absolute and are to be read in conjunction with section 273B which, in turn, talk of waiver of penalty if reasonable cause for the failure in compliance is proved. In other words, where the assessee proves that there was a sufficient and reasonable reason for non-compliance with the provisions of section 269SS, then the penalty which is otherwise levaible u/s 271D, cannot be imposed due to the intervention of section 273B. 6. Adverting to the f....