2014 (5) TMI 271

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....rder u/s.143(3) was passed on 30.12.2008 for A.Y.06-07. Ld. A.O. noticed various cash loans during the course of assessment proceeding. Therefore, he referred penalty u/s. 271D to the Addl. CIT, Navsari. The Addl. CIT, Navsari had offered reasonable opportunity of being heard, which was afforded by the assessee vide her letter dated 11.08.2009, which has been produced by the Addl. CIT on page no.2 to 5. The ld. Addl. CIT after considering the assessee's reply has held that assessee had taken advances from four parties to the tune of Rs.6,41,000/-. The receipt of advance was nothing but the loan/deposit in form of the cash. This attracted violation of provision u/s. 269SS. Therefore, penalty u/s. 271D of the IT Act is applicable. Thus, he le....

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....P) Ltd. (2002) 124 Taxman 729 (MP), CIT vs. Kharaiti Lal & Co. (2004) 270 ITR 445 (P & H), Karnataka Ginning & Pressing Factory vs. JCIT (2001) 77 ITD 478 (Mum.), Eetachi Agencies 248ITR 525 (Bom.), etc. CIT vs. Ajanata Dyeing & Printing Mills (2003) 264 ITR 505 (Raj-), etc. as the facts of these cases are identical and applicable to the appellant's case and based upon the statements recorded by the AO, confirmations and affidavits filed, I hold that these amounts standing as liability in the appellant's balance sheet are nothing but "advances" for purchase of fixed assets, which does not attract penalty u/s.271D as it is not a "loan" or "deposit" within the meaning of Sec.68 r.w.s.269SS. Therefore, am inclined to agree with the con....

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....uying assets, and if the same is not in the nature of loan or deposits, provisions of S.269SS of the Act cannot be invoked so as to levy penalty u/s 271D of the Act. The Ld. CIT(A), after taking into account the facts of the case and evidences, vide para 6.7 has also stated that the impugned amount received was not in the nature of loan or deposits as contemplated in S.269SS of the Act, but was in the nature of advances for the purpose of buying assets. The Id. CIT(A) vide para 6.7 has rightly relied upon the legal precedents to hold that the impugned amount is nothing but the advances for the purpose of fixed assets, which does not attract penalty u/s 271D of the Act as it is not a "loan" or "deposits" within the meaning of S.269SS of the ....