TaxTMI 
TaxTMI 
TaxTMI 
2014 (12) TMI 522
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....hrough the letter of confirmation signed by him. Since the said amount could not be taken into fold of assessable income of assessee in terms of section 68 of the Act, it was decided by AO that money be accepted as explained loan and since there was a prima facie violation of section 269SS of the Act, penalty proceedings were initiated u/s.271D(2) of the Act. The assessee's contention before the AO was as under :- "The assessee's case is mainly that the cash transaction between the Director and the Company were through current account and was necessitated for ensuring meeting of the fund 'requirements of the company which arose suddenly from time to time. Relevant portion of assessee's reply is quoted below for the purpose of appreciating the transaction in the light of sec.269SS before going into the various judicial authorities referred to/relied upon by the assessee. 'The assessee has received amounts in cash during certain months of the previous year from the Director Shri. Ramesh Shah as shown in the show cause notice issued by you. The account reflecting transactions between the assessee and the director was in the nature of current account. The director....
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....the assessee company are discussed below. 4 The assessee's case is mainly that the cash transaction between the Director and the Company were through current account and was necessitated for ensuring meeting of the fund requirements of the company which arose suddenly from time to time. Relevant portion of assessee's reply is quoted below for the purpose of appreciating the transactions in the light of sec.269SS before going into the various judicial authorities referred to/relied upon by the assessee. "The assessee has received amounts in cash during certain months of the previous year from the Director Shri Ramesh Shah as shown in the show cause notice issued by you. The account reflecting transactions between the assessee and the director was in the nature of current account The director used to pay the money in the current account and withdraw the money from the same current account as and when the need arises. Afore importantly such transactions between the assessee and the director are attributable to various exigencies and vicissitudes of the business. It may not be possible for an assessee to predict with precision the exact requirements of money for discharging i....
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....75. Accordingly, it was held that deposits does not include any amount from a director or a shareholder of a private limited company. Therefore, the cash transaction between the assessee and the director-cum-shareholder was not a loan or deposit and there was no violation of Section 269SS, hence, penalty u/s.271D was not leviable. 5.1 AR invited our attention to the copy of current account of Director maintained in the books of accounts of the assessee company which is a private limited company and contended that payment and withdrawal in current account does not come in the purview of the loans or deposits, accordingly, there was no violation of Section 269SS. Further reliance was placed on the decision of Chhattisgarh High Court in the case of CIT Vs. Preeti Fuels & Flames (P) Ltd., (2011) 330 ITR 129, wherein it was held that Rule 2(b)(ix) of Companies (Acceptance of Deposits) Rules, 1975 exempts from the definition of "deposit" inter alia, any amount received from a person who at the time of receipt was a director of the company. Therefore, it was held that the Tribunal was justified in deleting the penalty u/s.271D in respect of deposits received by the assessee company from ....
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.... carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest or acted in conscious disregard of his obligation. Penalty will also not be' imposed merely because it is lawful to do so. Rather penalty should be imposed for failure to perform a statutory obligation which is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. Reference may be made to the decision in Hindustan Steel Ltd. (supra)." 5.5 Learned AR argued that in the instant case also under the scrutiny assessment framed u/s.143(3), the AO has not doubted genuineness of the transaction, which was accepted and no addition was made u/s.68 of the Act....
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....ase of Builtec Engineers & Builders, reported in (2013) 31 taxmann.com 406 (Madras), wherein it was held that where the assessee has not shown any acceptable or unavoidable circumstances or impracticability or difficulty in receiving money otherwise than in cash, imposition of penalty under Section 271D was justified. Reliance was also placed on the decision of Hon'ble Punjab and Haryana High Court in the case of Auto Piston Mfg. Co. (P) Ltd, (2013) 38 taxmann.com 61 (P&H), wherein it was held that no substantial question of law arose out of the order of the Tribunal upholding the penalty where the Tribunal after discussing facts in detail had disregarded the explanation given by assessee regarding accepting loan, otherwise than by account payee cheque. 8. After going through the proposition of law laid down by the various High Courts as discussed above, we found that most of the High Courts are of the view that where loans and advances are accepted by the Director of company and which is not found to be ingenuine and assessee's return of income having been under scrutiny assessment u/s.143(3) and no addition having been made on account of such loan and there is no finding....