2015 (8) TMI 832

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.... section 269SS doesn't discuss anything regarding business exigency and talks only about the mode of receipt of loans and deposits ie. Either by way of account payee cheque or account payee bank draft. iii. The CIT(A) ought to have appreciated the fact that the Addl. CIT has clearly verified the explanation submitted by assessee along with supporting evidences submitted and confirmed the penalty levied earlier. iv. The CIT(A) to have allowed the assessing officer a reasonable opportunity to examine the evidences or documents in accordance with Rule 46A(3) of IT Rules, on the issue of additional evidence submitted in connection with the levy of penalty u/s. 271D. v. Any other ground that may be urged at the time of hearing". ....

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....the course of remand proceedings, the AO found that the assessee-company received the cash from one Shri K. Anil Kumar, who is the Managing Director of the assessee-company to the extent of Rs. 16,69,117/-. Therefore, levied penalty u/s. 271D of the Act. On appeal before the CIT(A), the same was allowed vide order dt. 13-12-2013 by holding as follows: "5.1 On examining the facts and figures produced for my verification, I find that the payments of Rs. 16,69,117/- were made in order to save the company from Securitisation Act and calling of advances by the financial institutions and to meet the legal cases filed by the creditors and other outside agencies against the company. It is further observed that such funds are arranged by the dire....

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....or deposit. The amounts were directly paid by the Managing Director, Shri K. Anil Kumar, to meet the urgent business needs of the respondent, assessee-company. The respondent company only recorded the transaction through journal entries. The respondent-company had not received any cash deposits directly from the Managing Director. In any event, it was submitted that the transactions in question were undertaken only to meet the urgent business needs of the respondent, assessee-company. Where there is a reasonable cause for accepting the cash, penalty cannot be levied and in support of this proposition, he relied upon the following decisions: i. CIT Vs. Manoj Lalwani (2003) 260 ITR 590 (Raj); ii. CIT Vs. Parma nand (2004) 266 ITR 255 (D....