TaxTMI 
TaxTMI 
2019 (1) TMI 459
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....ral Circle-1, Ludhiana that a search u/s 132 of the Act was conducted at the business premises of M/s Tara Health Foods Ltd. and during the search certain incriminating documents including a document in which entries pertaining to advance given to the assessee amounting to Rs. 7,00,00,000/- were found. During the re-assessment proceedings, a show cause notice was issued to the assessee with the direction to explain as to why the above cash receipts/cash payments should not be treated as made in violation of section 269 SS/269T of the Act. In response to the said notice, the authorized representative of the assessee submitted that the assessee had neither received any cash payment nor made any cash payment to M/s Tara Health Foods Ltd. However, the AO rejecting the contention of the assessee held that the assessee has violated the provisions of section 269SS and 269T of the Act while taking/returning the loan amount of Rs. 7,00,00,000/- in cash and send the matter to the additional CIT concerned for initiating penalty u/s 271D and 271E of the Act. Accordingly, the Ld. Additional Commissioner of Income Tax Range-12 (3), Mumbai initiated proceedings u/s 271D of the Act and levie....
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....to Advance for Machinery. Under these circumstances, the Ld. CIT(A) has rightly allowed the appeal of the assessee and deleted the penalty. 6. We have heard the rival submissions and perused the material on record including the cases relied upon the authorities below and the Ld. counsel for the assessee. The only grievance of the revenue is that the Ld. CIT(A) has wrongly deleted the penalty in question. We notice that the Ld. CIT(A) has deleted the addition mainly on the ground that AO has made addition on the basis of rough noting recovered from the possession of Tara Health Foods Ltd. during search conducted by the department. The observations of the Ld. CIT(A) read as under: "I have gone through the order of the Addl. CIT Range- 12(3) levying penalty and the submissions made by the A/R of the appellant in this regard. It is noted that the penalty has been levied u/s 271D on the assessee on account of acceptance of cash loans in contravention of provisions of section 269SS. The A.O. had noted in the penalty order instances of acceptance of loans through modes other than by account payee cheque or draft. Accordingly it was observed that assessee had violated provision....
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....ration of the entries that the amount is paid towards Advance for Machinery, which is outside the purview of Sec. 269SS and 269T. It is absolutely clear from the language of the section that the provisions of Sec. 269SS are applicable only in the case of transaction of Loans or Deposits and does not apply to any business transaction." 7. The rival contentions of the parties give rise to the question that whether the entries in loose papers recovered from the possession of a third party, during search u/s 132 of the Act, is sufficient to concluded that the assessee has accepted loan or advance in cash within the meaning of section 269SS so as to impose penalty u/s 271D of the Act? The Ld. CIT(A) has deleted the penalty firstly on the ground that the AO had no tangible material to hold that the assessee has received any loan or deposit in cash from Tata Health Food Ltd in violation of section 269SS of the Act and secondly, on the ground that since the entries pertain to money paid towards 'Advance for Machinery', which is outside the ambit of loans or deposits within the meaning of section 269SS of the Act, there is no justification in imposing penalty u/s 271D of the Act. 8....
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....: 2010-2011) Vide the present appeal, the revenue has challenged the impugned order passed by the Ld. CIT(A) on the following effective:- "On the facts and circumstances of the case and in law, Ld. CIT (A) has erred in deleting the penalty of Rs. 7,00,00,000/- levied u/s 271E of the I.T. Act on account of contravention of the provision of Section 269T of the I.T. Act." 2. The present appeal also arises from the transaction discussed in revenue's appeal ITA No 6889/MUM/2016. The revenue has challenged the impugned order whereby the Ld. CIT(A) has deleted the penalty levied u/s 271E of the Act for violation of the provisions of section 269T of the Act. The Ld. CIT(A) has deleted the penalty in question levied by the AO holding as under: "I have gone through the order of the Addl. CIT Range- 12(3) levying penalty and the submissions made by the A/R of the appellant in this regard. It is noted that the penalty has been levied u/s 271E on the assessee on account of repayment of cash loans in contravention of provisions of section 269T. The A.O. had noted in the penalty order instances of repayment of loans through modes other than by account payee cheque or draft....