2019 (2) TMI 1138

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... During the course of assessment proceedings u/s 143(3) for the assessment year 2012-13, it was found by the AO that the assessee had repaid loan amounting to Rs. 2,95,000/- to M/s. SREI Equipment Finance Ltd. in cash violating the provisions of section 269T of the Income tax Act, 1961. The AO, therefore, initiated penalty proceedings u/s 271E and in reply to the show-cause notice issued by the AO during the course of the said proceedings, the following written explanation was offered by the assessee. "The assessee firm has purchased an excavator (Machinery) by agreement with SREI (Financer) and agreed to pay the amount by EMI. Copy of Agreement and repayment schedule enclosed herewith for your honour's kind perusal. The firm has fail....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e case of the assessee firm considering the fact that default was not wilful and this default was committed due to adamant attitude of the finance company and drop the penalty proceedings u/s 271E of the I.T. Act, 1961." 3. The above explanation offered by the assessee was not found acceptable by the AO. According to him, the assessee had enough time to repay the amount of loan in equal monthly instalments but he failed to do so and made one time repayment of loan amounting to Rs. 2,95,000/- on 30.12.2011. He, therefore, held that there was a clear infringement of provision of section 269T by the assessee and proceeded to impose a penalty of Rs. 2,95,000/- u/s 271E of the Act. 4. The penalty imposed by the AO u/s 271E was challenged by th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....tion of the assessee as a reasonable cause on the ground that the assessee had enough time to repay the amount of loan in equal monthly instalments. We are unable to subscribe to this view taken by the Ld. CIT(A). As explained by the assessee during the course of appellate proceedings before the Ld. CIT(A), the delay in repayment of loan to SREI was due to weak financial position and this was the reason why the assessee could not repay the loan as per the agreed schedule. Had the assessee was in a position to repay the amount of loan in equal monthly instalments as per the agreed schedule, SREI could not have insisted for cash payment and the question of default u/s 269T would not have arisen. The weak financial position of the assessee res....