TaxTMI 
TaxTMI 
2019 (6) TMI 704
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....er in this appeal the assessee has raised multiple grounds of appeal but at the time of hearing the solitary grievance has been confined to the issue that the Ld. CIT(A) was erred in law as well as in facts by confirming the imposition of penalty of Rs. 1 lac u/s 271E of the Act. 3. Brief facts qua the issue are that in course of scrutiny proceedings for the assessment year 2009-10 it was observed by AO from the Tax Audit Report in Form no. 3CA that the assessee company has repaid a loan amount of Rs. 55,33,000/- during the F.Y. 2008-09, out of which Rs. 1,00,000/- was repaid to Shri Raju Bharat, MD of the company otherwise than by an account payee cheque/ bank draft. The provision of section 269T of the Act stipulates that no branch of a ....
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....g Officer has not initiated the penalty proceeding in the assessment order though he was very much aware that Rs. 1 lakh was paid in cash to MD. Moreover, the basic objective to insert section 269SS and 269T is to curb the black money in the economy. In the instant case the identity of the payer and the payee is very much established, both are tax payer assessee, transaction was properly recorded and cash was deposited to the bank of the MD. So it was not a cash transaction as envisaged by the relevant provision of the Act." 5. However, the Assessing Officer rejected the contention of the assessee held as follows: "1. The assessee company has stated in the submission that Rs. 1,00,000/- was paid in cash to the Managing Director of the ....
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....under the purview of section 269T of I T Act, 1961 and therefore not liable for imposition of penalty u/s 271E of the Act. The A/R of the appellant had further clarified that the MD Shri Raju Bharat held share amounting to 90.30 percent of the total paid of capital of the company. In the assessment order, the AO had lifted the corporate veil as the corporate veil in which it was revealed that as the MD of the company held 90.30% of the total capital of the company, so the company and the person are actually one person. So payment of Rs. 1,00,000/- in cash was nothing but was payment of one hand to another hand of the same person. The appellant further submitted that as the transactions were properly recorded and cash was deposited in the ....
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....he purpose of expenses be incurred for the company. However this cash was remained unutilized therefore the managing director of the company has deposited wrongly in his bank account and therefore the Assessing Officer imposed penalty u/s 271E presuming that shareholder having substantial interest has taken the loan which tantamount to violation of section 269SS and 269TT of the Act. The ld. Counsel also pointed out that there was no malafide intention of the assessee to utilize the company's fund therefore the penalty levied by the Assessing Officer should be deleted. 8. On the other hand, the ld. DR vehemently submitted that the director of the company who is one of the major shareholder of the company has taken cash amounting to Rs. 1 l....