2019 (10) TMI 238

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....g levy of penalty of _12,00,000/- u/s.271E of the Income Tax Act, 1961 (in short ''the Act''). 2. The Assessee raised the following grounds of appeal: "1. The order of The Commissioner of Income Tax (Appeals), Puducherry dated 04.08.2016 in l.T.A.No.561/CIT(A)-PDY/2013-14 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in confirming the levy of penalty u/s 271E of the Act for the above Assessment Year without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the levy of penalty u/s 271E of the Act was not correct as well as not automatic and ought to have appreciated that the provisions o....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

..... Kannan at No. C-4, II floor, Thiyagaraja Apartment, First Main Road, Thanthai Periyar Nagar, Pondicherry, it is found that Shiri. A. Kannan was engaged in the business of financing in cash and the repayment of loan was also accepted in cash. Statement u/s.133A(3) of the Act was recorded from Shri. A. Kannan by Income Tax Officer, Ward I(1), Ponducherry. It was stated that the assessee had repaid following loans in cash. A/c. No.3489 2,00,000 Rs. 50,000/01.04.2008 Rs. 50,000/02.04.2008 Rs. 50,000/03.04.2008 Rs. 50,000/04.04.2008 2009-10   2,00,000 Rs. 50,000/01.05.2008 Rs. 50,000/02.05.2008 Rs. 50,000/03.05.2008 Rs. 50,000/04.05.2008 2009-10   2,00,000 Rs. 50,000/01.06.2008 Rs....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... levy of penalty. Reliance was placed on the judgment of Hon'ble Supreme Court in the case of Hindustan Steel vs. State of Orissa, 83 ITR 26. The Assessing Officer considered the explanation offered and held that intention of the parties are clear to conceal the income and assessee failed to establish business exigencies in accepting the loan in cash as well as repayment of loan in cash, therefore proceeded with levy of penalty of G12,00,000/- vide order dated 30.04.2013. 4. Being aggrieved, an appeal was preferred before the ld. CIT(A), who vide impugned order had confirmed the levy of penalty by holing that assessee had failed to produce any evidence to show that lender had insisted for repayment of loan in cash and even if the tra....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... to whether imposition of penalty u/s.271E of the Act is justified on the facts of the case. Admittedly, in the present case, loans were repaid in cash. Provisions of Section 273B of the Act provides that no penalty u/s.271E of the Act can be levied in case, when it was proved that there was reasonable cause in the violation of provisions of Section 269T of the Act. Therefore the issue that requires for adjudication is whether explanation offered by the assessee in response to show cause notice is reasonable or not. The explanation of the assessee is that it was forced to repay the loan in cash on account of business expediency to meet the working capital limits of one the business concern in which he is interested; cannot be considered to ....