2019 (1) TMI 1643

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.... payee cheque.   3. Similarly the assessee has also raised several grounds in his appeals in ITA No.325 to 328 of 2018 however the crux of the issue is that the Ld.CIT(A) has erred in confirming the order of the Ld.JCIT who had levied penalty U/s.271E of the Act for violation of Section 269T of the Act by repayment of loan otherwise than by account payee cheque.   4. The brief facts of the case are that survey U/s.133A of the Act was conducted in the case of Shri A.Kannan, Proprietor of Vadamalayan Finance, Pondicherry 605 005 on 08.09.2011. In the survey it was revealed that Shri Kannan was engaged in money lending business wherein all the transactions were transacted in cash (i.e., advancing loan as well as receiving repayment of loan otherwise than by account payee cheque). From the books maintained by Shri Kannan, it was further noticed by the Revenue that the assessee Shri P.Sundaramurthy had obtained loan from Shri A. Kannan in cash and the same was also repaid in cash i.e.,otherwise than by account payee cheque . On query by the Ld. JCIT, the assessee did not explain the purpose of the loan obtained and further it was observed that assessee had not disclosed ....

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.... 2,28,000 UCO 31.08.2004 726514 G. Natesan& co   44088 1,83,912 Auditor fees 01.09.2004 726517 Vishnu Enterprises   45220 1,38,692 Supplier Bills 01.09.2004 726516 Quick frost   12000 1,26,692 Supplier Bills 01.09.2004 726518 Universal Electrical   50000 76,692 Supplier Bills 01.09.2004 726519 Universal Electrical   46677 30,015 Supplier Bills 01.09.2004 726515 Durai   22500 7,515 Civil materials 29.09.2004   Cash rec 300000   3,07,515 Rec from P. Sundaramoorthy 30.09.2004   Latha Steel   300000 7,515 Supplier Bills Total 880000  872485       ICICI 005605001978       Assessment year : 2006 - 07     Date Cheque No. Particulars Credit Debit Avail Balance Remarks 06.05.2005   Bank Balance     3,53,654.21   06.05.2005   Cheque deosit 8,80,000   12,33,654 Rec from P.Sundaramoorthy 06.05.2005....

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....3,00,000   4,639 Rec from P. Sundaramoorthy 21.01.2007 606503 Pest Control India         Pvt. Ltd   31427 -26,788 Supplier Bills     22.01.2007   Cheque deposit 3,20,000   2,93,212 Rec from P. Sundaramoorthy 22.01.2007   Cheque deposit 2,00,000   4,93,212 Rec from P. Sundaramoorthy 22.01.2007 684594 Indian Oil Cor   306000 1,87,212 LDO oil Purchase 22.01.2007 666824 The National Scientific   3664 1,83,548 Supplier Bills 23.01.2007 684593 Oven drawing    21000 1,62,548 Consulting charges 23.01.2007 606512 Car EMI   30000 1,32,548 Car EMI 24.01.2007 666825 Yasmin Transport   54000 78,548 Transport charges 24.01.2007 666826 Dewpoint Engineers   8722 69,826 Supplier Bills 26.01.2007 606513 Essae Teraoka Ltd   85206 -15,380 Supplier Bills Total 1820000 1835380      Assessment year : 2008 - 09 Date Cheque No. Par....

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....efore us. Therefore from the conduct of the assessee, it is apparent that the assessee has exposed the entire loan transaction through banking channel in the course of his business. Hence it cannot be construed that he has involved in any activity generating or encouraging black money. The provisions of Section 269SS, 269T, 271D & 271E of the Act are enacted only to curb black money and in the case of the assessee, it is evident that he did not generate or tried to hide black money by the cash transactions. In the case decided by the Hon'ble Jurisdictional High Court reported in 283 ITR 329 (Mad) in CIT vs. Kundrathur Finance And Chit Co., it was held that "Deleting penalty by exercising the discretion conferred U/s.273B of the Act is justified if there was genuine and bonafide transaction of obtaining loan by cash due to certain constrains". Further in the case sst. Director of Inspection (Investigation) vs. Kum A.B. Shanthi and Chamundi Granites Pvt. LTd., vs. DCIT and another reported in 255 ITR 258, the Hon'ble Apex Court observed as follows: "The object of introducing section 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money,....