TaxTMI 
TaxTMI 
2020 (3) TMI 787
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.... Name of the person to whom loan was repaid Amount in Rs Mode of Payment Remarks 21.04.2012 E.Rajeev 20,61,600/- Self withdrawal cheque Cash was withdrawn from the bank a/c of the assessee company 21.04.2012 E.Padmapriya 13,77,800/- Self withdrawal cheque Cash was withdrawn from the bank a/c of the assessee company 25.03.2013 E.Lakshmi 2,58,690/- Self withdrawal cheque Cash was withdrawn from the bank a/c of the assessee company 21.04.2012 E.V.Sudhakar 20,61,600/- Self withdrawal cheque Cash was withdrawn from the bank a/c of the assessee company On different dates A.V.V.Subahmanye swara Swamy & 62 others 36,45,000/- Repayment of loan in cash Assessee failed to produce that the above payments were made through DDs. In the case of Sri E.Rajeev, Smt.E.Padmapriya, Smt.E.Lakshmi and Sri E.V.Sudhakar, the assessee has withdrawn cash from the bank account and repaid the amount to the creditors. In the case of Sri A.V.V.Subrahmanyeswara Swamy & Others, the assessee has repaid the amount by way of crossed Demand Drafts. The Addl.Commissioner of Income Tax (in short 'Addl.CIT') initiated proceedings u/s ....
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....AR submitted that in exceptional circumstances and on request made by the creditor, the company has made the repayment of loans to above four persons by way of self withdrawal cheque. The above repayment was accounted in the books of accounts of the creditor. The company has to make the payment to meet the urgent needs of the directors and shareholders who has given the timely advances. The Ld.AR further submitted that all the above repayments were duly accounted in the respective accounts of the directors and shareholders. The assessee filed a paper book and enclosed capital account copies of E.Rajeev, in page No.12 and the repayment was accounted in the account. Similarly, in the case of E.Padmapriya, the account copy was enclosed in page No.13 and the payment of Rs. 13,77,880/- was duly accounted in her account. In the case of E.Lakshmi and E.V.Sudhakar also, the amounts paid was duly recorded in the respective accounts of the creditors. Apart from the above, the assessee also paid the interest on the amounts borrowed from the above individuals which was duly credited in the respective accounts of the creditors, which is appearing in the account copy placed in paper book in page....
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....appeal of the assessee. 6. We have heard both the parties and perused the material placed on record. In the instant case, the assessee has repaid the loans borrowed from E.Rajeev and E.V.Sudhakar by way of self cheque withdrawal and in the case of E.Lakshmi and E.Padmapriya also, the amounts were paid, otherwise than by crossed cheque. As verified from the order of the Addl.CIT, the assessee has frequently borrowed monies from directors and shareholders, mostly repaid by crossed cheque as per the details given by the AO, except on one occasion in each case. In all the remaining occasions, the assessee has paid the amounts by way of crossed cheque. The assessee has made the payment by self cheque and drawn the cash and paid the same to the creditors. Prima facie, the assessee has violated the provisions of section 269T of the Act. Further as observed from the penalty order, out of 20 occasions, the assessee has violated the provision on four occasions at the rate of one event in the case of each lender. Thus, we observe that the assessee has mostly repaid the loans by way of crossed cheque and complied with the statute. The reason explained by the assessee was that it has made th....
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....ween the family, and due to business exigency. A family transaction, between two independent assessees, based on an act of casualness, specially in a case where the disclosure thereof is contained in the compilation of accounts, and which has no tax effect, in our view establishes "reasonable cause" under s. 273B of the Act. Since the respondent assessee had satisfactorily established "reasonable cause under s. 2736 of the Act, he must be deemed to have established sufficient cause for not invoking the penal provisions (as. 271D and 271E of the Act) against him." 6.1. The Ld.AR also relied on the decision of Hon'ble High Court of Jharkhand in the case of OMEC Engineers Vs. Commissioner of Income Tax (supra), wherein, Hon'ble High Court held that the penalty is not exigible, if there exists a reasonable cause. For the sake of clarity and convenience, we extract para No.21 and 22 of the decision of Hon'ble High Court of Jharkhand which reads as under : "21. The words "reasonable cause' have not been defined under the Act but they could receive the same interpretation which is given to the expression "sufficient cause". Therefore, in the context of the penalty provisio....
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....Hence, we are of the view that facts of the present case are distinguishable from the facts of the case relied upon by the revenue. Therefore, we hold that there is sufficient and reasonable cause for repayment of the loan to the directors and shareholders i.e. E.Rajeev, E.Padmapriya, E.Lakshmi and E.V.Sudhakar and hence we set aside the order of the Ld.CIT(A) and cancel the penalty levied by the Addl.CIT. Accordingly, appeal of the assessee on this ground is allowed. 7. The next issue in this appeal is repayment of deposit to A.V.V.Subrahmanyeswara Swamy and 62 persons amounting to Rs. 36,45,000/-. The AO made the addition though the assessee stated that the deposits were repaid through account payee demand draft, since the assessee failed to produce the copies of demand drafts or counterfoils of the demand drafts. On appeal, the Ld.CIT(A) allowed relief to the extent of Rs. 20,000/- on each deposit, thus allowed Rs. 12,60,000/- and the balance penalty was confirmed. 8. Against which the assessee is in appeal before us. During the appeal hearing, the Ld.AR submitted that all the deposits were repaid by way of demand draft, but not by cheque. Therefore, argued that there is n....