2023 (1) TMI 884

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....ground raised by the assessee is that the Ld. CIT(A) erred in confirming penalty u/s. 271D of the Act and prayed to delete the same. 2.1. The brief facts of the case is that the assessee is a Private Limited Company filed its Return of Income for the Assessment Year 2013-14, declaring a loss of Rs. 3,92,95,118/-. Assessment was completed u/s. 143(3) vide order dated 29.01.2016 determining the loss at Rs. 3,89,22,520/-. During the course of assessment proceedings, the Assessing Officer found that assessee borrowed unsecured loans from related parties. The assessee has accepted a loan of Rs. 4,78,000- in cash on 24.08.2012 which is found to be in contravention to Section 269SS of the Act. Therefore the assessee was issued a show cause notice....

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....y of bank statement and the certificate from the bank confirming the said mistake is produced herewith for your verification. The assessee has referred the case of Mrs. Rupali R. Desai vs. ACIT wherein ITAT Mumbai has relied on the decision given by Mumbai Tribunal I the case of ITO vs. Paramount Builders (ITA No. 1812/Mum/1998, dated 17.01.2001); wherein Mumbai ITAT has mentioned that: ".... Penalty u/s. 271D cannot be levied when the default has been committed due to the clerical error as in this case two sister concerns were carrying on the business from the same premises and due to a clerical error of the staff of the sister concerns, the cash belonging to the sister concern amounting to Rs. 1,50,000/- was deposited in assessee's ac....

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.... by M/s. Om Ceramics, a sister concern of the assessee. However, while filling the bank deposit slip, the staff filled the name of the depositor correctly but the account number was wrongly mentioned as that of the assessee namely 25360200000020 instead of 25360200000026 and produced copy of the bank slip dated 24.08.2012. Immediately on noting this mistake, the next day i.e. on 25.08.2012, the assessee transferred the said amount of Rs. 4,78,000/- vide Cheque No. 2623 to the sister concern M/s. Om Ceramics. The Ld. Counsel produced before us copy of the Certificate issued by Bank of Baroda to show the genuineness of the transaction. The assessee also produced the copy of the Income Tax Returns filed by M/s. Om Ceramics to prove that the si....

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....at no penalty shall be imposable on a person under these provisions for any violation, if the person could establish the existence of any "reasonable cause". It is only where a person could not explain any "reasonable cause" for the failure in complying with the provisions of Section 269SS, then the penalty under section 271D would follow. The assessee has explained the circumstances under which the cash deposit, which was in the nature of mistaken bank challan entry was received by the assessee. However the same was rectified by the assessee on the very next day i.e. on 25.08.2012 by remitting the said amount of Rs. 4,78,000/- by issuing Cheque No. 2623 to M/s. Om Ceramics to prove the genuineness. The assessee also produced the banking ch....