The Tax Publishers2017 TaxPub(DT) 1436 (Hyd-Trib)

 

Lumbini Constructions Ltd. v. Addl. CIT

 

INCOME TAX ACT, 1961

--Penalty under section 271D--Contravention of section 269SSCash deposits from directors of company--Their explanation accepted in assessment--Where assessee received cash in contravention of section 269SS, assessee gave reasonable explanation as to why amount was taken, same was accepted in assessment, proceedings, penalty under section 271D was not leviable read with section 273B.--AO observed that assessee had received loans from various directors in cash in excess of the limits prescribed under section 269SS. Assessee explained as to why cash payments were accepted. AO imposed penalty under section 271D. Held: Assessee had accepted amounts from the directors and the explanation from the directors was considered in the assessment proceedings and accepted. Assessee had given a reasonable explanation that the amounts were taken in cash for; (i) payment to the court in lieu of directions given by the court to pay the amount in Bengaluru and paid to the creditor as per the directions of the court; (ii) certain amount paid to ICICI Bank for car instalments in small amounts; and (iii) certain amount spent for day-to-day running expenses of the office as the company which was having financial difficulties. Further, substantial amount was deposited in Bank Account directly. Explanation given was accepted in assessment proceedings, so the same could be considered as reasonable for accepting cash for the purpose of section 271D read with section 273B, therefore, the penalty order was liable to be set aside.

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