The Tax Publishers2024 TaxPub(DT) 763 (Srt-Trib)

INCOME TAX ACT, 1961

Section 271D

Transactions between Directors and assessee-company were for company's business purposes and these were in the nature of current account transactions. In these transactions, not personal gain or profit was involved and were at Arm's Length and not tainted by any extra commercial consideration. Since Private Limited Company is an artificial and judicial person which cannot talk and walk and only directors can execute work of the assessee-company, therefore, on behalf of assessee-company, directors did the transactions, hence these were current transactions for the purpose of assessee's business and, not liable for penalty under section 271D.

Penalty under section 271D - Contravention of section 269SS - Current account transactions for business purpose alleged as loan transactions -

Assessee, a Private Limited Company passed entries in its books relating to unsecured loan of Rs. 24,00,000 received from M, director of assessee-company, during the year under consideration. The said amount was deposited in bank account of assessee. AO held that unsecured loan received during the year under consideration attracted section 269SS and thus AO levied penalty under section 271D. Held: Transactions between Directors and assessee-company were for company's business purposes and these were in the nature of current account transactions. In these transactions, not personal gain or profit was involved and were at Arm's Length and not tainted by any extra commercial consideration. Since Private Limited Company is an artificial and judicial person which cannot talk and walk and only directors can execute work of the assessee-company, therefore, on behalf of assessee-company, directors did the transactions, hence these were current transactions for the purpose of assessee's business and, not liable for penalty under section 271D.

Relied :Thamira Green Farm (P.) Ltd. v. Addl. CIT (2023) 155 taxmann.com 320 (Chen-Trib) : 2023 TaxPub(DT) 6640 (Chen-Trib).

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2015-16

IN THE ITAT SURAT

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