Sudha Agro Oil & Chemical Industries Limited Vs Add. CIT (ITAT Visakhapatnam)
Conclusion: Penalty under section 271E for violation of provision of section 269T could not be levied as assessee-company repaid loans advances otherwise than by crossed cheque, however, it substantiated with relevant documents that all the payments made by it were genuine and all the creditors accounted the loans as well as the repayments in their books of account and moreover, it was a mere technical violation.
Held: Assessee had 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, assessee had paid the amounts by way of crossed cheque. AO levied penalty under section 271E for violation of provision of section 269T. Assessee submitted that all the payments made by it were genuine and all the creditors accounted the loans as well as the repayments in their books of account and also filed returns of income. It was further submitted that the payment were made to the creditors otherwise than by crossed cheque on their request and thus, requested to drop the penalty. It was held that there was no dispute that the transactions were between mutually / closely associated with the persons i.e. company, directors and shareholders of the company. The amount was repaid otherwise than by crossed cheque. The transactions were genuine which were duly reflected in the books of accounts. The interest paid was also allowed by AO in the assessment made u/s 143(3). In the instant case, assessee had demonstrated that transactions were genuine with relevant documents. It was a mere technical violation and there was no loss to the revenue. Hence, there was sufficient and reasonable cause for repayment of the loan to the directors and shareholders and hence the penalty levied was cancelled.
FULL TEXT OF THE ITAT JUDGEMENT
This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)]-9, Hyderabad in I.T.A No.10195/CIT(A)-9/Hyd/2017-18 dated 22.03.2019 for the Assessment Year (A.Y.)2013-14.
2. All the grounds of appeal are related to the penalty sustained by the Ld.CIT(A) u/s 271E of the Income Tax Act, 1961 (in short ‘Act’) to the extent of Rs.80,64,690/-. The assessee has repaid the loans and advances received from various creditors to the extent of Rs.94,04,690/- otherwise than by crossed cheque as per the details given under :
