Penalty u/s. 271D/ 271E of the Income Tax Act not leviable in case of ‘loan given’

Prakash Asphaltings & Toll of Highway (India) Ltd Vs ACIT (ITAT Indore)

ITAT Indore held that penalty under section 271D and section 271E are not attracted in case of “loan given”. Accordingly, penalty proceeding imposing penalty u/s 271D/ 271E of the Income Tax Act in case of ‘loan given’ is invalid.

Facts-

The original assessment was completed u/s 143(3). Subsequently, a search is conducted on the premises of the M/s. PATH Oriental Highways Public Limited during which incremating document was seized which contained the details of cash-transactions done between M/s Prakash Ashphaltings & Toll Highways (India) Ltd and M/s Agroh Infrastructure Developers Pvt. Ltd. (AIDPL). On analysis of document, AO framed a view that the assessee had given a loan of Rs. 1,15,00,000/- to AIDPL, which was not recorded in the book of account. Therefore, treating the same as payment made out of undisclosed income, AO re-opened assessment u/s. 147 of the Act and levied penalty under section 271D Income Tax Act 1961.

Being aggrieved, the assessee has preferred the present appeal.

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