Ravinder Shivhare Vs ACIT (ITAT Indore)
ITAT Indore held that as AO unable to found source of any cash loans during the search proceedings, provisions of section 269SS/ 269T of the Income Tax Act cannot be applied.
Facts- A search u/s 132 was conducted on 07.01.2016 upon assessee wherein two documents inventorised as “LPS-01-Page 135” and “LPS-02-Page 48” were seized. Based on “LPS-01-Page 135”, the AO framed a view that the assessee had taken/repaid cash-loans from/to Shri Laxmi Narayan Shivhare and based on “LPS-02-Page 48”, he formed a view that the assessee had taken/repaid cash-loans from/to other persons; that all these loans were in contravention of sections 269SS/269T which attracted penalties u/s 271D/271E for AY 2013-14 to 2015-16.
Therefore, during the course of assessment-proceeding, Ld. AO issued show-cause notice dated 19.07.2018 to assessee, in response to which the assessee made a written-submission and stated that he has never carried out any loan transaction. Subsequently, the AO initiated penalty-proceeding on the same premise that the transactions mentioned in those documents represented cash loans taken/repaid by assessee in violation of section 269SS/269T; finally he imposed penalties u/s 271D & 271E
Aggrieved, the assessee carried matter in first-appeal but could not succeed. Still aggrieved, the assessee has come in these appeals before us assailing the orders of lower authorities.
Conclusion- Held that the provisions of section 269SS/269T would trigger where the assessee explains the source of cash or any other asset found during search as representing the cash loans taken from various persons. Had the assessee declared the source of any cash, jewellery, asset, investment etc. found during search as acquired by utilizing loans taken in cash, the AO would have been justified to impose penalty u/s 269SS/269T. But the situation is just opposite. In the present case, there is no such declaration by assessee. Therefore, going by Circular also, one can conclude that the sections 269SS/269T and consequently sections 271D/271E can’t be applied in present case.
FULL TEXT OF THE ORDER OF ITAT INDORE
Feeling aggrieved by a consolidated appeal-order dated 09.09.2021 passed by learned Commissioner of Income-Tax (Appeals)-3, Bhopal [“Ld. CIT(A)”], which in turn arises out of a consolidated penalty-order dated 27.09.2019 passed by learned Addl. CIT, Central Range, Bhopal [“Ld. AO”] u/s 271D & 271E of Income-tax Act, 1961 [“the Act”] for assessment-year [“AY”] 201314 to 2015-16, the assessee has filed these four appeals. Since these appeals emanate from a common penalty-order and common order of first-appellate authority and the issues involved are also identical, they were heard together and are being disposed of by this common order for convenience and clarity.
2. Heard the Ld. Representatives of both sides at length and case records perused.
3. Briefly stated the facts leading to present appeals are such that the assessee is engaged in the business of sale of liquor and assessed regularly by Income-tax Department. A search u/s 132 was conducted on 07.01.2016 upon assessee wherein two documents inventorised as “LPS-01-Page 135” and “LPS-02-Page 48” were seized. Based on “LPS-01-Page 135”, the AO framed a view that the assessee had taken/repaid cash-loans from/to Shri Laxmi Narayan Shivhare and based on “LPS-02-Page 48”, he formed a view that the assessee had taken/repaid cash-loans from/to other persons; that all these loans were in contravention of sections 269SS/269T which attracted penalties u/s 271D/271E for AY 2013-14 to 2015-16. Therefore, during the course of assessment-proceeding, Ld. AO issued show-cause notice dated 19.07.2018 to assessee, in response to which the assessee made a written-submission and stated that he has never carried out any loan transaction. Subsequently, the AO initiated penalty-proceeding on the same premise that the transactions mentioned in those documents represented cash loans taken/repaid by assessee in violation of section 269SS/269T; finally he imposed penalties u/s 271D & 271E vide order dated 27.09.2019 as under:
