Case Law Details
Pearl Beach Promoters P. Limited Vs Assessing Officer (ITAT Chennai)
In the case of Pearl Beach Promoters P. Limited vs. Assessing Officer, ITAT Chennai ruled that penalties under sections 271D and 271E were not applicable to the company. These penalties were proposed because the company had received cash loans from its directors and related entities, and also repaid some loans in cash. The company argued that these loans were necessary to meet urgent expenses at remote project sites where banking facilities were inadequate. Despite having sufficient funds in its bank accounts, the company needed immediate cash for labor payments and other on-site expenses.
The Income Tax Appellate Tribunal (ITAT) Chennai accepted the company’s argument, noting that the loans were from directors and related entities, not third parties, and were crucial for business exigencies. Therefore, the ITAT canceled both penalties, ruling in favor of the company.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
1. Aggrieved by confirmation of certain penalty u/s 271D & 271E for Assessment Year (AY) 2017-18 vide impugned orders dated 23-10-2023, the assessee is in further appeal before us. The penalty levied u/s 271D is subject matter of ITA No.1289/Chny/23 whereas penalty levied u/s 271E is subject matter of ITA No.1290/Chny/2023.
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