Monarch Dyestuff Industries And Exports Ltd. Vs JCIT (ITAT Ahemdabad)
Conclusion: Assessee was not liable for penalty under section 271D and 271E for availing cash loans/deposits in violation of section 269SS and 269T as it had availed the facility in order to re-establish itself, and for fulfilment of promises given for the purpose of BIFR which was a reasonable cause foe not levying penalty.
Held: Assessee had obtained loan/deposits in cash and repaid alleged loan/deposits in cash, thus, violated provisions of section 269SS and 269T. AO had imposed penalty under section 271D and 271E. It was held no doubt breach was there, but assessee had a plausible explanation. It had been in the business since 1980 in exporting dyes and intermediaries. Thus, in order to re-establish itself, it had availed certain cash loans which had been used for fulfilment of promises given for the purpose of BIFR. therefore, assessee had been able to demonstrate reasonable cause for not visiting the penalty under section 271D and 271E.
FULL TEXT OF THE ITAT JUDGEMENT
Present two appeals are directed at the instance of the assessee against separate orders of the ld.CIT(A) dated 6.11.2015 passed for the Asstt. Year 2009-10.
2. Though the assessee has taken four grounds of appeal in each appeal, but its solitary grievance relates to confirmation of penalty under section 271D and 271E of the Income Tax Act amounting to Rs. 1,74,99,700/- and Rs.5 1,16,065/- respectively.
3. The facts on all vital points are common. Penalty has been imposed for violation of section 269SS and 269T of the Income Tax Act, 1961. In other words, according to the ld.AO the assessee has obtained loan/deposits in cash and violated provisions of section 269SS, therefore, deserves to be visited with penalty under section 271D. Similarly, it has repaid alleged loan/deposits in cash and alleged to have violated section 269T. The ld.AO has imposed penalty of Rs.5 1,16,065/- under section 271E of the Act. Thus, short controversy involved in both appeals relates to, whether the assessee is able to establish reasonable cause for accepting alleged loans or deposits in cash and making repayment of such loans/deposits in cash for absolving it from vigor of penalty imposable under section 271D and 271E of the Act.
4. Brief facts of the case are that on perusal of the audit report in form no. 3CD for the F.Y. 2008-09, it revealed to the AO that at clause (3) of item no.24, the assessee had shown loans/deposits received by it which fall within the ambit of section 269SS, as sum accepted or taken otherwise by crossed- The list of such amounts is as under:
