Sunil Kumar Vs ACIT (ITAT Jaipur)
The ITAT Jaipur considered the assessee’s appeals against the orders of the CIT(A) confirming penalties levied under Sections 271D and 271E of the Income-tax Act for alleged violations of Sections 269SS and 269T. The assessee, engaged in the business of supplying building material, had filed a return under Section 44AD. During assessment proceedings, the Assessing Officer noticed cash deposits of ₹23,36,000 in the assessee’s personal bank account. The assessee explained that ₹3,36,000 belonged to a friend, who had deposited the amount in the assessee’s account for obtaining demand drafts in favour of the Excise Department to participate in liquor shop tenders. The Assessing Officer accepted the explanation regarding the source of the cash deposits and made no addition in the assessment, but penalty proceedings under Sections 271D and 271E were initiated on the premise that the amount represented a loan or deposit received and repaid in cash.
Before the Tribunal, the assessee relied on the explanation furnished during assessment and the affidavit of the depositor stating that the amount was deposited only for obtaining demand drafts and was later refunded after cancellation of the drafts. The Tribunal observed that the Assessing Officer had accepted this explanation during assessment and had not recorded any finding that the amount represented a loan or deposit. It held that the explanation accepted during assessment could not be rejected in the penalty proceedings without any fresh or contrary material.
