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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI
IN THE INCOME TAX APPELLATE TRIBUNAL “E” BENCH, MUMBAI BEFORE SHRI SHAMIM YAHYA, AM AND SHRI RAM LAL NEGI, JM (Assessment Year: 2011-12) M/s. Electroplast Engineers, JCIT-24(3) 4th Floor, Piramal Chambers, Garuda House, 142, Upper Govind Nagar, Vs. Mumbai Opp. Kailashpuri Hanuman Temple, Malad (E), Mumbai-400 097 PAN/GIR No. AAAFE 8028 N (Appellant) : (Respondent) Appellant by : None Respondent by : Shri D. G. Pansari Date of Hearing : 19.11.2018 : 04.02.2019 Date of Pronouncement O R D E R Per Shamim Yahya, A. M.:
This appeal by the assessee is directed against the order of the learned Commissioner of Income Tax (Appeals)-41, Mumbai (‘ld.CIT(A) for short) dated 12.04.2017 and pertains to the assessment year (A.Y.) 2009-10.
The ground of appeal read as under:
1. On the facts and circumstances of the appellant’s case and in law the ld. Commissioner of Income Tax (Appeals) erred in confirming the penalty levied u/s. 271D r.w.s. 273B of the Income Tax Act, 1961 by the Ld. Joint Commissioner of Income Tax amounting to Rs.9,75,000/-.
Brief facts of the case are that the assessee firm is engaged in the business of manufacturing of accessories of tube light fittings and other electrical components. During the course of assessment proceedings, source of cash deposited in the bank account was examined and it was found that the assessee has taken unsecured cash loan of Rs. 9,75,000/- from M/s. P.K. Hospitality Services Pvt. Ltd. It was submitted that M/s, P.K. Hospitality Services Pvt. Ltd. has paid the cash loan out of its cash collection from various branches. In view of the fact that the assessee firm had accepted loans in cash over and above Rupees Twenty Thousand in violation of the provisions of section 269SS of the I, T. Act, 1961, notice u/s 274 initiating the penalty proceedings u/s 271D dated 05.03.2014 was issued and served upon the assessee firm.
4. During the course of penalty proceedings, the assessee firm failed to comply any details / documents to satisfactorily explain that the unsecured loan taken from M/s. P.K.
Hospitality Services Pvt. Ltd. was not in cash. Thus, penalty of Rs.9,75,000/- under section 271D of the Act was levied against which the assessee firm is in appeal before this office.
Upon the assessee’s appeal, the ld. CIT(A) noted the submissions of the assessee that the amount was taken due to business exigency. The submissions before the ld. CIT(A) were as under:
During the present appellate proceedings, the AR of the appellant firm appeared and filed written submission along with copies of case laws relied upon and copy of accounts of the appellant and the party who has ..given the loan/advance. The AR submits that the appellant and the concern, M/s. P.K. Hospitality Services Pvt. Ltd., belong to the same group. The AR further states that the cash received from M/s. P.K. Hospitality Services Pvt. Ltd. was in the nature of business advance and not loan, which was taken due to business exigency and requirement and the same was utilized in the business of the appellant. The AR further states that as the amount was not in the nature of loan, the provisions of section 269SS would not be applicable and hence would not attract penalty u/s 271D. Reliance was placed in the decisions taken in the case of QT vs Parmanand (2004) 266 ITR 0255 (Delhi HC), CU vs Manoj Lalwani (2003) 260 ITR 0590 (Raj. H.C.) and various other judicial pronouncements.
However, the ld. CIT(A) was not convinced. He observed that the assessee has completely failed to prove any business exigency for accepting the cash loan. He further observed that the assessee has failed to prove that the aforesaid cash advance was for business purposes, as there was no business transaction of any kind between the lender and the assessee. Hence, he concluded as under:
Therefore, it is found that the appellant has no reasonable cause for taking the cash loans in violation of provisions of Section 269SS. No exceptional, immediate or urgent requirement /circumstances justifying cash loan has been demonstrated by the appellant. In view of above, the penalty of Rs. 9,75,000/- levied by the AO u/s 271D is hereby sustained. The ground is rejected.
Against the above order, the assessee has filed an appeal before us.
We have heard the ld. Departmental Representative (ld. DR for short) and perused the records. Despite notice, none appeared on behalf of the assessee. The acknowledgement of the notice issued is duly on record.
Upon careful consideration, we agree with the finding of the ld. CIT(A) that there was no reasonable cause for the assessee to accept loan over Rs.20,000/- in cash in clear contravention of section 269SS. Except for stating that there was business exigency and the loan taken was for business purpose, no cogent evidence has been produced. The ld. CIT(A) has given a finding that there was no business transaction between the lender and the assessee. Hence, receiving the cash advance purportedly for business purpose is not proved. Accordingly, we do not find any infirmity in the order of the ld. CIT(A), hence, we uphold the same.
In the result, this appeal filed by the assessee stands dismissed.
Order pronounced in the open court on 04.02.2019