SH. PRAVEEN GUPTA,DELHI vs. ADDL. CIT, NEW DELHI

This is an appeal filed by the assessee against the order passed by the ld. CIT(A)-XXVIII, New Delhi dated 15.01.2014 on the following grounds : “

The submission of the assessee was considered by the AO and he concluded that it is a concocted explanation and did not satisfy and imposed penalty u/s. 271E of the Act. Against the order of the ld. AO, the assessee appealed before the first appellate authority, who confirmed the order of the Assessing Officer stating as under : “5.1. I have carefully considered the penalty order and submissions thereof. The facts of the case as per the penalty order are that there was credit entry for an amount of Rs.4,00,000/- as per the cash book and the unsecured loan amount had been debited. The assessee claimed that the proprietor had received the sum, however, the Assessing Officer confirmed that the drawings account had not been debited but the unsecured loan account had been debited. The Assessing Officer thus concluded that the assessee was trying to give a concocted explanation and it was clear that the assessee had made cash repayment of loan in violation of Section 269T. Penalty proceedings were initiated and penalty of Rs.4,00,000/- was levied after giving detailed reasoning in the penalty order. In the appellate proceedings the appellant reiterated that the amount had actually been paid to the proprietor and it was by mistake of the assessee's accountant that it was shown as a unsecured cash loan, therefore there was no balance outstanding in the balance sheet. The claim of the appellant has been considered. The Assessing Officer has found that the assessee has debited the unsecured loan account and has thus made cash repayment of loan in violation of Section 269T. No details regarding the person to whom the amount had been paid was available in the records of the assessee. In case the amount had been paid to the proprietor, as claimed by the appellant, then the amount should have been deposited in the personal bank account or taken to the drawings account since this has not been found on examination by the Assessing Officer, the penalty is sustained. Grounds of appeal are disposed of.” Aggrieved by the order of the first appellate authority, the assessee is in appeal before the Tribunal.

The ld. AR submitted that it was a mistake of the accountant who wrongly debited the unsecured loan ledger account in lieu of drawing account. The cash was actually withdrawn by the proprietor. The correct entry should be passed that drawing account debited in lieu of unsecured loan account and cash account should be credited whereas the accountant passed the entry and debited to unsecured loan. When this mistake came to the knowledge, the entry was reversed before finalization of the balance sheet. There was no payment of unsecured loan through cash. The rectification entry was submitted before the Assessing Officer and CIT(A) which is at paper book page 29.

The ld. DR relied on the orders of the lower authorities. He submitted that the Assessing Officer has categorically examined the cash book and found that it was a payment of unsecured loan. He objected that journal vouchers were submitted which is on paper book page 19 and pointed out that there is no any voucher number noted. No one has checked. Only the authorized signatory has verified these vouchers. Had this reversal entry been passed on 01.10.2007, then why this was not submitted before the AO during the scrutiny assessment proceedings, which has been submitted in the penalty proceedings. In the voucher, the narration has been mentioned as “being amount transferred”. This voucher is system generated and entry can ever be passed.