M/S.ST.MARY'S HOTELS P. LTD,KOTTAYAM vs. THE ADCIT, THIRUVALLA

None appeared on behalf of the assessee, even though the case was adjourned for today on the request of the assessee on 27/09/2017. We, therefore, decided to dispose of the appeal of the assessee after hearing learned D.R. and considering the material available on record.

We have heard the submissions of Learned D. R., carefully considered the same along with the orders of the tax authorities below. We noted that the Assessing Officer levied the penalty under section 271D on the assessee because the assessee has violated the provisions of section 269SS as the Managing Director of the company made the repayment of Rs.5,00,000/- in cash to Kottayam District Co-operative Bank Limited, Account No. 1/99. When the matter went before the CIT(A), the CIT(A) confirmed the penalty ignoring the fact that the assessee has taken the plea before the Assessing Officer that he was prevented by reasonable cause as the MD of the company has to directly deposit a sum of Rs.5,00,000/- in cash into the accountof Kottayam District Co-operative Bank Limited account No. 1/99 as per the direction of the court out of his own sources. We noted that the provision of section 271D for levying the penalty are subject to the provisions of section 273B. Section 273B stipulates that in case the assessee has a reasonable cause then no penalty shall be imposable on the assessee. In this case the assessee company has to deposit the amount towards the repayment of the term loan account maintained with Kottayam District Co-operative Bank Limited as per the direction of the court. The payment on behalf of the company was made by the MD from his own sources in cash to the bank as it was immediately required to be made. The genunity of the transaction has not been doubted by the Assessing Officer. Except the said sum of Rs.5,00,000/-, the rest of the payment amounting to Rs.50,00,000/- was remitted into the term loan account of the bank by the assessee company only through cheque. In our opinion, due to the exigencies of the circumstances and the order of the court, the assessee was bound to make the payment immediately and therefore, the assessee was prevented by reasonable cause. We accordingly hold that

In the result, the appeal of the assessee stands allowed.