ITAT Confirms Penalty since Assessee failed to Prove that the Loan was accepted in Cash due to Business Exigencies

ITAT - Loan

While hearing the case between Shri Prodyut Dhar and J.C.I.T, Kolkata bench of Income Tax Appellate Tribunal (ITAT) confirmed the penalty since the assessee failed to prove that the loan amount which is accepted in cash due to business exigencies.

In the instant case, the assessee is an individual engaged in the business of medicine and wine has filed his return of income for the assessment year.

During the assessment proceedings the Assessing Officer (AO) has noticed that during the year the assessee has received cash loans from three different persons and the same was escaped from the total income declared by the assessee earlier and accordingly he initiated penalty proceedings under Section 271D of the Income Tax Act 1961 by holding that the concealment of the loan amount received by the assessee is termed as breach of the provisions of section 269SS of the act.

Before the AO, assessee submitted that t he was compelled to accept the cash loans of Rs. 2,80,000 from the concerned three parties due to business exigencies. But the AO refused to accept assessee’s explanation by holding that there were no proof documents in the hands of the assessee to prove his explanation, consequently he proceeded to impose a penalty of Rs. 2,80,000 under section 271D of the Income Tax Act.

On appeal CIT (A) also confirmed the penalty and also upheld the order passed by the AO.

Thereafter the assessee approached the tribunal on further appeal.

After analyzing the above narrated facts deeply, tribunal bench including Judicial Member S.S. Viswanethra Ravi and Accountant Member P.M. Jagtap observed that the assessee has failed to establish on evidence that the loans in question in cash were accepted by him in cash due to business exigencies and there were compelling circumstances to accept the said loans in contravention of section 269SS.

Accordingly, the division bench dismissed the appeal filed by the assessee by considering the fact that the assessee failed to establish any reasonable cause on evidence for accepting the loans in question in cash in violation of section 269SS and also upheld the order pronounced by the lower authorities.

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