The Indore bench of Income Tax Appellate Tribunal ( ITAT ) recently held that in case of “loan given” Penalty under section 271D Income Tax Act 1961 would be invalid.
The fact of the case is that when a search is conducted on the premises of the Assessee Prakash Asphaltings & Toll of Highway (India) Ltd (PATL) some of the documents were seized which contained the details of cash-transactions done between M/s Prakash Ashphaltings & Toll Highways (India) Ltd d M/s Agroh Infrastructure Developers Pvt. Ltd. (AIDPL) On analysis it was found that the assessee was given a loan to AIDPL but which was not recorded in the book of account of the assessees. Assessing officer re-opened assessment under section 147 of the Income Tax Act 1961 and levied penalty under section 271D Income Tax Act 1961.Against the order assessee filed an appeal before the ITAT.
section 271D Income Tax Act 1961 provides that if any person accepts any loan in contravention of the provision of 269SS Income Tax Act 1961 he shall be liable to pay an amount by way of penalty.
Madhur Agrawal counsel for the assessee contended that the alleged document was found and seized from the premise of PATL, AIDPL and not from assessee. Further two conclusions are made by the authority, the initial conclusion or original conclusion was that the assessee had given loan to AIDPL but subsequently they reversed their conclusion to the effect that AIDPL has given loan to the assessee which was considered the reversed conclusion. Assessment Of assessee was re-opened on the basis of original-conclusion. The original conclusion was absolutely incorrect hence the action taken under section 148 Income Tax Act 1961 as well as order of re-assessment is bad.
Moreover “even if the reassessment-order is held to be valid for any reason, then also the penalty-proceeding would be invalid for the simple reason that penalty proceeding of section 271D were initiated on the basis of “original-conclusion” made in re-assessment order that the assessee had given cash-loan to AIDPL, but section 271D not have application to the transaction of loan given.”
P.K. Mitra counsel for the revenue contented that dutifully supported the penalty order, though he agrees that penalty under section 271D was not applied to the transaction of loan given.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
