S.R. Associated Construction v. JCIT [ITA Nos. 209 & 210/Kol/2013, dt. 8-4-2016] : 2016 TaxPub(DT) 2135 (Kol-Trib)

Penalty under section 271D/271E

Facts:

Assessee in the business of civil construction works, had taken a loan from PNB. The said loan was declared as NPA (non-performing asset) thus was transferred to ARCIL. ARCIL directed assessee to settle the dues thus one director Ashok Kumar Sarda had to pledge his lands to repay the said loan. The pledge was subsequently released and the land sold and draft of 17.25 lakhs in the name of ARCIL as part payment was handed over to ARCIL. The entry was erroneously made in the books as Debit Cash Credit Ashok Kumar Sarda and then Debit ARCIL Credit Cash. The said entry was routed through the current account of the director. This could not be propertly explained by the assessee. Similarly to release the sale deed cash was paid to the director in turn to the buyers which was recorded as Debit Ashok Kumar Sarda Credit Cash. Both transactions were read as in violation of section 269SS/269T and thus penalty was upheld by the assessing officer/Commissioner (Appeals) under section 271D/E. On appeal:

Held by the ITAT in favour of the assessee, that the assessee has established the facts of reason of such transaction under section 273B and since that being a bona fide transaction no penalty can be levied.

Also held amounts paid to director in current account is not deposit or loan.