Assessee’s business was closed and inoperative for last 7 years and had borrowed money from private lenders and banks for last 10 years, to meet business liabilities he had raised cash loans from the unorganised sector. AO opined that there was violation of S. 269SS in respect of cash loan in respect of assessee, a penalty for the same loan amount was imposed by the AO and further enhanced by the Commissioner (Appeals). In Appeal held, that the Assessee had specifically submitted to the AO that his business was inoperative for years and had taken loans for several years to meet financial requirements as lenders were pressing hard. Assessee even had Rs. 50 crore mortgaged against assets worth Rs. 5 crore only. When this fact was seen in the light of return filed by the assessee declaring loss of Rs. 4.35 lakhs, it clearly emerged that the loans were taken by the assessee in cash in violation of the provisions of section 269SS to meet the financial liabilities. This constituted a reasonable cause warranting non-imposition of penalty under section 271D in terms of section 273B. Therefore, the penalty of Rs. 88,18,000 was deleted. (ITA No. 914/Pun/14 dt 15-01 2019) (AY.1999-2000 )
P. R. Associates v. A CIT (2019) 70 ITR 469 (Pune)(Trib.)
S. 269SS : Penalty—Acceptance of loan in cash in excess of specified limit—assessee’s business inoperative for past years—assessee borrowing from bank and private money lenders for past years— assessee borrowing money from unorganised financial sector in cash for repaying financial liabilities—assessee declaring loss in return—reasonable cause—Imposition of penalty not warranted. [S. 273B]