| Question And Answer | |
|---|---|
| Subject: | Simultaneous levy of penalty u/s. 271AAC and u/s. 271D |
| Category: | Income-Tax |
| Querist: | VISHAL SONI |
| Answered by: | Law Intern |
| Tags: | penalty u/s 271D, penalty u/s. 271AAC, Unexplained cash credit, unexplained expenditure |
| Date: | March 21, 2026 |
Mr. A has received notice from income tax department u/s. 148 , citing reasons of search at some other party and finding of incriminating material regarding repayment of cash loan of Rs. 10.00 lacs and payment of interest of Rs. 5.10 lacs.
AO has made addition u/s. 69A in respect of alleged repayment of loan of Rs. 10.00 lacs and u/s. 69C in respect of alleged payment of interest of Rs. 5.10 lacs.
Now AO wants to levy penalty both u/s. 271AAC and Rs. 271D .
Your expert opinion is sought
In my view, simultaneous levy of penalty u/s 271AAC and 271D is not permissible. 271AAC will apply here because the unexplained deposit and unexplained interest expenditure are assessed u/s 69A and 69C. However, having treated the deposit as income, the same cannot also be treated as being a loan or deposit for purposes of s. 269SS and 271D.
See Bajrang Textiles v. Addl. CIT (2009) 122 TTJ 190 (ITAT Jodhpur) where it was held “If an amount has been treated as an “unexplained deposit” and taxed on it, the same amount cannot be treated as a cash loan (deposit) for the purpose of imposing a penalty for violation of Section 269SS”.