Penalty u/s 269SS held to be not leviable where , the assessee a reputed dealer in fast moving goods in order to get encashed the cheques issued to various companies, accepted the cash in his bank account from various persons also soon repaid the same . The assessee did not use the CC limit to save interest cost. – Amar Nath [05-10-2015] High Cour of Himachal Pradesh ITA 4014/2013 Case laws relied upon: Asstt. Director of Inspection Investigation v. A.B. Shanthi, (2002) 6 SCC 259 Hindustan Steel Ltd. V. State of Orissa, (1972) 83 ITR 26 (SC); CIT v. Kharaiti Lal and Co., (2004) 270 ITR445 (P&H); CIT v. Maheshwari Nirman Udyog, (2008) 302ITR 201 (Raj); CIT v. Lakshmi Trust Co., (2008) 303 ITR 99 (Mad); CIT v. Indore Plastics P. Ltd., (2003) 262 ITR 163(MP); CIT v. Idhayam Publications Ltd., (2006) 285 ITR 221 (Mad); CIT v. Bazpur Co-operative Sugar Factory Ltd.,(1988) 172 ITR 321 (SC); CIT v. Balaji Traders, (2008) 303 ITR 312 (Mad); CIT v. Kundrathur Finance and Chit Co.,(2006) 283 ITR 329 (Mad); and CIT v. Ratna Agencies,(2006) 284 ITR 609 (Mad

Chit fund satisfies the principle of mutuality and the transactions of the participators do not give rise to any taxable income or allowable loss - Soda Silicate vs CIT 179 ITR 588 - Kanga and Palkhiwala - 2014 edition - page 678 .

The Delhi High Court in CIT vs. M/s Muthoot Financiers has held that transaction of loan between a firm and its partner does not attract s. 269SS. If other High Courts have taken a consistent view, that should be followed even if opposite view is possible - [2015-ITRV-HC-DEL-109]

Cash Receipt of Share Application Money is not contravention of 269SS

 INCOME TAX APPELLATE TRIBUNAL, DELHI

ITA No.2858/Del/2012 – Assessment year: 2008-09

Deputy CIT V/s.  M/s Alpex Exports (P) Ltd.

Date of pronouncement 28-08-2012

Casual Transaction with relatives and bonafide belief -not penalty for 269SS,269T

•Casual transaction with relatives and bonafide belief and genuineness constitutes reasonable cause—no penalty. Sunil Kumar Goel  315 ITR 163 P&H

 

269SS,269T not applicable to book entry

Acceptance or repayment through journal entry do not attract section 269SS or 269T: Acceptance or repayment through Journal Entry would not come within the ambit of the words ‘loans or deposits’-section 269SS applies only where money passes from one person to another by way of ‘loan or deposit

•’[CIT v. Noida Toll Bridge Co. Ltd. 262 ITR 260 (Del.)]

Amount paid by firm to partners or vice versa- 269SS,269T not attracted

Amount paid by firm to partners or vice versa- is payment to self and does not partake the character of loan or deposits in general law. Provisions of section 269SS are not applicable to such facts( CIT v. Lokhpat Film Exchange (Cinema) [2008] 304 ITR 172 (Raj.)

Case Laws on 269SS favoring assessee

In following cases 269SS not applied having regards to facts and circumstances of the case
i)ITO vs Rajendera Trading Co.48ITD210 Chd SMC
ii)Muthoot M. George Bankers 46 ITD 10 Cochin
iii)Jay Builders 111 Taxmann 211(Mum Tri)
iv)Shree Nath Builders 111 Taxmann 142
v)Mrs Rupali R. Desai 88 ITD76 (Mum)

Loan through book Entry. 269SS/T not to apply if backed by lender and acceptance letter of receiver
- Sunflower BUilders Private Limited 61 ITD 227