u/s 269SS cash loan granted by executive directors to meet company’s urgent financial needs: ITAT waives penalty

0

The Income Tax Appeal Tribunal (ITAT) Bangalore has waived the penalty as a cash loan under Section 269SS of the Income Tax Act 1961 granted by administrators to meet the company’s urgent financial needs.

The assessed company is JICE Academy for Excellence Pvt. ltd. consists. under the Indian Companies Act 2013. The aim of the company is to provide training and sleeping facilities for aspirants such as IAS, IPS, etc.

During the vetting process, the Valuation Officer noted the cash loan received from the 2 trustees viz. Akhil Anand Biraj of Rs. 14,62,470 and KV Kanaghavi of Rs. 27,00,000. Therefore, pursuant to Section 271D of the Act, the Joint Commissioner of Income Tax commenced penalty proceedings under Section 271D of the Act for violation of s. 269SS of the Act. The law’s u/s 271D penalty proceeding was then transferred to the Faceless National Assessment Center.

In response, the assessed company filed the response explaining that the company in cash for an urgent requirement of the company in which the above said directors held the management affairs of the company. The said directors are responsible for the day-to-day business of the company.

Counsel for the person being assessed argued that s. 269SS of the Act does not apply to a cash transaction between the directors and the company, because the directors are not another person, but are the people who manage all of the affairs of the company and the company being valued is also convinced that Sec. 269SS of the Act does not apply to ongoing transactions between the director and the company.

A Coram composed of NV Vasudevan, Vice Chairman and Chandra Poojari, Accounting Member, observed that “the transaction between the valued company and its executive directors is intended to meet the urgent financial needs of the company. Accordingly, it cannot be contemplated and there are reasonable grounds for accepting cash from the executive directors of the company who are responsible for the day-to-day business of the company. In our opinion, in this case, the imposition of a fine u/s 271D of the is unjustified. »

Subscribe to Taxscan Premium to view the judgment

Support our journalism by subscribing to Tax scan premium. follow us on Telegram for quick updates

JICE Academy for Excellence Pvt. Ltd vs NFAC

Counsel for the Appellant: Shri Rajeev Nulvi

Counsel for the Respondent: Shri K. Sankar Ganesh

CITATION: 2022 TAXSCAN (ITAT) 1587

Share.

About Author

Comments are closed.