Vasan Healthcare (P.) Ltd. v. ACIT – [2021] 125 taxmann.com 266 (SC)

 

Short Overview:

 

Director of assessee-company borrowed cash loans from a financier.

 

Assessing Officer (AO) issued show cause notice regarding violation of provisions of Section 269SS by receiving cash in excess of Rs. 20,000.

 

Assessee stated cash borrowed by such director was introduced through his running account with the company for the purpose of meeting expenses of assessee.

 

AO rejected the same and imposed penalty under Section 271D upon assessee.

 

CIT(A) and ITAT upheld the order passed by AO.

 

On appeal, Madras HC held that director of assessee had borrowed huge cash loans.

 

Accepting a loan in contravention to the provisions of section 269SS automatically attracts section 271D.

 

Therefore, director had become exposed to penalty proceedings under section 271D.

 

Further, director had deposited the cash loans so obtained by him in his individual capacity into the current account/bank account of the assessee.

 

Assessee accepted the same in cash remittance, in contravention to section 269SS, had also exposed themselves to levy of penalty under section 271D.

 

Therefore, there can be no mix up of these two individual transactions and the theory of multiplicity deserves to be out rightly rejected.

 

To be entitled to the benefit under Section 273B, the onus is on the person claiming such benefit to show that he could not get a loan by account payee cheque or demand draft and the cause shown by him should be genuine and bona fide.

 

Thus, merely because the director took cash loans and deposited it in the current account of the assessee on the very same day, and assessee utilised it to pay salaries, rent and EMI Commitments coudl never be a ground to be taken as a mitigating factor to escape from the rigour of levy of penalty under section 271D.

 

 Assessee preferred a SLP against the order passed by High Court and which was dismissed by the Supreme Court.