Section 271D, read with section 269SS of the Income-tax Act, 1961 - Penalty

IT : Where cash received in excess of Rs. 20,000 was loans and not capital contribution by partners, penalty to be levied
■■■
[2014] 52 taxmann.com 490 (Kerala)
HIGH COURT OF KERALA
Soundarya Textiles
v.
Assistant Commissioner of Income-tax*
DR. MANJULA CHELLUR, CJ.
AND A.M. SHAFFIQUE, J.
IT APPEAL NO. 35 OF 2012†
JANUARY  8, 2014
Section 271D, read with section 269SS of the Income-tax Act, 1961 - Penalty - For failure to comply with section 269SS (Cash Contribution) - Assessment year 2005-06 - Assessee firm received cash in excess of Rs. 20,000 - Assessee submitted that persons who paid cash were promoters of assessee-firm and that they were supposed to be partners and that contribution was made in first year of business and said funds were mobilised in form of capital contribution - Revenue found that said contributions made were, in fact, treated as a loan - Whether explanation that these persons were to be made partners later could not be accepted - Held, yes - Whether since reasons stated by assessee were not genuine, penalty was to be levied - Held, yes [Para 5] [In favour of revenue]