COMMISSIONER OF INCOME-TAX Vs. RASHI INJECTION MOULDERS

JUDGEMENT

(1.) The above Tax Case (Appeals) are filed by the Revenue as against the order of the Income Tax Appellate Tribunal in the appeal filed by the Revenue as well as the cross objection filed by the assessee, raising the following substantial questions of law:

(2.) The assessment year in this case is 2007-08. The respondent/assessee is engaged in the manufacture of plastic components. The assessee filed returns for the relevant assessment year on 01.04.2008 showing certain amounts as loans. The said return was selected for scrutiny. Besides the loan availed from banks, it was found that there were sundry loans for a sum of Rs.70,54,153/- as on 31.3.2007. The documents submitted by the assessee were verified, more particularly the ledger, which reflected cash loan accepted by the assessee for an amount not less than Rs.18,000/-. The General Ledger Pages 247 to 255 showed loans "by cash". In the course of this proceeding, the Department wanted to verify the genuineness of those transactions and on 01.12.2009, the Authorised Representative of the appellant submitted 24 individuals with address at Kanyakumari District and have claimed that they were agriculturists and they had income out of agriculture and they have lent the amount to the assessee without interest. Consequent to this, the Department completed the assessment under Section 143(3) of the Income Tax Act. However, with regard to the sundry loan, taking note of the balance as on 31.3.2007, the Assessing Officer initiated penalty proceedings under Section 271D of the Income Tax Act for violation of Section 269 SS of the Income Tax Act and the Authority imposed penalty of Rs.35,33,242/-. As against which, the assessee preferred an appeal before the Commissioner of Income Tax (Appeals).

(3.) The Commissioner of Income Tax (Appeals) accepted the contention of the assessee that the penalty proceedings was not sustained on the ground of limitation and also on merits and allowed the appeal filed by the assessee holding as follows: