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Section 271D of the Income-tax Act, 1961 - Penalty - For failure to comply with section 269SS - Where assessee-company had neither received any amount by way of loan nor received any deposit and it was director of assessee-company who had utilized his undisclosed income for and on behalf of assessee, no penalty could be levied on assessee-company under section 271D [In favour of assessee] The premises of 'K', a director of the assessee-company, was searched by the income-tax authorities, during which incriminating documents regarding unaccounted expenditure incurred by the said 'K' were seized. In the proceedings initiated under section 153C, the said 'K' offered to tax the undisclosed expenditure incurred by him for and on behalf of the assessee-company for construction activities. Accordingly, journal entries were passed in the assessee's books of account in respect of the said expenditure incurred by the director on behalf of the company. Since the credit entries in the books of the assessee were not by way of account payee cheque/bank draft, the Assessing Officer was of the opinion that the assessee violated section 269SS and, accordingly, levied penalty under section 271D. The Commissioner (Appeals) upheld the penalty. On second appeal, the Tribunal deleted the penalty by recording a finding of fact that the assessee had neither received any amount by way of loan nor received any deposit and it was director of the company who had utilized his undisclosed income for and on behalf of the assessee. Held that the Tribunal had recorded a finding of fact that the director had explained the source of his undisclosed income and the said explanation had been accepted by the department. Thus, there was no question of receiving any amount by the assessee as a loan or deposit from its director. In these circumstances, deletion of penalty imposed under section 271D could not be faulted with. B.M. Chatterjee for the Appellant. P.J. Pardiwala and Atul K. Jasani for the Respondent. JUDGMENT 1. In all these appeals, the only question raised by the Revenue is, whether the Income-tax Appellate Tribunal was justified in deleting the penalty levied under section 271D of the…

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