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2012 (10) TMI 856 - ITAT AGRAPenalty u/s. 271D - loan or deposit received from Samajwadi Party - ignorance to the provisions of section 269SS - CIT(A) deleted the levy - Held that:- Samajwadi Party deposited the impugned amount on 23.06.2005 in the joint bank account of the assessee in cash & on the same date, the said amount was withdrawn for the purpose of making payment to Nazul Department for getting the joint property of the assessee converted from lease hold to free hold. The AO did not dispute the genuineness of the transaction entered into between the assessee and Samajwadi Party and no addition has been made in this regard. These facts would clearly reveal that on 23.06.2005 when Samajwadi Party deposited the amount in cash in the joint account of the assessee, the assessee was in dire need of (cash) money because on the same day the amount in cash was withdrawn from the joint account of the assessee and was deposited with the Nazul Department. It is supported by the challan of the treasury and the registered deed executed by the Nazul Officer on 23.06.2005 and 24.6.2005. If the assessee would have taken the loan from Samajwadi Party through banking channel through cheque, it would have taken some time for process in clearing. Since the amount is deposited in the joint account of the assessee on 23.06.2005 and was withdrawn on the same day for making cash payment to the Nazul Authority, there can be no reason to doubt the bona fide of the assessee. Thus, the assessee has been able to prove that for bona fide reasons the assessee had taken cash loan from his own party (Samajwadi Party) and entered into the genuine transaction. Routing of the cash deposit through the bank account of the assessee without direct receipt and payment of the impugned cash would further endorse the bona fide of the assessee. Section 269SS did not prohibit taking of loan in cash from political party or otherwise. It simply provides mode of taking or accepting certain loans and deposits instead of cash. The prohibition is provided under these provisions for taking or accepting from any other person a loan or deposit otherwise than by account payee cheque or draft if it exceeded the prescribed limit. Therefore, whether Samajwadi Party had no provision in their Constitution for giving loan or advance to the assessee, would not be relevant criteria to decide the issue of levy of penalty u/s. 271D. Further, Samajwadi Party has filed their confirmation that the impugned loan was given to the assessee and his wife, which was repaid later on through banking channel - a "reasonable cause" for failure to comply with the provisions of law is proved - in favour of assessee.
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