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COMMISSIONER OF INCOME-TAX Versus SUNIL KUMAR GOEL - 2009 (3) TMI 131 - PUNJAB AND HARYANA HIGH COURT - Income Tax
Cash Loan - Penalty u/s 271D and 271E – Violation of section 269SS – Held that - assessee had produced his cash books, depicting loans taken by him unilaterally before the Revenue - no prejudice was caused to the Revenue - assessee did not attempt by the impugned act to avoid any tax liability - there is no dispute about the fact that the instant cash transactions of the respondent assessee were with the sister concern and that these transactions were between the family and due to business exigency - A family transaction, between two independent assessees, based on an act of casualness, specially in a case where the disclosure thereof is contained in the compilation of accounts and which has no tax effect, in our view establishes “reasonable cause” under section 273B of the Act. Since the respondent assessee had satisfactorily established “reasonable cause” u/s 273B of the Act he must be deemed to have established sufficient cause for not invoking the penal provisions (sections 271D and 271E of the Act) against him – penalty set aside.
.............. impugned act to avoid any tax liability. Furthermore, there is no dispute about the fact that the instant cash transactions of the respondent assessee were with the sister concern and that these transactions were between the family and due to business exigency. A family transaction, between two independent assessees, based on an act of casualness, specially in a case where the disclosure thereof is contained in the compilation of accounts and which has no tax effect, in our view establishes reasonable cause under section 273B of the Act. Since the respondent assessee had satisfactorily established reasonable cause under section 273B of the Act he must be deemed to have established sufficient cause for not invoking the penal provisions (sections 271D and 271E of the Act) against him. 18. For the reasons recorded hereinabove, we find no merit in either of the aforesaid two appeals, i.e., I. T. A. Nos. 777 and 778 of 2008, and accordingly, the said appeals are hereby dismissed.
J. S. KHEHAR and NAWAB SINGH JJ. Yogesh Putney for the petitioner. Kashmiri Lal Goel for the respondent. JUDGMENT The judgment of the court was delivered by J. S. KHEHAR J.- Through the instant order, we propose to dispose of I. T. A. Nos. 777 and 778 of 2008. The issue which arises for consideration is the validity of the order passed by the Income-tax Appellate Tribunal, Delhi Bench, on January 19, 2007, whereby, the penalty imposed on the respondent-assessee under sections 271D and 271E of the Income-tax Act, 1961 (hereinafter referred to as the Act ) was ordered to be set aside. 2. The basis of the controversy raised in the instant appeals emerges from the order dated October 11, 1993 (annexure A1) passed by the Deputy Commissioner of Income-tax, Rohtak Range, Rohtak, showing that the respondent-assessee, Sunil Kumar Goel, had taken the following loans in cash 26-4-1990 5-5-1990 11-5-1990 19-5-1990 28-6-1990 16-7-1990 6-6-1990 12-6-1990 Rs. 25,000 30,000 10,000 10,000 20,000 15,000 20,000 15,000 3. The aforesaid cash loans were taken during the financial year 1990-91 (assessment year 1991-92). According to the appellant-Revenue, the action of the respondent-assessee in taking the aforesaid cash loans was in clear violation of section 26955 of the Act. Section 269SS of the Act is being extracted hereunder 269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor) any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,- (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit or (b) on the date of taking or accepting such loan, or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,- (a) Government (b) any banking company, post office savings bank or co-operative bank (c) any corporation established by a Central, State or Provincial Act (d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing notify in this behalf in the Official Gazette Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation - For the purposes of this section (i) banking company means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in section 51 of that Act (ii) co-operative bank shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) (iii) loan or deposit means loan or deposit of money. 4. A perusal of the aforesaid provisions reveals that it is not open to an assessee to accept a loan or a deposit (the aggregate whereof, is in excess of Rs. 20,000) by way of cash. It is apparent from the factual position noticed from the extract of the order dated October 11, 1993, that the respondent-assessee had taken loans in excess of Rs. 10,000 by way of cash. This action of the respondent-assessee was sought to be penalized by invoking section 271D of the Act. Section 271D of the Act is also being extracted hereunder 271D. (1) If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 5. It is the vehement contention of the learned counsel for the Appellant-Revenue that section 271D of the Act is a mandate, inasmuch as, every violation of section 269SS of the Act, is liable to be penalized by imposing a penalty (equal to the amount of the loan/deposit taken or accepted by the assessee in cash). It is, therefore, the submission of the learned counsel for the appellant-Revenue that it was not open to the Income-tax Appellate Tribunal to set aside the penalty imposed on the respondent-assessee under section 271D of the Act for the violation of section 269SS of the Act. 6. The facts noticed hereinabove are relevant for Income-tax Appeal No. 777 of 2008. 7. In so far as I. T. A. No. 778 of 2008 is concerned, it pertains to penalty imposed on the respondent-assessee on the return of the aforesaid loans taken in cash. Undisputably, the alleged loans depicted hereinabove, were returned by way of cash. On this occasion, the appellant-Revenue arrived at the conclusion that the respondent-assessee had violated the mandatory provisions of section 269T of the Act. Section 269T of the Act is being extracted hereunder 269T. No branch of a banking company or a co-operative bank and no other company or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if (a) the amount of the loan or deposit together with the interest, if any, payable thereon, or (b) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the cas.................