TMI Blog2005 (10) TMI 209X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Harbans Lal, wherein he stated that he had advanced loans of Rs. 80,000 repayable in instalments of Rs. 100 per day. He further stated that he advanced fresh loan after the first loan was returned by the borrower. Since Shri Harbans Lal was not able to explain the source of various loans advanced to parties, he disclosed income under VDIS to cover these loans. The assessment was accordingly completed in the case of Shri Harbans Lal. Thereafter, it appears that the Assessing Officer obtained copies of the accounts of various persons to whom he had given loans. The Assessing Officer observed that the assessee had advanced loans in cash to various persons including these two persons in violation of the provisions of section 269SS. He, therefore, referred the case to JCIT, Bhatinda, for consideration of levy of penalty under section 271D of the Income-tax Act. Accordingly, the JCIT issued show-cause notices to the aforesaid persons. Since he was not satisfied with the explanation of the aforesaid persons, he imposed penalties of the following amounts for the below mentioned assessment years: ---------------------------------------------- Name A.Y. Penalty Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Orissa [1972] 83 ITR 26. In addition, reliance was also placed on the decision of I.T.A.T. Chandigarh Bench in ITO v. Rajendera Trading Co. [1994] 48 ITD 210 (SMC)/48 ITD 211 and some other cases. The learned CIT(A) considered these submissions. He observed that the Assessing Officer has imposed penalty in all these cases by relying copies of accounts of these parties obtained from M/s. Juneja Traders and the factual position stated therein did not tally with the statement given by Sh. Harbans Lal. In his statement, Shri Harbans Lal had stated that fresh loans were given only after the earlier loans were returned by the borrowers. This position was found contrary in the copies of accounts obtained from the parties. He also observed that the Assessing Officer has not adduced any clinching evidence to establish that the affected parties had received loans from Shri Harbans Lal to the extent referred to in the penalty orders. Statements of some of the persons on whom penalty has been imposed were also recorded. They also stated that they had taken loans 2 or 3 times from Shri Harbans Lal during their whole life span. The ld. CIT(A) further observed that the department was not in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sustained (A copy of the judgment was placed before us). (c) The decision of the ITAT Delhi Bench in the case of Dolly Farms Resort (P.) Ltd. v. Dy. CIT 15-IT Rep. 159 (TM), where it was held that the justice should be done even if the heaven falls. (A copy of the judgment was placed before us). (d) The decision of the ITAT (Delhi Bench) in the case of Sat is h Gupta v. ITO [2005] 145 Taxman 37 (Delhi) (SMC) (Mag.), assessment year 1995-96, where by relying on the judgment of the Hon'ble Supreme Court in the case of Kishanchand Chela Ram v. CIT [1980] 125 ITR 713, the Tribunal has held that if any evidence is used against the assessee and the same was not shown to him and an opportunity to controvert the same was not given, such evidence was not admissible in support of the addition. He further relied on the two judgments of Hon'ble Punjab Haryana High Court in the cases of CIT v. Sham Lal [1981] 127 ITR 816 and State Bank of Patiala v. Union of India [1973] 91 ITR 630. He further submitted that in his statement recorded by the Assessing Officer and referred to by the learned CIT(A) in the impugned orders, Sh. Harbans Lal had stated that fresh loans were given after the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IT in levying the impugned penalty in all these cases by relying on the copies of accounts of these persons appearing in the books of account of a third party without confronting the same to the affected parties and without allowing an opportunity to cross examine Shri Harbans Lal violated the principles of natural justice. It is a trite law that evidence obtained from the third party cannot be used against the assessee until the same has been confronted to the assessee and an opportunity to cross examine the witness has been allowed. The various decisions of the ITAT relied upon by the ld. Counsel, the judgment of the Hon'ble Supreme Court in the case of Kishanchand Chela Ram and two judgments of the jurisdictional High Court in the case of Sham Lal and State Bank of Patiala also support this view. Therefore, we are of the view that such evidence could not be the basis of levy of penalty in the present cases. 7.1 Now coming to the merits of the cases, we find that during the course of appeal proceedings, photocopies of the accounts of these persons appearing in the books of account of M/s. Juneja Traders were given to these persons. As pointed out by the ld. Counsel and duly acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is. The authority concerned is required to record a specific finding about a particular transaction entered by these persons in violation of the provisions of section 269SS. No such finding has been recorded by the learned CIT(A) after accepting the position that the department has not been able to place any evidence in support of levy of penalty in each case. It must be noted that provisions of sections 271D and 271E are the harshest of all other penalty provisions of the Income-tax Act, as in this case penalty is not leviable with reference to income or tax payable thereon, but the amount of penalty is equal to the amount of loan given or taken irrespective of the fact whether the person accepting such loan/advancing loan has taxable income or not? Therefore, it is imperative on the part of the revenue authorities to exercise due care and examine the case from various angles before levying penalty under these sections. This approach has not been adopted in the present cases. 7.3 The provisions of sections 269SS and 269T have been introduced in the Act with a view to curb tax evasion. In the present cases, the undisputed facts of the cases are that these were small persons havin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Supreme Court has held: "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or acted in a conscious disregard of its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in a manner prescribed by the statute." In the present cases, the authorities below have failed to establish that these persons acted in conscious disregard of the statutory obligation and they were guilty of contumacious or dishonest conduct. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew of Hon'ble President's letter D.O. No. P. 25/2004 dated October 6, 2004, who while quoting decisions of Hon'ble Supreme Court in Sundarjas Kanyalal Bhatija v. Collector, Thane, Maharashtra [l990] 183 ITR 130 and Union of India v. Paras Laminates (P.) Ltd. [1990] 186 ITR 722, directed that coordinate Bench should follow order of the Bench on identical question and warned in clear terms that non-compliance of such direction, a very strict view of the matter would be taken. The last para of Hon'ble President's letter reads as under: "It is thus settled law that a coordinating Bench should follow the decision of same Bench on an identical question. If they are to differ, the procedure as laid down by the Hon'ble Supreme Court should be followed. I, therefore, once again request you to adhere to principle laid down by the Hon'ble Supreme Court. There is no justification to disregard above principle. In future if I note that attempt is being made not to follow the law as laid down by the Hon'ble Supreme Court, a very strict view of the matter would be taken and such cases would be dealt with in accordance with law." 2. Despite that learned A.M. did not agree to change his stand an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment years 1995-96 and 1996-97 were issued to the assessee on 2-12-1999 for 27-12-1999. On 27-12-1999, Shri Navin Gamber, the assessee, attended the proceedings and on his request, the penalty proceedings were adjourned for 14-1-2000. On 13-1-2000, the assessee submitted written submissions, vide letter dated 12-1-2000, which was not signed by the assessee, stating therein that the amount of loan was accepted due to bear the expenses on the illness of his wife; that these loans have been repaid by him after sale of clothes, sale of ancestral house and raising loan from the bank; that the loan has bean accepted by him after banking hours. In the last para, the assessee has sought some time to collect the evidence regarding reasonable cause of contravening the provisions of section 269SS of the Act. 5. The Assessing Officer considered the submissions of the assessee but did not find any force in it because proof of illness of assessee's wife pertained to the period April, 1994 whereas the assessee has raised/accepted loans w.e.f. February 1995 to March, 1996 i.e. during the period relevant to the assessment years 1995-96 and 1996-97. Similarly, the copy of account of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... radictory to the alleged statement of Shri Harbans Lal, Prop. M/s. Juneja Traders, Fazilka. The department relied upon the books of account of third party to take action against the assessee without proving that the books of account of third party were reliable. Books of account of the third party do not confirm his alleged statement before the Assessing Officer, which was also accepted by the Assessing Officer. He further stated that the assessee was never an income tax assessee and he was also not aware of the technical provisions of law. Moreover, he was acting under the bonafide belief that no offence was being committed. The contention is further justified if facts of the case are examined in context of normal human behaviour as also in the context of normal knowledge of law. It is a trite law that levy of penalty is not automatic in view of the Supreme Court decision in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326 to the effect that there is no presumption that every person knows the law but that this is not a correct statement, there is no such maxim known to the law. He has also relied in support of his submissions on Supreme Court deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ooks unreliable and these entries cannot be relied upon for imposing penalty under section 271D. That a perusal of the debit entries relating to the alleged debit balance of Rs. 63,000, the following loans were advanced to the appellant: ----------------------- Date Amount ----------------------- 19-5-1995 10,000 23-8-1995 20,000 17-10-1995 10,000 15-12-1995 10,000 27-1-1996 5,000 27-2-1996 5,000 ----------------------- 9. That if the copy of account is perused keeping in view the contentions of Shri Harbans Lal Juneja, Prop. M/s. Juneja Traders, Fazilka before the Assessing Officer that he advanced fresh loans on the repayment of earlier loan. The logical conclusion will be that the entries on these books were not conclusive to impose penalty under section 271D on the assessee. Reliance for the contention is placed on the following judgments: State Bank of India v. CIT [1986] 157 ITR 67 (SC) Chiranjit Lal Steel Rolling Mills v. CIT [1972] 84 ITR 222 (Punj. Har.) P.S. Abdul Majeed v. Agrl. Income-tax and Sales Tax Officer [1994] 209 ITR 821 (Ker.). 10. It was further pleaded that the department has not allowed the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the parties in the books of account of M/s. Juneja Traders. It was also contended that these were illiterate persons, therefore, they were not aware of the provisions of the Act that acceptance of cash loans exceeding the prescribed limit attracted levy of penalty. Reliance was placed on the judgment in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326 (SC), Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC) and ITO v. Rajendera Trading Co. [1994] 48 ITD 210 (Chd.) (SMC). The learned Counsel for the assessee pleaded the Assessing Officer has imposed penalty in all these cases by relying upon copies of accounts of these parties obtained from M/s.Juneja Traders and the factual position stated therein did not tally with the statement given by Shri Harbans Lal. In his statement, Shri Harbans Lal has stated that fresh loans were given only after the earlier loans were returned by the borrowers. This position was found contrary in the copies of accounts obtained by the parties. It was further contended that the Assessing Officer has not established that parties had received loans from Shri Harbans Lal to the extent referred to in the penaltie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be held to be valid for imposition of penalty. It was thus pleaded for deletion, of penalties imposed by the Assessing Officer and to the extent sustained by the learned CIT(A). 14. The learned D.R. while relying on the order of the Assessing Officer has pleaded for dismissal of the appeal of the assessee. It was further submitted that if the amounts shown in the photocopies of the receipts stated to have issued by Shri Harbans Lal are tallied with the copy of accounts of the assessee in the books of M/s. Juneja Traders it would transpire that except one or two entries, all other entries do tally with the copy of accounts and even balance at, pages 6 and 7 tallied with the balance shown in these receipts with respect to tour of the entries and the assessee has not produced all the receipts nor a chance to verify such receipts has been given to Jt. CIT by learned CIT(A) who without following due procedure as laid down under Rule 46A has admitted additional evidence and considered the same also. So on the basis of such receipts, no further relief is allowable and in view of these facts, relief as claimed by the assessee cannot be allowed and order of learned CIT(A) should be u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thed and the tax-payer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records to suit the plea of the taxpayer. The main object of section 269SS was to crub this menace of making false entries in the account books and later giving an explanation for the same. The undue hardship of the provisions of section 271D, which replaced section 276DD providing for a penalty, is substantially mitigated by the inclusion of section 273B providing that if there was a genuine and bona fide transaction and the taxpayer could not get a loan or deposit by account-payee cheque or demand draft for some bona fide reason, the authority vested with the power to impose penalty has a discretionary power not to levy the penalty. It is settled law that the heads of legislation given in the lists in the Seventh Schedule to the Constitution should not be construed in a narrow or pedantic way. If any Legislature makes an ancillary or subsidiary provision which incidentally transgresses its jurisdiction for achieving the object of such legislation, it would be a valid piece of legislatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... existence of mitigating circumstances penalty cannot be deleted. The assessee must prove beyond the shadow of doubt that there existed a reasonable cause for not complying with the conditions contained in section 269SS. Circumstances under which the cash was accepted must be explained. Unfortunately, no cogent material was produced in that direction. The exigency was stated to be the requirement of machine. How urgent that requirement was is not known. The machine was not purchased soon after taking the loan. This indicates that the assessee could have complied with the requirements of section 269SS of the Act, without much difficulty. It is the duty of every citizen to respect law. Majesty of law is to be maintained. 15. Taking into consideration the entire conspectus of the case, I am of the opinion that there existed no reasonable cause for accepting the loan of Rs. 1,00,000 i.e. Rs. 50,000 each from Smt. Chandralekha R Khivasara and Smt. Zankarbai Khivasara. Penalty can therefore be maintained protanto. I, therefore, agree partly with the learned JM and partly with the learned AM." 18. In the context of penalty provision, the Full Bench of Hon'ble Patna High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... provision when such provision has already been held to be valid by the court none other than Hon'ble Supreme Court of India, therefore, in my considered view until a reasonable cause is pleaded and substantiated by producing/adducing material/evidence, the assessee cannot be exonerated from levy of penalty. As regards plea of having no knowledge of the provision taken by the assessee and its acceptance by learned A.M. in the draft proposed signed order of learned A.M. is concerned, it would be imperative to mention that similar issue came up for consideration in the case titled CIT v. Sunil Kumar Goel [2005] 274 ITR 53 (Punj. Har.) in which CIT has prayed for determination of the following question of law in appeal under section 260A before Hon'ble Punjab Haryana High Court: "Whether, on the facts and in the circumstances of the case, the Hon'ble Income Tax Appellate Tribunal was justified in deleting the penalties imposed under sections 271D and 271E of the Income-tax Act, 1961, amounting to Rs. 1,45,000 and Rs. 95,000 respectively, by holding that the assessee has made transactions of cash bona fide and under ignorance of the provisions of the Income Tax law, ignoring the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unal should have clearly reflected the application of mind by the learned members. In view of the above conclusion, we do not consider it necessary to deal with and decide the question framed by the appellant. For the reasons stated above, the appeal is allowed. Order dated 2-1-1998, passed by the Tribunal in I.T.A. Nos. 3294 and 3295/Delhi of 1995 is set aside and the case is remanded to it for fresh adjudication of the appeals, filed by the respondent...." 24. So in view of above authoritative finding of Hon'ble Jurisdictional High Court, neither plea of the assessee that he did not know the law nor deletion of the penalty on this ground by learned A.M., can be accepted/agreed to by me. As such plea in this regard is rejected. 25. Further, the assessee, in this case, has taken the stand before the Assessing Officer that in connection with illness of his wife he borrowed these funds after banking hours and sought time to substantiate the plea raised which plea of the assessee was not appropriately addressed by Jt. CIT who rejected the same but before ld. CIT(A), the assessee comes out with a totally different plea and also filed fresh evidence in the shape of photocopies o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer and copies placed by the assessee in the paper book, nor in the photocopies of so-called receipts enclosed by the assessee in the written submission filed at appeal stage support such inference drawn by learned CIT(A). 26. There is another important aspect of these appeals. The Jt. CIT gave opportunity to the assessee and assessee sought adjournment on the ground that necessary material for pleading reasonable cause in accepting loan exceeding the prescribed limit in cash i.e. otherwise than by crossed cheque or by Bank Draft was accepted after banking hours to bear the medical expenses on illness of his wife but he rejected assessee's request for adjournment and proceeded to draw the inference that illness of assessee's wife to the period April 1994 whereas the assessee has accepted loans with effect from February 1995 to March 1996 and the assessee was making repayments of loans regularly. The assessee came up with detailed explanation before first appellate authority, which he accepted partly on the basis of relevant and irrelevant considerations. The course of action adopted by learned CIT(A) is not in accordance with the settled position because befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11-2004 in which penalty under section 271D with respect to acceptance of cash loans exceeding prescribed limit from the same person i.e. Shri Harbans Lal, Prop. M/s. Juneja Traders, was under consideration and matter has been set aside on the file of the Assessing Officer for de novo consideration. Therefore, in the interest of justice and in order to have fair play in the matter, I find it just and appropriate to set aside the orders of authorities below and restore the matter back on the file of the Assessing Officer for adjudication of the matter afresh as per law after allowing a reasonable opportunity of being heard to the assessee. I hold and direct accordingly. 28. As a result, the appeals for both the years are allowed for statistical purposes. 29. As regards appeals in the case of Ashu Bagla [IT Appeal Nos. 377 and 378 (Jab.) of 2000] for the assessment years 1995-96 and 1996-97 are concerned, the facts indicate that the assessee is doing business of readymade garments at Fazilka and has never filed income-tax return. The Assessing Officer while making the assessment of M/s. Juneja Traders, Fazilka found that this concern has advanced loans to various persons against ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arlier case has pleaded for confirmation of the impugned order. 32. After hearing both the sides and considering the material on record, I find that facts, issues and arguments as advanced by rival sides in the case of Navin Kumar Gamber are similar to the facts and issues of the cases in hand, therefore, following the same basis and reasoning as given in earlier part of the order in the case of Navin Kumar Gamber, I set aside the orders of authorities below and restore the matters back on the file of Assessing Officer for deciding these afresh as per direction issued in that case. I hold and direct accordingly. 33. As a result, all the appeals are treated to have been accepted for statistical purposes. REFERENCE UNDER SECTION 255(4) OF THE INCOME TAX ACT There being difference of opinion amongst the Members constituting the Bench in above noted appeals, following point of difference is formulated and referred to learned President for nominating Third Member under section 255(4) of the Income-tax Ad: "Whether penalty under section 271D, in view of facts and circumstances, can be entirely deleted or matter can be restored back on the file of the Assessing Officer for recon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the Hon'ble JM through my D.O. letters, already placed on file and he was also requested to incorporate the same in the body of his order. These do not find mention therein so much so that even the date on which subsequent order was passed by the Division Bench has not been mentioned. Be that as it may, in my view the following questions need to be referred to the Hon'ble President under section 255(4) of the Act: "(i) Whether, in the facts and circumstances of the cases, penalty under section 271D sustained by the CIT(A) deserves to be deleted or the matter is to be restored to the file of Assessing Officer for reconsideration ? (ii) Whether, in the facts and circumstances of the cases and having informed his intention of writing a dissenting order on 15-9-2004 and before sending a dissenting order on 25-4-2005, the action on the part of Hon'ble JM in becoming a party to a subsequent decision by the Division Bench on 30-11-2004, expressing a contrary view than proposed by the AM in the initial draft order is in conformity with the procedure laid down under section 255(4) of the Act? (iii) Whether, subsequent order passed by the Division Bench on 30-11-2004 is binding o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t two assesses before me were alleged to have received loans/deposits in violation of provisions of section 269SS of the Income-tax Act, 1961. The aforesaid provisions in the relevant period provided as under:- "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 (since the case of the assessee does not fall within the purview of either of the proviso, hence these are not being reproduced)." 4. It may be relevant to state that both the assessees do not maintain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hem were unreliable. The assessees also stated that they were illiterate persons having no knowledge of law nor any idea that a statutory provision was being violated by them. As assessees were acting bona fidely, the penalties under section 271D be cancelled. Reliance was placed by the assessees on the decision of the Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26. 6. The learned CIT(A) after examining the facts and the circumstances of the case including photo copies of accounts of the assessee, confirmed the levy of penalties to the extent of Rs. 30,000 in each case in each year with the following observations:- "5. I have given careful consideration to the views expressed by both the sides. It is a factual position that the appellant has taken the loan/deposit from Shri Harbans Lal, Prop. M/s. Juneja Traders, Fazilka. It is also a factual position that the Fazilka party has given loans to different individuals in and around the area of Fazilka. It is also a factual position that the Jt. C.I.T. has levied penalty in most of the cases of the loanees of Shri Harbans Lal, Prop. M/s. Juneja Traders, Fazilka under the provisions of s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 269SS of the Income-tax Act, 1961, therefore, the penalty for each year is upheld to the tune of Rs. 30,000 each and the balance amount of penalty for the assessment years 1995-96 and 1996-97 is deleted to the tune of Rs. 52,000 and Rs. 70,150 respectively. It is more-so because the ratio of the decision of the Hon'ble P H High Court reported in 84-ITR-232 is squarely applicable and in the said case Their Lordships have held that no addition can be made on the basis of enquiries found in the books of account of the third party and the appellant denying the same." 7. The Revenue Authorities accepted above order of the learned CIT(A). The assessees, however, remained aggrieved and impugned the order in appeals before the Income-tax Appellate Tribunal. 8. After hearing the parties, the learned Accountant Member proposed (he leading order and cancelled the penalties sustained by the learned CIT(A). His reasonings for taking the above view can be summarised as below:- (i) The copies of account of assessees in the books of account of M/s. Juneja Traders, Fazilka obtained by the Assessing Officer were not given to the assessees. Copy of statement of Shri Har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e that the loan was taken two or three times in the life span, it could not follow that said amount exceeded Rs. 30,000 for penalty of Rs. 30,000 was sustained purely on ad hoc and estimate basis without recording a specific finding about any particular transaction entered into in violation of the provisions of section 269SS. The provisions of sections 271D and 271E are the harshest of all other penalty provisions, as penalty under these sections is leviable not with reference to income or tax payable by the assessee but with reference to loan given or taken despite the fact that assessee's income may not be taxable. It is, therefore, imperative that the Revenue authorities must exercise due care and examine the case from various angles before imposing penalty under these sections. Such approach has not been adjudicated in the present cases. (iv) The object of provisions of sections 269SS and 269T was to curb tax evasion. The assessees are petty persons with no taxable income. They never filed any income-tax return. In spite of heavy loans alleged to be taken by them, no assessments/reassessments were initiated in those cases. The assessees had clearly acted bona fidely. These pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to dispose of the said proposed questions at t he very outset. 11.1 have given thought to the reasonings given by the learned Members relating to the above two questions. A Bench of the Tribunal comprises of a Judicial Member and an Accountant Member. The powers and functions of the Tribunal are to be exercised by the Bench and not by the Members individually. It is imperative that two Members should act in unison and in harmony and the decision should be taken and arrived at after deliberations and discussions by the Bench. The litigant should have the feeling that the Bench is one and not two Members moving in opposite directions. For smooth functioning of the Benches and of the Institution as a whole individualistic approach and ego has to be suppressed by adopting fair, reasonable and objective approach aimed at advancing cause of justice. Conflicts and disputes as far as possible are to be adopted. I am not suggesting that Members are not entitled to disagree or pass dissenting orders. Disagreement and dissenting is essential for development of law and is healthy but disagreement has to be shown in a graceful manner. It should not lead to any bitterness or disgrace, nor it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty of Rs 30,000 in each year in each case. This question on facts and in the light of the submission of the parties, I would be considering herein below. Apart from above, the two questions discussed above do not materially affect the disposal of the case. I now proceed to consider the matter on merit. The learned representatives of parties also did not address me on question Nos. 2 and 3 proposed by the ld. Accountant Member. I, therefore, propose to decide question No. 1 in reference of the learned Accountant Member as also question proposed by the learned Judicial Member. 15. On merits, the learned Judicial Member took note of the loans shown as per the books of account of M/s. Juneja Traders, Fazilka for the assessment years 1995-96 and 1996-97. He referred to the observations of the Assessing Officer and the opportunities of being heard provided by him to the assessee. He further referred to the written submissions dated 12-1-2000, not signed by the assessee and to the contentions raised therein. He observed that the Assessing Officer did not find any force in the submissions advanced on behalf of the assessee. He referred to the observations of the Assessing Officer t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, the learned Judicial Member observed that neither the plea of the assessee that he did not has knowledge of the law nor deletion of the penalty on this ground by the learned Accountant Member could be accepted/agreed to by him. Such plea was rejected. 20. The learned Judicial Member was of the view that the matter should be set-aside and restored to the file of the Assessing Officer for a fresh decision after allowing reasonable opportunity of being heard to the assessees. His reasoning is contained in paras 25 to 27 of the order, which are as under:- "25. Further, the assessee, in this case, has taken the stand before the Assessing Officer that in connection with illness of his wife he borrowed these funds after banking hours and sought time to substantiate the plea raised which plea of the assessee was not appropriately addressed by Jt. CIT who rejected the same but before ld. CIT(A), the assessee comes out with a totally different plea and also filed fresh evidence in the shape of photocopies of the receipts stated to have been issued by Shri Harbans Lal without formally applying for admission of such evidence and ld. CIT(A) without adhering to the provisions of Rule 46A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal stage support such inference drawn by learned CIT(A). 26. There is another important aspect of these appeals. The Jt. CIT gave opportunity to the assessee and assessee sought adjournment on the ground that necessary material for pleading reasonable cause in accepting loan exceeding the prescribed limit in cash i.e. otherwise than by crossed cheque or by Bank Draft was accepted after banking hours to bear the medical expenses on illness of his wife but he rejected assessee's request for adjournment and proceeded to draw the inference that illness of assessee's wife to the period April, 1994 whereas the assessee has accepted loans with effect from February 1995 to March 1996 and the assessee was making repayments of loans regularly. The assessee came up with detailed explanation before first appellate authority, which he accepted partly on the basis of relevant and irrelevant considerations. The course of action adopted by learned C1T(A) is not in accordance with the settled position because before admitting any material in the proceeding learned CIT(A) should have confronted such material to the Assessing Officer and should have sought his objection which he failed to do so. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as under consideration and matter has been set aside on the file of the Assessing Officer for de novo consideration. Therefore, in the interest of justice and in order to have fair play in the matter, I find it just and appropriate to set aside the orders of authorities below and restore the matter back on the file of the Assessing Officer for adjudication of the matter afresh as per law after allowing a reasonable opportunity of being heard to the assessee. I hold and direct accordingly." 21. The appeals were allowed for statistical purposes in the proposed order. Similar order was suggested in appeals of Ashu Bagla. 22. The matter was fixed for hearing and I have heard Shri Sudhir Sehgal, Advocate on behalf of the assessees and Shri Jayant Kumar, the learned D.R. for the Revenue. Shri Sudhir Sehgal relied upon the order of the learned Accountant Member. He further argued that there was no clear evidence of advancing loan of Rs. 20,000 in this case. In this connection, he referred to page 5 of the paper book, which was copy of account of the assessee from 1-4-1995 to 31-3-1995 in account books of M/s. Juneja Traders. Total amount received as loan on different dates was Rs. 82, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be remanded to the Revenue authorities. On my request to point out any particular entry or entries which taken singly or in a conjunction would show repayment of loan/deposit exceeding Rs. 20,000 and would thus justify imposition of penalty of Rs. 30,000 each. The learned D.R. could not pin-point any. 25. After careful consideration of the rival submissions and relevant material on record, I see no justification to uphold levy of penalties sustained by the learned CIT(A). 26. It has to be appreciated that learned CIT (Appeals), after consideration of relevant material, did not agree with the view adopted by the Assessing Officer. He recorded categorical factual findings to-which reference had been made earlier. It was open to the revenue to challenge the said order in further appeal before the Appellate Tribunal but that was not done. From above, it follows that order of learned CIT (Appeals), as far as revenue is concerned, have attained finality. In appeal filed by the assessee, the Revenue could only support the order of CIT (Appeals) and not challenge the same by raising various grounds. They could only argue that no further relief be allowed to the assessee. They had no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Judicial Member. It is a settled law that penalty proceedings are quasi-criminal proceedings. The Revenue authorities are obliged to record a clear finding based on authentic evidence which would leave no scope for doubt that assessee committed offence and was liable to be visited with penalty. The penalty cannot be imposed on vague and imaginary evidence. No such definite evidence is available in this case to show that the assessee contravened provisions of section 269SS to justify levy of penalty under section 271D of the Income-tax Act. The learned CIT(A) on the basis of statement of the assessee assumed that he must have received loan or deposit of Rs. 30,000 and, therefore, imposed penalty of an equal amount this inference is not supported by any cogent material. The learned Accountant Member has properly analyzed statement of the assessee. There are large number of credit and debit entries in unreliable photocopies of accounts relied upon by the Revenue authorities. Entry or entries taken singly or jointly do not establish that assessee received loan/ deposit of Rs. 30,000 in contravention of statutory provision. The penalty, as rightly observed by the learned Accountant Memb ..... X X X X Extracts X X X X X X X X Extracts X X X X
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