TMI Blog1994 (1) TMI 115X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Sh. Vijay Kumar 25,000 2. Kaur Singh 1,00,000 3. Harbans Singh 40,000 4. Jaswinder Singh 1,64,979 5. Jaswant Singh 21,225 3. The assessee responded and made written submissions as follows:— "that the assessee firms is a regd. firm doing business of Kacha Ahrtia. Kacha Ahrtia acts only as an agent or his constituent and never acts as a principal. The remuneration of Kacha Ahrtia consists solely of commission and he has not interested in the profit and losses made by his constituents and he has no personal interest of his own when he enter into a transaction and his interest is limited to the commission agent's charges and certain out of pocket expenses. In the instan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of payments of Rs. 1,64,979 and Rs. 21,225 made to Shri Jaswinder Singh and Shri Jaswant Singh, but levied penalty in relation to payments of Rs. 1,00,000 and Rs. 10,000 to Shri Kaur Singh and Shri Harbans Singh respectively. and reduced the charge in respect of payments to Shri Vijay Kumar to Rs. 10,000. 5. The learned CIT(A) cancelled the penalty and I would like to reproduce para 5 to give his reasons for doing so with which I agree: "5. I have given careful consideration to the entire matter and I have also examined the statements of persons to whom repayments were made in cash. In their statements they had stated that the amount was given as an Amanat and no interest had been charged by the creditors. Since these amounts were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest from a party that customarily accepts the deposits. That deposits made could also be for safe-keeping or as a security for the performance of an obligation, undertaken by the creditor. That in the case of loan it is for the borrower at whose instance and for those whose needs the money is advanced. That borrowing is primarily for the benefit of the borrower although the person who lends money may also stand to gain thereby by earning interest. The learned author's have referred to the decision of Pennwalt India Limited as quoted supra as also the case of M/s. Durga Parsad Mandela (1987) 61 Comp. Cas. 479 (Bom). Seen in the light of the above position, the creditors did not derive any benefit whatsoever on the short-term loans given to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court judgment in the case of Kumari A.B. Shanthi (Alias) Vennira Adai Nirmala vs. Asstt. Director of Inspection, Investigation (1992) 197 ITR 330 (Mad) wherein the provisions of s. 276DD of the Act (prior to its substitution by s. 271D) had been declared ultra vires of the Constitution of India and s. 269SS of the Act had also been held to be violation of Art. 14 of the Constitution of India penalty was not leviable. 7. I have already observed above that I agree with the reasoning of the CIT(A) for cancelling the penalty. 8. However, I would like to further add that independent of the CIT(A)'s order, I cancel the penalty on the ground which was pleaded before the CIT(A) regarding bona fide belief that payments to agriculturists were ..... X X X X Extracts X X X X X X X X Extracts X X X X
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