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2014 (12) TMI 6 - AT - Income TaxLevy of penalty u/s 271D – Fixed deposits received in contravention of section 269SS - AO was of the view that there was no reasonable cause of the failure on the part of the assessee as prescribed u/s. 273B of the I.T. Act so as to receive fixed deposits in the form of cash in contravention of section 269SS – CIT(A) confirmed the penalty u/s. 271D - Held that:- The assessee is a society earning income from interest received on loan given to the members and also from the fixed deposits - while interpreting the provisions of section the marginal note is not decisive and cannot run contrary to substantive provisions contained therein - Only in case of doubt, the heading can be considered as aid for construction - there is no ambiguity in the language of s. 269SS and the provisions of s. 269SS are not only to counteract the evasion of tax but also to regulate certain transactions of money in a specified form - s. 269SS is not to judge the genuineness or otherwise of the credit entries appearing in account books - the provisions of s. 68 have been incorporated which deal with unexplained credits appearing in assessee's books of accounts. It is not legally correct to contend that the assessee and its members are one and the same person and the transactions with the members are outside the scope of s. 269SS - loan or deposit was involved in cash in excess of the amount specified in the section, the CIT(A) was justified in confirming the penalty – in CIT v. Kumbakonam Mutual Benefit Fund Ltd. [1964 (5) TMI 2 - SUPREME Court] it was held that if the profits are distributed to shareholders as shareholders, the principle of mutuality is not satisfied - a shareholder in the assessee-company is entitled to participate in the profits without contributing to the funds of the company by taking loans - the assessee shall show the reasonable cause for receiving the amount by way of cash and what is the reason for not receiving the deposit by way of account payee cheque or bank draft - If there is a reasonable cause for accepting the deposits in the form of cash, then only the assessee could be exonerated from the levy of penalty 271D - The assessee was unable to explain any reasonable cause for accepting the deposits in the form of cash - In the absence of any proof to show that there existed a reasonable cause for receiving the amount in cash, it is not possible to come to the conclusion that the assessee is not liable for payment of penalty - The burden is on the assessee to prove that there was reasonable cause for receiving the deposits by way of cash from the various persons - the lower authorities were justified in rejecting the contention of the assessee – Decided against assessee.
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