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2014 (11) TMI 1254 - AT - Income TaxLevy of penalty u/s. 271E - violation of provision of section 269T in respect of deposit in three different bank accounts of the assessee firm and repayment of the same in cash - Explanation to "reasonable cause” - whether the amount received by the assessee from Shri K.A. Thomas can be termed as ‘loan’ or ‘deposit’ so as to attract the provisions of section 269T? - HELD THAT:- The amount taken by the assessee from Shri K.A. Thomas was for custody. There is no evidence to show that there was any stipulation as to the period of custody. It is, therefore, a matter of grave doubt as to whether the receipt of money from Shri K.A. Thomas can be characterised as loan or deposit. In our view, it was recived only for temporary custody. Such temporary custody fall outside the purview of section 269T of the I.T. Act. The facts in the present case show that the monies are not used for the purpose of business and it lied idle with the assessee in the form of fixed deposits and thereafter the same was returned to Shri K.A. Thomas. There was a reasonable cause as provided under section 273B of the Act as the assessee has received the amount as custodian in view of family arrangements. It can be safely held that the bona fide belief constitute all reasonable cause, as provided under section 273B. In these circumstances and also keeping in view of the decision of the Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. vs. State of U.P. [1978 (12) TMI 45 - SUPREME COURT](1979) (118 ITR 326), it was held that there was a reasonable cause within the meaning of section 273B and, therefore, no penalty is leviable under section 271E of the Act. The facts and circumstances of the present case clearly indicate that there was a reasonable cause and, therefore, no penalty is leviable. In the present case, it is noticed that the amount was kept in the form of bank deposit and not used for business purposes and later repayments were made to Shri K.A. Thomas and it is obvious that the assessee entertained a bona fide belief that no contravention of any provisions of Income-tax Act was being made while making the transaction and it cannot be considered as violation of contravention of sec. 269T of the Act. Accordingly, we delete the penalty and the appeal of the assessee is allowed.
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