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2016 (3) TMI 242 - AT - Income TaxPenalty under S.271D - Appellant made cash borrowings from near relatives who are staying in village, having agricultural incomes and not having bank accounts - Held that:- Turning to the circumstances under which loans had to be obtained in cash, we find that as far as Shri Kondiah and Smt.Venkata Subbamma are concerned, in the absence of any evidence brought on record to controvert the claim of the assessee that they are agriculturists living in a village, having no banking facilities, the cause shown by the assessee for making the borrowals in question from them in cash, has to be accepted as reasonable. Merely because the third lender, Shri Nageswara Rao is also a teacher, the factum of he, being also an agriculturist and living in a village, cannot be ignored. It may be noted, at this juncture, that we are not concerned here with any addition made in the quantum proceedings on account of violation of provisions of S.269SS of the Act, but penalty leviable under S.271D of the Act, in relation to the loans/deposits accepted by the assessee in violation of the provisions of S.269SS of the Act. Penalty, being punitive in nature, warrants a liberal approach, while examining the existence or otherwise of a reasonable cause for the borrowals made in cash. Moreover as seen from the assessment order AO accepted borrowal at ₹ 9,60,000 only. The balance of the amount was considered for estimation of income. How the amount could be taken at ₹ 10.10,000 was not explained. Part of the amount was already been taxed separately. In addition assessee has purchased property along with his brother the fact of which was accepted in assessment itself. It was the explanation that the family transactions (HUF) were accounted in assessee bank account as he did not have any other bank account. This explanation was reasonable considering the fact that property for which monies were borrowed was registered in joint names. At best, assessee liability can only be half the amount. This aspect was also ignored by Revenue. Considering the totality of facts and circumstances of the case, and also the fact that the issue involved in these proceedings is not of a quantum but of a penalty, we are of the considered opinion that it is not a fit case for the imposition of penalty under S.271D - Decided in favour of assessee
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