TMI Blog2002 (4) TMI 224X X X X Extracts X X X X X X X X Extracts X X X X ..... td. Penalty proceedings under s. 271D were initiated for violation of the provisions of s. 269SS of the Act. In response to the show-cause notice it was stated on behalf of the assessee that no loan was accepted through cash in excess of Rs. 20,000 and hence the provisions of s. 269SS were not violated. The AO opined that if any persons takes or accepts loan or deposit otherwise than by an account payee cheque or account payee draft of Rs. 20,000 or more he is liable to penalty under s. 271D. He, therefore, held that the assessee had violated the provisions of s. 269SS and accordingly imposed a penalty of Rs. 39,87,063 under s. 271D. 3. The action of the AO was assailed before the first appellate authority and various submissions were made in support of the fact that no penalty was liable to be imposed. It was submitted that all the shareholders of the assessee-company were members of Sh. D.K. Gupta s family and, therefore, the provisions of s. 269SS were not attracted because of close relation of the assessee with all the depositors. Reliance was also placed on Circular No. 387, dt.6th July, 1984, to contend that the provisions of s. 269SS were introduced prohibiting against tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal position and as such his order deserves to be struck down. 5. In the oppugnation, the learned counsel for the assessee supported the order passed by the CIT(A). His marathon submissions were the reiteration of reasoning given by the CIT(A) for deleting the penalty. In specific, the learned counsel submitted that the provisions of s. 269SS were not attracted in its case because the relation between the assessee-company and other depositors was very close and all the transactions were at the instance of Sh. D.K. Gupta, who was managing the affairs of all the group concerns. As the office of the company was situated at the same place where the offices of other sister concerns were situated and Sh. D.K. Gupta along with his family members was also living at the same premises, the learned counsel submitted that these were the transactions between closely connected persons and hence the provisions of s. 269SS were not applicable on such transactions. It was tendered that s. 269SS was brought into existence to disregard the explanation given by taxpayers during the course of search and seizure proceedings in respect of undisclosed cash found during search operations. As the provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... money. A further contention was raised by the learned counsel that the assessee acted under a bona fide belief that the provisions of s. 269SS were not attracted when the loan transactions were routed through transfer entries and hence the provisions of s. 273B came into its aid to suggest that no penalty could be inflicted where the assessee established that there was a reasonable cause for non-compliance with the provisions. In the final analysis the learned counsel submitted that the CIT(A) was fully justified in deleting the penalty which was imposed by the AO on misappreciation of the provisions of s. 269SS r/w s. 271D. 7. We have considered the rival submissions in extenso in the light of material placed before us and precedents relied upon. It is manifest that the assessee-company accepted certain loans and deposits from the director, his family members and its sister concerns by way of transfer entries in its books of accounts for which the penalty was imposed by the AO. In order to evaluate the contentions raised by the rival parties before us, it is necessary to consider the provisions of s. 269SS. The relevant portion of the s. 269SS provides that no person shall take ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... V-B which deals with the provisions relating to search and seizure cases. As the applicability of this section by its clear words has been restricted only to search and seizure cases, we hold that s. 269SS applies in all circumstances and is not confined to only search and seizure cases. 8. That apart it is important to note that IT Act is a fiscal statute and it has to be interpreted strictly on the basis of plain language used in it. In this process it is not open to read the words in the Act which have not been so used. Recently, the Hon ble apex Court in Vikrant Tyres Ltd. vs. ITO (2001) 166 CTR (SC) 1 : (2001) 247 ITR 821 (SC), on the interpretation of the provisions has laid down as under: "if this process Courts must adhere to the words of the statute and the so-called equitable commitments of these words of the statute are not permissible. The task of the Court is to construe the provisions of taxing enactments according to the ordinary and natural meaning of the language used and then to apply that meaning to the fact of the case and in that process the taxpayer brought within the net is caught otherwise he had to go scot free." More recently the Hon ble Delhi High C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions contained therein. Only in case of doubt the heading can be considered as aid for construction. Hon ble Bombay High Court in Dharmavat Provisions Store vs. CIT (1981) 22 CTR (Bom) 277 : (1983) 139 ITR 700 (Bom) has laid down that the marginal note to a section cannot restrict the plain meaning of the language used in the section itself. To similar effect is another decision of the Hon ble Bombay High Court in R.B. Shreeram Religious Charitable Trust vs. CIT (1988) 73 CTR (Bom) 145 : (1988) 172 ITR 373 (Bom). In the light of this legal position, it is noted that there is no ambiguity in the language of s. 269SS and, therefore, we have no hesitation in holding that 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. If the contention of the assessee that no penalty is exigible because genuineness of transaction was not doubted, is accepted, it would lead to anomalous results. It is important to bear in mind that s. 269SS is not to judge the genuineness or otherwise of the credit entries appearing in account books. For this purpose the provisions of s. 68 have been incorporated whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the sister concerns are outside the scope of s. 269SS. We have not come across any stipulation in the body of this section to this effect which provides for the inapplicability of this section on transactions between sister concerns. 12. Now, we would deal with the main question as to whether the provisions of s. 269SS are attracted on the transfer entries as it is so in the present case. No doubt, the main part of s. 269SS as considered in one of the preceding paras, provides that no person shall take or accept loans from any other person otherwise than by account payee cheque or account payee bank draft. If the section is read upto here, it would show that there is a bar on taking or accepting loan or deposit by any mode other than account payee cheque or account payee bank draft. But the position does not stop here. Clause (iii) of Explanation to s. 269SS clarifies the purport of "loan or deposit" as loan or deposit of money. When this Explanation is read with the main section it brings to light that only the transactions of loans or deposits which are covered within the ambit of this section are that of "money . If the loan or deposit transaction is not that of money, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he king, by virtue of his prerogative; and the King s stamp thereon. (1 Hale s Hist. P.H. 188). The definition of the term money in these dictionaries and as laid down by apex Court is a pointer to the fact that money means cash . When cl. (iii) of the Explanation is read with main section, the natural corollary that follows is that the restriction contained in s. 269SS is against accepting loan or deposit in cash alone. The other modes of loans or deposits including creation of credit through transfer entries are outside the scope of s. 269SS. If the arguments of the learned Departmental Representative that this section applies on transfer entries as well, is accepted, it would amount to stretching the ambit of this section beyond cl. (iii) of the Explanation which restricts itself only to loan or deposit of money. We, therefore, hold that the transfer entries do not fall within the ken of s. 269SS. As in the present case no loan or deposit was accepted in cash in excess of the amount specified in the section, we are of the considered opinion that the CIT(A) was justified in deleting the penalty. That apart we find that the assessee was under bona fide belief and rightly so t ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
