TMI Blog2002 (11) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... ion as per agreement of co-ownership executed on 10th April, 1995. Father made the payment of Rs. 2,00,000 by way of bank draft and balance amount of Rs. 1,80,000 was paid in cash. As per co-ownership agreement dt. 10th April, 1995 which is registered, the consideration was to be paid by father whereas the property was to be registered in the name of the assessee. Thus, in the assessee s account, the entire amount of Rs. 3,80,000 was shown as loan from the father of assessee. The Addl. CIT was of the opinion that such loan was accepted in contravention of the provisions of s. 269SS of the Act and accordingly issued a show-cause notice as to why penalty under s. 271D may not be imposed. As the show-cause notice was not responded, the Addl. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ision of Hon ble Supreme Court in the case of Hindustan Steels Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC) wherein it was held that no penalty was imposable merely on technical or venial breach of law. Shri B.K. Nema, learned counsel for the assessee also relied on the decision of Jabalpur Bench of the Tribunal in the case of Chaudhary Co. Bhujiawala 33 BCAJ 1021. 5. On the other hand, learned Departmental Representative while relying on the decision of the CIT(A) submitted that the genuineness of the payment or the creditworthiness of the lender was not relevant for the purposes of penalty under s. 271D of the Act. As the assessee had failed to prove the reasonable cause in violating the provisions, the penalty was exigible in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arring persons from taking or accepting, after 30th June, 1984, from any other person any loan or deposits otherwise than by an account payee cheque or account payee bank draft if the amount of such loan or the aggregate amount of such loan and deposit is Rs. 10,000 or more. This prohibition will also apply in cases where on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), and the amount or the aggregate amount remaining unpaid is Rs. 10,000 or more. The proposed prohibition would also apply to cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... naccounted money, is not applicable to any transaction which is done in an open manner, which is genuine and in which no unaccounted money is involved. Mere technical breach of the provisions, while the transactions are held to be genuine, do not attract the provisions of s. 269SS. It is not the case of the Revenue that the amounts involved were unaccounted transaction. It is an undisputed fact that the transactions are genuine. The Chapter XX-B and s. 269SS begins with the heading Requirement as to mode of acceptance, payment or repayment in certain cases to counteract evasion of tax. The term certain used therein, when read along with the legislative intent of curbing tax evasion, clearly means that all loans are not attracted. This sec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ow of funds for meeting the urgent business necessities. Tribunal, Pune Bench, in the case of Moti Lal J. Doshi has held that where the loan received in cash was from a relative of the partner of the firm, there was a bona fide belief that s. 269SS was not attracted. The Chandigarh Bench of the Tribunal in the case of ITO vs. Rajendra Trading Co. (1994) 48 ITD 210 (Chd) while cancelling the penalty under s. 271D had observed as under: "An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceedings and penalty will not ordinarily be imposed unless the party is obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in conscious ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9SS of the Act. The penalty under s. 271D is subject to the provisions of s. 273B of the Act. We, therefore, examined as to whether there was any reasonable cause in violation of the provisions of s. 269SS of the Act. We find that the assessee was in the urgent need of money for purchasing the property. The father made the payment on behalf of the assessee and that too under a co-ownership agreement. The assessee was, therefore, having a bona fide belief that such transaction will not be violative of the provisions of s. 269SS r/w s. 271D of the Act. We, therefore, hold that as there was a reasonable cause, no penalty under s. 271D was leviable. The penalty sustained by the CIT(A) is, therefore, cancelled. 13. In the result, the appeal fi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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