TMI Blog2006 (7) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... 24,241 Smt. Dayalaxmi 23,233 Shri Abhay Kankane 22,350 Miss Ann Marya Thomas 20,000 Shri Ashish Dhirwani 20,000 Shri Jitendra Shrivastava 22,380 -------- 1,32,204 -------- 3. The AO while observing that as per provision of s. 269SS of IT Act, if any person takes or accepts from any other person any loan or deposit after 30th of June, 1984, otherwise than by an account payee cheque or draft, if the amount of such loan or deposit or the aggregate amount of such loan or deposit is Rs. 20,000 or more he becomes liable for penalty under s. 271D. Since the assessee-company had accepted loans/deposits in cash for Rs. 20,000 and more from the above persons in contravention of the provisions of s. 269SS of the IT Act, the proceedings under s. 271D were initiated and show-cause notice was issued to the assessee accordingly. 4. In reply to the show-cause notice the assessee submitted vide letter dt. 30th Nov., 1995 and 5th Dec., 1995 that deposit from the following persons had been accepted during the year 1991 as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... axation provided in s. 273B of the IT Act. 7. The AO while considering but not accepting the plea of the assessee with regard to reasonable cause has concluded to hold that the assessee has failed to adopt necessary precaution as required under the law. The assessee further submitted that he has filed a writ petition in the Madhya Pradesh High Court against the penalty proceedings which is accepted in motion hearing, therefore, proceedings may be kept pending till the decision of the case and this plea of the assessee was also not accepted in view of the limitation provided for imposing penalty and by observing that in case any relief is allowed to the assessee from the High Court, order of penalty shall accordingly be modified and since the assessee had committed default by accepting the loan/deposit in contravention of the provision of s. 269SS, he is liable for penal action under s. 271D. As such penalty of Rs. 1,20,700 was imposed under s. 271D for the above default vide order dt. 12th Dec., 1995. 8. The assessee filed appeal before the first appellate authority against the order of learned Dy. CIT (Asst.) Spl. Range, Jabalpur and while reiterating the submissions as made b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tten arguments of the learned counsel and I find that the submissions of learned counsel are correct. Provision regarding levy of penalty under s. 271D is not mandatory. The appellant filed necessary evidence that it has not received even a single instalment of term loan sanctioned by the SBI, Jabalpur during the relevant point of time. The acceptance of deposits in cash was not with an intention to purposely violate the provisions of s. 269SS. In these circumstances and considering the facts of the case, I am of the convinced opinion that this was not a fit case where the appellant could be visited with penalty under s. 271D. Therefore, the penalty of Rs. 1,20,700 levied by the AO is hereby cancelled. As a result, the appeal is allowed." 9. Aggrieved by the order of the learned CIT(A), Department is in appeal and while relying upon the order of the AO it was pleaded for setting aside the order of learned CIT(A) and restoring that of AO. It was submitted that since the assessee has accepted cash loans/deposits or aggregate of which is of Rs. 20,000 and more from various parties during the year under consideration and no reasonable cause has been shown, the AO has rightly imposed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. (1980) 19 CTR (MP) 182 : (1981) 127 ITR 512 (MP); 6. CIT vs. Vegetable Products Ltd. 1973 CTR (SC) 177 : (1973) 88 ITR 192 (SC); 7. Hari Shankar Agrawal, Prop. M/s Khajuraho Auto Centre, Khajuraho Asst. yr. 1990-91, Appeal NO.-J-DCIT/R-1/16/1991-92 by CIT(A), Jabalpur; 8. Bhaiyalal Biharilal Sidhi Asst. yr. 1990-91 Appeal No. J/DCIT/R-1/6/1992-93 dt. 22nd Nov., 1994 9. Harpal Singh Jaswant Singh vs. ITO (1995) 51 TTJ (Asr) 383 : (1995) 82 Taxman 81 (Asr)(Mag) 11. It was also submitted that a writ was filed before the Hon'ble High Court of Madhya Pradesh on issuance of penalty notice which was accepted in motion hearing but same has not been disposed of so far, therefore, the appeal of the Revenue should either be kept pending or order of the learned CIT(A) should be confirmed. When specifically asked whether any stay has been granted by the Hon'ble High Court, learned counsel's reply was in negative. 12. In order to counter the submission of the learned counsel for the assessee, learned Departmental Representative submitted that the Hon'ble High Court has not granted stay against either penalty proceedings before AO or against the proceedings before other higher auth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Parliament. Nor are the provisions of s. 269SS or s. 271D or s. 276DD unconstitutional on the ground that the provisions are draconian or expropriatory. The object of introducing s. 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he makes some false entries, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records to suit the plea of the taxpayer. The main object of s. 269SS was to curb this menace of making false entries in the account books and later giving an explanation for the same. The undue hardship of the provisions of s. 271D, which replaced s. 276DD providing for a penalty, is substantially mitigated by the inclusion of s. 273B providing that if there was a genuine and bona fide transaction and the taxpayer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reason, the authority vested with the power to impose p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SS has been held to be valid provision and while upholding such validity, at the same time, Hon'ble Supreme Court has held as under: "It is important to note that another provision, namely s. 273B was also incorporated which provides that notwithstanding anything contained in the provisions of s. 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause for such failure and if the assessee proves that there was reasonable cause for failure to take a loan otherwise than by account payee cheque or account payee demand draft, then the penalty may not be levied. Therefore, undue hardship is very much mitigated by the inclusion of s. 273B in the Act. If there was a genuine and bona fide transaction and if for any reason the taxpayer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power. In that view of the matter, we do not think that s. 269SS or 271D or the earlier s. 276DD is unconstitutional on the ground that it was draconian or expr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted. The assessee must prove beyond the shadow of doubt that there existed a reasonable cause for not complying with the conditions contained in s. 269SS. Circumstances under which the cash was accepted must be explained. Unfortunately, no cogent material was produced in that direction. The exigency was stated to be the requirement for making payment to labour and for materials. How urgent that requirement was, is not known. The details were not furnished to establish as to what was immediate need/requirement on particular dates of taking loans and after taking of loan, how such need/requirement was met. The documents furnished do not indicate anything in this direction and are not relevant to establish any urgency. This indicates that the assessee could have complied with the requirements of s. 269SS of the Act, without much difficulty. It is the duty of every citizen to respect law. Majesty of law is to be maintained. Taking into consideration entirety of facts and circumstances, we are of the opinion that there existed no reasonable cause for accepting loans/deposits or aggregate of such loans/deposits of Rs. 20,000 or more from various persons otherwise than crossed cheques and ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
