TMI Blog2000 (6) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... Date Amount Date Amount -------------------------------------------------------------------------- 1. Shri Ganesh 8-7-1991 20,000 20-11-1991 10,000 L.Jongaonkar 27-12-1991 8,000 28-11-1991 9,000 20-01-1992 15,000 12-12-1991 9,000 ---------- --------- 43,000 24-3-1992 15,000 ---------- --------- 43,000 ---------- 2. Shri Shriram 8-7-1991 10,000 20-11-1991 10,000 L.Jongaonkar 9-7-1991 9,000 28-11-1991 10,000 15-10-1991 10,000 12-12-1991 7,000 20-1-1992 10,000 27-12-1991 2,000 24-03-1992 10,000 ---------- --------- 39,000 39,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee and accordingly, the penalty was held to be leviable under both the sections by observing (1) that there was no dispute that assessee had accepted the loan/deposit in cash and also repaid the same in cash, (2) that every person is obliged to act not only in accordance with the law of land, but also in such manner that no provisions of law are violated, (3) when the lenders had no Bank A/c., the assessee itself would have taken due care and efforts to ensure that Account Payee Drafts were got prepared, (4) the assessee has failed to substantiate the business exigency for accepting/paying the amounts in cash. Accordingly, the penalty of Rs. 82,000 each was levied under sections 271D and 271E. 3. The matter was carried before the CIT(A). Various statements were raised before him by the assessee namely (1) that in view of CBDT circular No. 387 dated 6-7-1984, the intention of the Legislature was to counter the tax evasion and therefore, genuine transactions are outside the ambit of these sections, (2) section 271E is applicable where re-payment is against deposits and not against loans. Since these payments were against the amounts received as loans, no penalty could ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eated. However, he has drawn our attention to the extracts from the cash book to point out that all the loans were taken when there was urgent business need for making the payment to M/s. Nagpur Distillery. The assessee had to approach the lenders as it was short of funds and since the lenders were agriculturists having no Bank A/c., the loans had to be taken in cash. On the other hand, the ld. D.R. has relied on the reasonings given by the Assessing Officer. 5. Rival submissions have been considered carefully. As far as penalty under section 271E is concerned, we do not find any merit in the appeal of the Revenue. The penalty under section 271E can be levied if a person re-pays any deposit referred to in section 269T otherwise than Account Payee cheque or draft. Section 269T refers to the re-payment on deposits and the word 'deposit' has been defined in the Explanation to Section 269T as any deposit of money which is re-payable after notice or re-payable after a period and includes the deposit of any nature. The Legislature has made distinction between loan and deposit as is apparent from the provision of Sections 269-SS and 269T. Admittedly, the notice issued under section 271D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion provided that assessee would not make any payment exceeding the prescribed amount otherwise than by way of crossed cheque or draft and in case of failure, it was provided that such expenditure would be disallowable. This provision was considered by Supreme Court in the case of Attar Singh Gurmukh Singh v. ITO [1991] 191 ITR 667, wherein it was held that genuine and bona fide transactions are not taken out of the sweep of the section though it, was open to the assessee to furnish to the satisfaction of the Assessing Officer the circumstances under which the payment in the prescribed manner was not practicable or would have caused genuine difficulty to the payee. In our opinion, the similar logic can be applied while interpreting of the provision of section 269SS read with section 273B for the purpose levy of penalty under section 271D. 7. The second contention of the assessee is that no penalty should be levied in view of the Supreme Court decision in the case of Motilal Padampat Sugar Mills Co. Ltd., inasmuch as the assessee was not aware of the drastic provisions of sections 269SS and 271D. We are also unable to accept this contention. Such contention cannot be heard from an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bhani, so that the Draft for the sum of Rs. 88,000 could be purchased. However, we find that there was no urgency for raising the loan of Rs. 8,000 from Shri Ganesh on 27-12-1991 as is apparent from the Extract of Cash book that there was enough cash balance at the beginning of the day as well as at the end of the day. After considering the relevant extract of cash books, we find that there were business exigencies for raising loans on various dates except the sum of Rs. 8,000 from Shri Ganesh as mentioned above. We have also gone through the affidavits of the creditors and find that these two creditors are agriculturists and residents of Pimpalgaon Hajam, Distt. Parbhani. Such persons do not have any Bank account which did compel the assessee to raise the loan in cash. Had the assessee not made payments immediately, its business interest might have suffered in future. Considering the totality of the circumstances, we are of the view that assessee was prevented by reasonable cause. Accordingly, no penalty could be levied in respect of the cash loans except the sum of Rs. 8,000. 10. The only question that remains is whether penalty can be levied with reference to the sum of Rs. 8, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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