TMI Blog2011 (3) TMI 1347X X X X Extracts X X X X X X X X Extracts X X X X ..... see whether the cash loan was borrowed by the assessee on account of shortage of cash balance in a particular place where the cash loan was taken. Further he has to see whether cash loan was taken for a short period without any stipulation regarding repayment period or interest. Even otherwise penalty under section 271D cannot be levied in any case if there is a reasonable cause for accepting the cash loans. Therefore, if there is only technical lapse for which no penalty could be levied. With these observations, we set aside the issue to the file of the Assessing Officer for fresh consideration. - IT APPEAL NO. 425 (HYD.) of 2009 - - - Dated:- 31-3-2011 - G.C. GUPTA, CHANDRA POOJARI, JJ. S. Rama Rao for the Appellant. K.V.N. Charya for the Respondent. ORDER Chandra Poojari, Accountant Member. ‑ This appeal by the assessee is directed against the order of the CIT(A), Vijayawada, dated 31-12-2008 and pertains to assessment year 2003-04. 2. The grievance of the assessee in this appeal is with regard to confirmation of penalty of Rs. 31,56,490 by the CIT(A). 3. Brief facts of the case are that the assessee is a partnership firm and engaged in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etty loans from available cash savings with them. As they are uneducated and not aware of banking facilities, whatever they saved from the past earnings they used to keep cash with them due to illiteracy. Out of the total loans of Rs. 39,28,236 being given by their employees and hamalis which helped the firm to run smoothly. We have filed all details and particulars regarding the loans taken during the year and explained in detail for the loans taken. We have also furnished the address of the loan creditors and some confirmation letters. The Assessing Officer conducted enquiry through his inspector in some cases also, summoned some of the creditors and acquired the genuineness of the amounts advanced to us. However, due to lack of tune and other constraints, we could not produce the details of the above loan of Rs. 7,71,746 as such we offered some of the additions and in our opinion it will not become concealment of income. In the above said circumstances, they have given the petty amounts as loans in cash which was available with them to save the firm out of financial crisis. Therefore, we request your goodself to see the case sympathetically and drop the proposed penalty proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and they gave petty loans in cash. These loans helped the assessee to revive the firm from financial crisis. 10. The Assessing Officer's observation that the arrest of Sri R. Venkateswara Rao in connection with the affair of an Urban Co-operation Bank has nothing to do with the business of the firm, fails to appreciate that the assessee is a firm and not a corporate entry. The assessee also relies on the following decisions: (a) Industrial Enterprise v. Dy. CIT [2000] 73 ITD 252 (Hyd.) (b) Omec Engineers v. CIT [2007] 294 ITR 599/[2008] 169 Taxman 158 (Jhark.) (c) Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 (SC). 11. Further the learned counsel for the assessee relied on the judgment of Rajasthan High Court in the case of CIT v. Ajanta Dyeing Printing Mills [2003] 264 ITR 505/130 Taxman 442 wherein it was held that penalty under section 271D is computed on the loan which exceeds Rs. 20,000 as permissible under section 269SS of the Act. 12. The learned DR submitted that the assessee was required to furnish audit report under section 44AB of the Act and auditor is required to furnish the details regarding violation of section 269SS in the Tax Audit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee and he is on run to avoid the harassment from public as well as from police. He cannot be able to concentrate on the business of the assessee and the assessee is having different branches at Mumbai, Andheri, Poorna Bhiwandi, Bhayander, Ullhas Nagar, Bhiwandi (T), Vasi, Ahmedabad, Sarkej, Vapi, Secunderabad, Fateh Nagar, Jeedimetla, Diwan Devdi, Vijayawada, Guntur, Bhuvanagiri and Chennai in addition to the head office at Hyderabad. Since there was shortage of cash balance in some of the branches on a particular date, the assessee was forced to pay the dues to the creditors who were troubling in and out of the day and the employees sitting in such office having no option used their own money to pay the dues of the customers to escape from their clutches and to avoid unpleasant situation. Further the contention of the assessee's counsel is that though there was positive cash balance in centralised account when the assessee consolidated all the accounts of the branches, actually there was cash shortage in particular branches where the cash loan was taken and this is reasonable cause as provided under section 273B of the Act. 14. We find force in the argument of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its employees then the assessee is having reasonable cause for taking such cash loans and penalty cannot be levied. Further while interpreting the provisions of section 269SS, we have to bear in mind the objective for which it was introduced. If the assessee is able to lead evidence to show that not only was there reasonable cause for taking the money in cash, but the amount did not also represent unaccounted money either of the assessee or of the persons from whom they were taken, normally that should be sufficient to hold that the penalty is not justified. As regards the genuineness of the borrowing in the present cash, there does not appear to be any doubt. The authorities herein have raised no doubt about the genuineness as it is clear from the facts of the case. Apparently, the Revenue authorities were satisfied with the assessee's explanation regarding the nature and source of the amount. Thus, the transactions between the assessee and the employees did not fall within the mischief sought to be remedied by the section. As already pointed out by us if the assessee was prevented by reasonable cause from taking the money through account payee cheques or demand draft the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X
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