TMI Blog2012 (4) TMI 211X X X X Extracts X X X X X X X X Extracts X X X X ..... - was in accordance with commercial expediency of assessee's business as the nature of business of the assessee is such - as reasonable cause has been proved no penalty will be livable - appeal of assess allowed. - IT Appeal NoS. 2805 & 2806 (Ahd.) of 2011 - - - Dated:- 10-2-2012 - G.C. Gupta, A.L. Gehlot, JJ. Sunil Talati for the Appellant. G.S. Souryawanshi for the Respondent. ORDER A.L. Gehlot, Accountant Member These appeals are filed by the assessee against the order of CIT (A)-V, Baroda both dated 22-9-2011 for the assessment year 2005-06 passed u/s.271D and 271E of the I.T. Act. 2. The ground raised in appeal is in respect of levy of penalty of Rs. 2,36,850/- u/s. 271D and Rs. 3,10,750 u/s. 271E of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ld. Representatives of the parties and perused records. Let us see the relevant statutory status of provisions and the scheme of the Act. Chapter XX-B provides requirements to mode of acceptance payment or repayment in certain cases to counteract evasion of tax. Section 269SS provides that no person shall, after the 30th day of June, 1984, take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if, ( a ) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or ( b ) 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 (whethe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or co-operative society and no firm or other person shall repay any loan or deposit made with it otherwise than by an account payee cheque or account payee bank draft drawn in the name of the person who has made the loan or deposit if ( a ) the amount of the loan or deposit together with the interest, if any, payable thereon, or ( b ) the aggregate amount of the loans or deposits held by such person with the branch of the banking company or co-operative bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, is twenty thousand rupees ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted. 5.3 After considering nature of transactions the issue to be examined in the case under consideration whether penalty under section 271D and 271E is leviable when assessee was having reasonable cause. We noticed that while introducing section 269SS 269T, section 273B was also incorporated in the statute which provides that no penalty shall be imposable on a person or an assessee, as the case may be, for any failure referred to in the said provision if the assessee proves that there was a reasonable cause for such failure. In other words, penalty is not automatic under section 271D/271E on mere violations of provisions of section 269SS/269T.The words 'reasonable cause' have not been defined under the Act, but they could receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... whereas the collection of hire charges received after sometime. It was also submitted that in case of urgency in business, the assessee took loan from the relatives and friends each amounting below Rs. 20,000/-. The AO did not doubted about the genuineness of the transactions. From the facts of the case, we find that the expenditure and repayment of temporary loan in cash was in accordance with commercial expediency of assessee's business as the nature of business of the assessee is such. The bona fide transactions of the assessee carried out in accordance with commercial expediency and business need amounts to reasonable cause and in the case of reasonable cause the penalty u/s. 271D and 271E is not leviable. We therefore, cancel the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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