TMI Blog2012 (12) TMI 292X X X X Extracts X X X X X X X X Extracts X X X X ..... entral, Calcutta Versus National Taj Traders [1979 (11) TMI 2 - SUPREME COURT] followed. - IT Appeal No. 305 (Hyd.) of 2011 - - - Dated:- 19-10-2012 - Chandra Poojari And Smt. Asha Vijayaraghavan, JJ. M.H. Naik for the Appellant. A.V. Raghunadha Rao for the Respondent. ORDER Chandra Poojari, Accountant Member - This appeal by the Revenue is directed against the order of the CIT(A)-VI dated 30.11.2010 for assessment year 2005-06. 2. The Revenue raised the following grounds of appeal: 1. The order of the learned CIT(A) is erroneous both on law and facts. 2. The learned CIT(A) has erred in allowing relief to the assessee without considering the facts in appreciating the fact that the assessee has accepted loans in cash which is evident from the Balance Sheet filed by the assessee as shown in unsecured loans. 3. The learned CIT(A) has erred in allowing relief without considering the fact that the assessee has taken loans from different people in cash for the purpose of applying for liquor license in his name. 4. The learned CIT(A) has on technical defence has given relief to the assessee for the violations of law u/s. 269SS for accepting l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... did not have any bank account. The assessee was not professionally managed. From this it could be concluded that the breach flowered from a bona fide belief. Ex facie it was a venial breach. Cash was accepted because of business exigencies. As such, there existed reasonable cause for accepting the cash loans.' 5. The CIT(A) observed that, as could be seen from the sworn statements of the assessee and the depositors recorded by the AO and the confirmation letters filed before the AO, all the depositors were agriculturists and milk vendors residing at a remote village, and even their income is meagre and do not have PAN and are not assessed to tax. Even though, some of them are holding bank account it is for the reason that they do not have PAN they could not obtain the DD on their own from the bank, for this sole reason they depended on the assessee who is having bank account, PAN and is assessed to tax. The conclusion of the AO that the amounts were returned through cheque and that all the depositors have bank accounts seems to be wrong, as it could be seen that amounts mentioned in the cheques issued to the four persons were not just Rs. Four lakhs and is over and above it and i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R submitted that CIT(A) after considering all the above points including depicting the amounts in the balance sheet etc, found that there was no concealment on the part of the assessee at any point of time. 8. The AR submitted that in view of the above, the grounds appealed by the Assessing Officer 1, 2 and 3 are not sustainable and are baseless. The 4th point in the grounds of appeal is irrelevant and proved wrong beyond doubt by both the Assessing Officer and the CIT(A) as follows: (a) The Assessing Officer never considered them as loans attracting provisions of 269SS as the deposits nor the depositors were never doubted by the Assessing Officer at any stage and no adverse remarks were passed by the Assessing Officer which means he has felt reason and satisfied with the explanations and proofs submitted by the assessee of its genuineness. Further, there is no finding of the appellate authority that the transaction in breach of the aforesaid provisions made by the assessee was mala fide and with the sole object to disclose the concealed or undisclosed money. (b) Further, because of these transactions committed by the assessee, it has not resulted in loss of revenue, theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 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 (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is [twenty] thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,- (a) Government; (b) any banking company, post office savings bank or co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: [Provided further that the provisions of this s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he provisions of section 2710, which replaced section 276DD providing for a penalty, is substantially mitigated by the inclusion of section 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 penalty has a discretionary power not to levy the penalty. It is settled law that the heads of legislation given in the Lists in the Seventh Schedule to the Constitution should not be construed in a narrow or pedantic way. If any Legislature makes an ancillary or subsidiary provision which incidentally transgresses its jurisdiction for achieving the object of such legislation, it would be a valid piece of legislation. The entries in a legislative list should be given their fullest meaning and widest amplitude and be held to extend to all ancillary and subsidiary matters which can fairly and reasonably be said to be comprehended in them. It is only when a Legislature which has no power to legislate, or the legislation is camouflaged in such a way as to appear to be within its competence when it knows that it is not, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the said mandate invites penalty, as is envisaged u/s. 271D of the Act. It is clearly laid down in that section that no person shall after 30.6.1984 take or accept from any other person any loan or deposit otherwise than by account payee cheques or account payee DD, if the amount or loan or deposit or the aggregate amount of such loan or deposit is Rs. 20,000 or more. 13. This provision of the Act was brought on the statute book to counter tax evasion. Therefore, it is not sufficient to say that simply the transaction was genuine, so provisions of section 269SS of the Act are not applicable. One cannot accept such proposition of law. There is no ambiguity in the language of the provisions of section 269SS as well as 271D of the Act. Penalty proceedings are to construe strictly in view of judgement of Supreme Court in the case of CIT v. National Taj Traders [1980] 121 ITR 535 wherein held that "the principle that a fiscal statute should be construed strictly is applicable only to the taxing provisions such as a charging provision or a provision imposing penalty and not to those parts of the statute which consist machinery provisions." 14. Therefore, subject to the existence of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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