TMI Blog2015 (2) TMI 362X X X X Extracts X X X X X X X X Extracts X X X X ..... lear violation or contravention of the said provisions. It is only when an assessee has taken a decision to mobilise loans or deposits and in the process it has received amounts exceeding ₹ 20,000, otherwise than through cash that the contravention can be said to have been taken place. Similarly, section 269T can be said to have been violated if only the repayment to a depositor or a loanee exceeding a sum of ₹ 10,000 was made otherwise than through crossed cheque or demand draft. In the instant case, the Assessing Officer did not identify the loanee or depositor and has simply invoked the provisions in relation to an internal financial adjustment among the firms. - Decided in favour of assessee. - Income Tax Tribunal Appeal No 231 of 2003 - - - Dated:- 12-11-2014 - L. NARASIMHA REDDY AND CHALLA KODANDA RAM, JJ. FOR THE APPELLANT : Y. RATNAKAR FOR THE RESPONDENT: J. V. PRASD, SENIOR STANDING COUNSEL FOR INCOME-TAX JUDGMENT L. Narasimha Reddy J.- The appellant is a partnership firm. Its partners have also brought into existence some other firms, such as M/s. Venkateshwara Modern Rice Mill, M/s. Yellaiah Gupta Transport. The appellant submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. Whether the levy of penalty of ₹ 1,23,000 under section 271D(1) for the assessment year 1993-94 is justified in the facts and in the circumstances of the case ? 4. Whether the payments made into the account of Yelliah Gupta Transport account amounting to ₹ 2,48,300 for the year ended March 31, 1992, and ₹ 1,99,573 for the year ended March 31, 1993, could be said to be repayment of deposit and whether the provisions of section 269T are attracted ? 5. Whether the payment to Smt. Sarada Mohan amounting to ₹ 24,000 during the year ended March 31, 1992, relevant to the assessment year 1992-93 could be said to be repayment of deposit and whether the provisions of section 269T are attracted ? 6. Assuming while denying there was any failure, whether the explanation given by the assessee for the payment into the account and withdrawal from the account of Yellaiah Gupta Transport account can be said to be covered by reasonable cause attracting the provisions of section 273B of the Income-tax Act ? 7. Whether the provisions of section 271D(1) and section 271E(1) give any discretion in the matter of levy of quantum of pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al adjustment of the funds or accounts among the firms. It was almost by way of reopening of the orders of assessment that notices under sections 271D and 271E were issued. 8. The cash transactions by the assessees or the public in general were treated as one of the devices to create black or unaccounted money since it becomes difficult to verify the same. As a step to curb this, Parliament amended section 40A of the Act by introducing sub-section (3). It mandates that where an individual incurs expenditure exceeding a sum of ₹ 20,000, payment thereof shall be through crossed cheque, or demand draft, and any deviation therefrom shall entail in denial of reduction to the extent of 20 per cent. Further steps in that direction were taken by introducing Chapter XX-B, through the Income-tax (Second Amendment) Act, 1981. This Chapter comprises sections 269SS, 269T and 269TT. Corresponding provisions in Chapter XXI relating to penalties were also included and came to be renumbered as section 271D and section 271E. 9. Section 269SS prohibits any person from accepting loan or deposit, otherwise than by an account payee cheque or draft, if the aggregate of the amount exceeds S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent years. Out of them, one payment is to a person by name Smt. Sarada Mohan. The plea of the appellant was that the alleged payments, in favour of M/s Yellaiah Gupta, or receipts from it are nothing but book adjustments that too in the light of dissolution of a firm, by name, M/s. Venkateshwara Rice Mills. The payment to Smt. Sarada Mohan is said to be an account of the death of her husband, who was a legal advisor to the appellant. Though at the stage of passing of orders under section 143(3) of the Act these contentions were accepted, they were disbelieved, at a later stage. 12. Receipt of ₹ 20,000 or more, in cash, or payment of the same to a depositor, in a sum, exceeding ₹ 10,000, is not only prohibited but also visits the assessee with penal consequences. The assessee accused of violating it would be exposed to the penalty of equal amounts. The other general penalties in the Act may also be in store. Therefore, it is only when the ingredients of the provisions of the Act are proved to be existing that the penal action can be taken. Section 269SS can be said to have been contravened, if only it is established as a fact, that certain amount, exceeding ₹ 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 269SS or section 269T of the Act penalty cannot be imposed, as a matter of course. 16. Making book adjustment of the funds, by a firm vis-a-vis its sister concern, can by no means be said to be the one taken in clear violation or contravention of the said provisions. It is only when an assessee has taken a decision to mobilise loans or deposits and in the process it has received amounts exceeding ₹ 20,000, otherwise than through cash that the contravention can be said to have been taken place. 17. Similarly, section 269T can be said to have been violated if only the repayment to a depositor or a loanee exceeding a sum of ₹ 10,000 was made otherwise than through crossed cheque or demand draft. In the instant case, the Assessing Officer did not identify the loanee or depositor and has simply invoked the provisions in relation to an internal financial adjustment among the firms. 18. Therefore, this court is of the view that the acts and omissions attributed to the appellant do not constitute violation of sections 269SS and 269T, and if for any reason, such contravention is noticed, it stands condoned under section 273B and thereby, the proceedings initiated under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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