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The Assistant Commissioner of Income Tax, Circle 2, Solapur Versus Kailaswasi Sambhajirao Garad Shikshan Prasarak Mandal

Penalty levied u/s. 271D and 271E - assessee accepted the cash deposits and repaid the same in cash in violation of the provisions of section 269SS and 269T - CIT(A) deleted the penalty levy - Held that:- It is an undisputed fact that the assessee accepted cash loan of ₹ 7,73,000/- and has repaid the same in cash to the lenders. Thus, the assessee has violated the provisions of section 269SS and 269T of the Act. For the violations of aforesaid sections the assessee had made itself liable f .....

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06 from Geeta Sanstha making an offer to settle the loan account by paying an amount of ₹ 6,11,000/- on 12-06-2012 before the Co-operative Court. The assessee has also placed on record the translated copies of the Resolution dated 31-03-2006 and 15-08-2005 to substantiate that the assessee had to repay loan to Geeta Sanstha. The assessee has filed affidavits of the lenders who are agriculturist to substantiate that they have advanced cash loan for the purpose of repayment of arrears of loa .....

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amount and recorded their statements on 14-10-2009. All the three lenders supported the cause of the assessee. The genuineness of the transactions have been verified. The persons who have advanced cash loans have been identified. They had filed affidavits and their statements were recorded by the Assessing Officer. The Revenue has not been able to controvert the contents of the statements or the affidavits. The circumstances under which cash loan was accepted and repaid have been explained. We a .....

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WASTHY, JM:- These two appeals of the Revenue are directed against the common order of Commissioner of Income Tax (Appeals)-III, Pune dated 12-09-2013 for the assessment year 2007-08 deleting penalty levied u/s. 271D and 271E of the Income Tax Act, 1961 (hereinafter referred to as the Act ). 2. The brief facts of the case as emanating from records are: The assessee is an Educational Trust. The assessee is fully aided by the Government and thus, its income is exempt u/s. 10(23C)(iiiab) of the Act .....

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ons of section 269SS and 269T. Accordingly, penalty proceedings u/s. 271D and 271E for accepting cash and repayment of amount in cash were initiated against the assessee. The Additional Commissioner of Income Tax vide two separate orders dated 17-03-2010 levied penalty of ₹ 7,73,000/- u/s. 271D and 271E for the assessment year 2007-08. Aggrieved by the orders levying penalty, the assessee preferred appeals before the Commissioner of Income Tax (Appeals). The Commissioner of Income Tax (App .....

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persons despite the fact it was having bank account. The assessee has not been able to show that the lenders were not having bank accounts. There was sufficient time for the assessee to deposit the cheque for further repayment of loan. The ld. DR vehemently defending the orders levying penalty submitted, that the assessee has not been able to show reasonable cause for accepting and repaying the loan amount in cash. In support of his submissions he placed reliance on the following decisions: i. C .....

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akari Pat Puravtha Sanstha Maryadit, Mohol (hereinafter referred to as Geeta Sanstha ) for the purpose of construction in the year 1994. The assessee was not in position to repay loan to Geeta Sanstha all these years as it was in financial distress. When the loan was taken the assessee was not receiving any aid from the Government. The assessee in its balance sheet as on 31-03-2007 has shown the loan along with accumulated interest ₹ 9,26,865/- under the head Loans (Secured or Unsecured). .....

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portunity. Three persons contributed the amount as under: Name of the person Date of Borrowing Amount Samadhan A. Bhosale, Jt. Secretary 06-05-2006 09-06-2006 Rs.2,26,000/- ₹ 1,33,000/- Mukund A. Bhosale, Member 03-05-2006 05-05-2006 Rs.2,34,000/- ₹ 30,000/- Sunil S. Bhosale, Member 08-06-2006 Rs.1,50,000/- Total Rs.7,73,000/- The amount received from the above three persons was deposited in assessee s account with State Bank of India, Mohol Branch on the following dates: Date Amount .....

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ank claimed that the Bank had lended money to Geeta Sanstha and recovery proceedings against Geeta Sanstha are pending before the same Court. Therefore, they have the lien on the said amount. Since, the assessee had no instructions from Geeta Sanstha to repay the amount to Solapur District Central Co-operative Bank, the assessee was advised by Counsel not to make the payment at that point of time in the Court. As a consequence of events that occurred in Court, the lenders insisted the assessee t .....

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was taken in cash and repaid in cash. In support of his submissions the ld. AR placed reliance on the decision of Hon'ble Madras High Court in the case of CIT Vs. Laxmi Trust Co. reported as 303 ITR 99 (Mad) and the decision of Agra Bench of the Tribunal in the case of Sharda Educational Trust Vs. ACIT reported as 99 TTJ (Agra) 212. 6. We have heard the submissions made by the representatives of both the sides and have perused the orders of the authorities below. We have also examined the de .....

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and 271E if the assessee proves that there was reasonable cause for not complying with provisions of the Act. The assessee has given detailed reasons for accepting the loan amount in cash from its Members/Office bearer and repayment of the same in cash. Further, in support of its submissions, the assessee has placed on record letter dated 28-04-2006 from Geeta Sanstha making an offer to settle the loan account by paying an amount of ₹ 6,11,000/- on 12-06-2012 before the Co-operative Court. .....

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detailed sequence of events that transpired on 12-06-2006 in the Co-operative Court. 7. The Revenue has not disputed the outstanding amount payable by assessee to Geeta Sanstha which is duly reflected in audited balance sheet of the assessee as on 31-03-2007 under the head Loans. The Assessing Officer had summoned the lenders of the cash amount and recorded their statements on 14-10-2009. All the three lenders supported the cause of the assessee. The genuineness of the transactions have been ve .....

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sions. After examining the same, we are of the considered view that the decisions cited by the ld. DR do not support the case of Revenue. In the case of CIT Vs. Sunil Kumar Goel (supra) the Hon'ble High Court did not consider the question framed by the appellant (Department) with respect to deleting of penalty imposed u/s. 271D and 271E of the Act. The Hon'ble High Court set aside the order of Tribunal on the ground of violation of rules of natural justice. The Hon'ble High Court hel .....

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uced any material to substantiate the plea of reasonable cause. The Hon'ble High Court upheld the order of Tribunal. In the case of P. Baskar Vs. CIT (supra) the Hon'ble High Court upheld the findings of Tribunal in confirming penalty u/s. 271D. The Hon'ble High Court held that except for the mere statement of the assessee there was no material on record to show that in fact there was real exigency that compelled the assessee to pay cash loan. In the instant case the assessee has bee .....

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