TMI Blog2013 (10) TMI 1327X X X X Extracts X X X X X X X X Extracts X X X X ..... ount. The details of the parties are available on record. The assessees as well as lenders are all regularly assessed to income-tax. The identity of the parties are beyond doubt. The factum of loan and repayments are beyond doubt. The genuineness of the transactions is also not in doubt. It is also established by the assessees that there existed similar emergency for repaying the loan in cash, as the emergency which prompted them to take loans in cash. Therefore, this is a case where there is a reasonable cause for the assessees to repay the loans in cash. In such circumstances, it is to be seen that the violation of Section 269T is technical. Therefore, we find that the Commissioner of Income Tax (Appeals) ought have deleted the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ans from a financing firm by name M/s Vadamalayan Finance. This financing firm is owned by one Shri A. Kannan. There was a survey under Section 133A on the business of M/s Vadamalayan Finance on 8.10.2011. In the course of survey, it was brought out that Shri A. Kannan is carrying on the business of financing under the name and style of M/s Vadamalayan Finance, even though Shri A. Kannan does not have a licence to carry on the money lending business. Shri Kannan lends money on the strength of pronotes. Such pronotes are returned to the buyers when the loans are repaid. He is collecting interest on the loans disbursed by him and the accounts relating to the money lending business are maintained in a register called by name Kishti Vasool Lis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch is equal to the amount of the loan or deposit repaid by the person. 9. Section 273B provides that no penalty shall be imposed, among others, under Sections 271D and 271E, if the person proves that there was reasonable cause for the failure of complying with the law stated in Section 269SS and 269T. 10. When the Assessing Officer proposed levying of penalty, the assessees submitted a detailed reply to the Assessing Officer in the light of the law stated in above paragraph and requested that penalties may not be levied as the loans were taken and repaid on the exigencies of business and they had no other way but to complete those transactions in cash. The Assessing Officer rejected the detailed submissions made by the assessees and l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n cash substantively violated the provisions of law stated in Section 269T. He held therefore that the penalties under Section 271E have been levied in accordance with law. The Commissioner of Income Tax (Appeals), accordingly, confirmed the penalties levied under Section 271E of the Incometax Act, 1961. 13. The assessees are aggrieved by the orders of the Commissioner of Income Tax (Appeals) confirming the penalties levied under Section 271E. Therefore, these appeals filed before the Tribunal. 14. The common grounds raised in these appeals are as follows:- (1) The Commissioner of Income Tax (Appeals) has erred in sustaining the levy of penalty under Section 271E r/w Section 269T of the Income-tax Act, 1961, without assigning prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ous that the transactions must be in cash as insisted by Shri A. Kannan. That acts as a reasonable cause in the case of these assessees regarding acceptance and repayment of loans to Shri A. Kannan, who is the proprietor of M/s Vadamalayan Finance. 17. While considering the circumstances leading to accepting the loans in cash, and while deleting the penalty levied on assessees under Section 271D, the Commissioner of Income Tax (Appeals) might have considered this circumstance also while coming to a conclusion that the assessees had reasonable cause for accepting loans in cash. 18. The explanations given by the assessees time and again before the lower authorities have equally established similar circumstances under which they were con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces of the cases placed before us, we find that the Commissioner of Income Tax (Appeals), who has justifiably deleted the penalty levied under Section 271D, has acted against the principle declared by Hon ble Supreme Court in the above judgment of Hindustan Steel Ltd. v. State of Orissa. 22. In the case of Assistant Director of Inspection (Investigation) v. Kum. A.B. Shanthi, the Hon ble Supreme Court has examined the object of introducing Section 269SS in the Income-tax Act, 1961. The Court held that it is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted money, or if he has given some false entries in his accounts, he shall not escape by giving false explanation for the same. The Court observed that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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