TMI Blog2012 (7) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... other suppliers demanding cash, we do not find any details placed before the Authorities concerned to accept the case of the assessee that there was a reasonable cause shown in receiving an amount of ₹ 6,51,000/- in cash from Mr. M.T. Nair. Thus the Assessing Authority rightly pointed out that the explanation was not convincing, hence, the case of the assessee was rejected. As the Commissioner of Income Tax (Appeals) as well as the Tribunal confirming such a finding, we do not think that there are grounds in the appeal which persuade us to take a different view. In the circumstances, we have no hesitation in rejecting the tax case. It is stated in the letter that the assessee received ₹ 6,51,000/- from Mr. M.T. Nair during the year and a sum of ₹ 91,389/- was repaid to him. There was an opening balance of ₹ 45,475/- due to him in his account. Thus the conduct of the assessee treating the transaction as loan transaction and so too the letter dated 24.9.1997 belies the claim of the assessee made through the affidavit of Mr. M.T. Nair that the transaction be treated as a gift, we agree with the Tribunal that the changed stand is only an after thought and do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved were for use in the business. It pointed out that the assessee had to undergo financial hardship to meet their commitments for wage payment and to suppliers especially in connection with the work executed at Rajamundhry. Since there was no bank finance facility for the assessee to meet their requirements, funds were raised from relatives and friends. The letter addressed by the assessee on 24.9.1997 states that since the work at Rajamundhry was the first out of State contract undertaken and labour payments had to be made in cash and suppliers were also insisting for cash payment, the amount was received in cash. Not satisfied with the explanation, the Assessing Authority confirmed the proposal of penalty and accordingly, a sum of ₹ 7,36,475/- was levied as penalty under Section 271 D of the Income Tax Act. 3. Challenging the order of penalty, the assessee filed an appeal before the Commissioner of Income Tax (Appeals). Confirming the findings of the Assessing Officer, the Commissioner held that the explanation offered by the assessee was far from satisfactory. The work was done in Rajamundhry, which was a district headquarters, where one could not claim that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso pointed out that there was no statement or return of gift by the donor and even the letters did not mention the transaction as gift. Thus both on the maintainability of such alternate plea as well as on merits of such plea, the Tribunal rejected the plea of the assessee. It also pointed out that there was no bona fide shown in such a plea taken. 6. As far as the merit of the transaction is concerned, the Tribunal pointed out that the amount taken was utilised for payment relating to construction activity throughout the year, such as wages, material purchases etc. It accepted the Department's arguments that the requirement of such payments in a construction business were routine in nature. The Tribunal further pointed out that the assessee had taken the loan in cash from Mr. M.T. Nair, who happened to be the close relative of the partners throughout the year under consideration. The Tribunal pointed out that on the mere ground of the expenditure in the form of payment to labours being genuine, the contention of the assessee that there was reasonable cause shown could not be accepted for exonerating the assessee from the rigour of penalty under Section 271 D of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s there was practically no bank finance facility for us, we had to meet our requirements out of funds raised from friends and relatives, work undertaken by us at Rajamundry was the first work we undertook out of Madras, where we were not known and the labour payments had to be made in cash and suppliers were also insisting on cash payment. Major part of the loan received by us was from Sri. M.T. Nair who is the father of the 3 partners and the husband of the other partner and therefore a very close relative. He is also working in the firm as the Chief Executive. An amount of ₹ 6,51,000/- was received from him during the year and a sum of ₹ 91,389/- was repaid to him. There was an opening balance of ₹ 45,475/- due to him in his account. Apart from this, we have taken a very short term loan of ₹ 40,000/- from M/s.Lakshmy Finance on 20.8.93 which was repaid on 21.8.93. The entire amounts were received and used for our business purposes and we had no option other then to take such funds from close relatives to enable us to continue and survive in the business. We would therefore humbly request you to kindly take a lenient view and to kindly drop your propos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had not shown any acceptable or unavoidable circumstances or impracticability or difficulty in receiving money otherwise than in cash. Even accepting the reasoning of the assessee that the reasonable cause that the assessee may show could be appreciated on the lines shown in Rule 6 DD, we fail to find any reasonable cause shown in the letter, which was in a very general form. Except for mere statement that the work undertaken by the assessee at outside the State was for the first time and there was necessity for meeting the requirements to labour and other suppliers demanding cash, we do not find any details placed before the Authorities concerned to accept the case of the assessee that there was a reasonable cause shown in receiving an amount of ₹ 6,51,000/- in cash from Mr. M.T. Nair. Thus the Assessing Authority rightly pointed out that the explanation was not convincing, hence, the case of the assessee was rejected. As the Commissioner of Income Tax (Appeals) as well as the Tribunal confirming such a finding, we do not think that there are grounds in the appeal which persuade us to take a different view. In the circumstances, we have no hesitation in rejecting the tax ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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