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2016 (12) TMI 445 - ITAT JAIPUR

2016 (12) TMI 445 - ITAT JAIPUR - TMI - Penalty u/s 271D - accepting cash loan in violation of section 269SS - Held that:- It is noted from the record that the assessee had received the loans from his close relatives and family members not exceeding ₹ 20,000/- at one time. - These loans were taken in the business interest as the assessee had started a new venture. These amounts were repaid in parts to the respective persons which can be seen from the bank statement of the assessee. The .....

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nsactions being genuine and the assessee having offered reasonable explanation justifying these cash transactions, the impugned penalty u/s 271D is not leviable. See Smt. Kusum Dhamani vs. Addl. CIT [2015 (4) TMI 144 - ITAT JAIPUR ] - Decided in favour of assessee - ITA No. 41/JP/2016 - Dated:- 7-11-2016 - SHRI BHAGCHAND, ACCOUNTANT MEMBER For The Assessee : Shri Gulab Rai Ramchandani (assessee) For The Revenue : Smt. Poonam Rai, DCIT-. DR ORDER PER BHAGCHAND, AM The assessee has filed an appeal .....

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sions of Section 271D of I.T. Act, 1961. 2.1 Apropos Ground No. 1 and 2 of the assessee, it is observed that assessment in the case of Shri Gulab Rai Ramchandani was completed u/s 143(3) of the I.T. Act on 18-03-2013 for the assessment year 2011-12. During the course of assessment proceedings, the ITO, Ward- 2, Beawar observed that the assessee had accepted the loans in cash of ₹ 2,83,500/-from the following persons which according to him is contravention of provisions of Section 2699SS of .....

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009 Cash 19,000/- do - 15-04-2009 Cash 19,000/- do - 25-10-2009 Cash 19,000/- Suresh Ramnani 01-04-2009 Cash 19,000/- do - 02-04-2009 Cash 19,000/- Total 2,83,500 Thus the ITO,Ward- 2, Beawar vide his letter dated 04-04-2013 sent the proposal for initiation of penalty proceeding u/s 271D in the case of the assessee. Show cause notice for penalty u/s 271D was issued on 18-06- 2014 vide letter No. 43 asking the assessee as to why penalty u/s 271D be not imposed upon for the default. In response to .....

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under consideration. The assessee further argued that he was under impression that there is no necessity to accept a loan below the monetary limit of ₹ 20,000/- through a cheque or demand draft. He had no idea that even the aggregate if exceeded ₹ 20,000/- resulted into contravention of Section 269SS of the I.T. Act , 1961. In view of the entire facts and circumstances of the case, I hold that the assessee has violated the provisions of Section 269SS of the Income Tax Act, 1961 by ac .....

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the assessee. The amount accepted is ₹ 2,83,500/-. I levy of penalty of ₹ 2,83,500/- (Rs. Two Lacs Eighty Three Thousand & Five Hundred only). 2.2 In first appeal, the ld. CIT(A) confirmed the penalty u/s 271D of the Act imposed by the AO by observing as under:- 4.3 I have gone through the penalty order, statement of facts, ground of appeal and written submission carefully. It is seen that the appellant has argued that he had to borrow the fund in cash because of compelling busin .....

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e, no penalty u/s 271D should have been imposed by the AO, is not accepted. Further, the appellant has argued that he was under bona fide belief that penalty u/s 271D cannot be imposed, if the amount borrowed at a time is less than ₹ 25,000/-, therefore, no penalty should have been levied on the appellant. It has consistently been held by various Courts that the ignorance of law is no excuse for infraction of any law of the land. Therefore, the argument of the appellant that he was not awa .....

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the considered view that AO was fully justified in levying the penalty u/s 271D. Hence, the penalty levied by the AO hereby confirmed. 2.3 During the course of hearing, the assessee prayed that these deposits received by the assessee are less than ₹ 20,000/- and they were taken from the close relatives and family members. The assessee was under bona fide belief that such transaction of less than ₹ 20,000/- can be taken. The assessee further prayed that the genuineness of the loans we .....

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fter observing as under:- We are not persuaded by the submission of counsel for the Revenue . Section 271D of the Income Tax Act provides for penalty failure to comply with the provisions of Section 269SS of the Incometax Act. According to this provision, if a person, inter alia, accepts any loan in contravention of the provisions of Section 269SS of the Income-tax Act, he shall be liable to pay, by way of penalty, a sum of equal to the amount of loan or deposit so taken or accepted. Section 273 .....

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m to satisfy the immediate business requirement but found that this has not been established. However, the Tribunal was thus of the view that there was a reasonable cause to accept the deposit otherwise through bank draft or through cheque because the assessee bona fide believed that the cash transactions below ₹ 20,000/- was permissible. It is true that the ignorance of law is no excuse, but the question here is whether the assessee was able to establish reasonable cause u/s 273B justifyi .....

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any substantial question of law. It is dismissed in limine. 2.4 The ld. DR relied on the orders of the authorities below. 2.5 I have heard the rival contentions and perused the materials available on record. It is noted from the record that the assessee had received the following loans from his close relatives and family members not exceeding ₹ 20,000/- at one time. However, the total amounts of the loans taken was at ₹ 2,83,500/-. Name of Party Date Mode of Payment Amount (Rs.) Kai .....

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2-04-2009 Cash 19,000/- Total 2,83,500 These loans were taken in the business interest as the assessee had started a new venture. These amounts were repaid in parts to the respective persons which can be seen from the bank statement of the assessee. The assessee was under bona fide belief that the loan amount of less than ₹ 20,000/- can be taken in cash and if it is exceeded more than 20,000/- then it will be taken either through cheque or Demand Draft. Thus the assessee had taken the loan .....

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Dhamani vs. Addl. CIT vide its order dated 13-06-2014 in ITA No. 847/JP/2011 for the assessment year 2006- 07 deleted the penalty u/s 271D of the Act by observing as under:- 4.0 We have heard the rival submissions and perused the relevant material available on record. From the record there is no shred of doubt about the genuineness of the transactions and their disclosure in the books of account and returns of both the assessee who happen to be husband and wife, carrying on the business as siste .....

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