TMI Blog2017 (7) TMI 68X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty order passed u/s 271E of the Income Tax Act. 2. Briefly stated the facts are that assessee is engaged in the business of yarn trading, acting as broker and commission agent in the name of Punit Yarn Agency. The Assessing Officer in the course of assessment proceedings noticed that assessee has re-paid loan of ₹ 4,84,000/- and out of this an amount of ₹ 2,05,000/- was re-paid in cash. Therefore, the Assessing Officer initiated penalty proceedings u/s 271E of the Act. In the course of the penalty proceedings the assessee contended that he has paid ₹ 2,05,000/- to his wife Smt. Vijaya Pathak on 2.3.2009 from out of cash balance available in his proprietary concern namely M/s Punit Yarn Agency. It was contended that this fact was brought to the Assessing Officer in the course of assessment proceedings and therefore it is not the case of undisclosed income finding it s way through loan or deposit as envisaged in the provision of section 269SS and 269T of the Act. It was also contended that the amount was paid by the assessee to his wife to enable her to clear her personal obligation on urgent basis. It was also contended that the assessee was under bona fide b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticed that assessee has re-paid loan to his wife partly in cheque and partly in cash and, therefore, he initiated penalty proceedings u/s 271E for the contravention of provision of Sec. 269T of the Act on the re-payment of loan in cash. Assessee contended that he has re-paid this amount to his wife from out of cash balance available with his proprietary concern M/s Punit Yarn Agency which is doing business in trading of yarn brokerage and commission agency. Assessee contended that this amount is not undisclosed money finding its way through loan or deposit as envisaged in provisions of Sec. 269SS and 269T of the Act. It was further contended that since this amount was paid by the assessee to his wife to enable her to clear her personal obligations on an urgent basis, the assessee was under bona fide belief that the provision of Sec. 269T are not attracted to funds made available to his wife as the transaction is between husband and wife only. It was also contended that there is reasonable cause in repaying the loan by the assessee to his wife. 7. However, the authorities below rejected this contention of the assessee and penalty was sustained. We have noted that the transactions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Sunil Kumar Goel (Supra) while deciding an identical issue has observed as under : 10. We have considered the submission advanced by the learned counsel for the respondent-assessee. We are satisfied that section 273B of the Act envisages a non-obstante clause as against sections 271D and 271E of the Act (which have been sought to be invoked for penalising the respondent- assessee). In the exceptional situation envisaged in section 273B of the Act, it is permissible for an assessee to substantiate reasonable cause for his failure to comply with the provisions on the basis whereof, penalty is sought to be imposed upon him. Taken to the logical conclusion in so far as the present controversy is concerned, it is open to the respondent-assessee, in the present case, to establish a reasonable cause for having not complied with the provisions of section 269SS of the Act (in the case of I. T. A. No. 777 of 2008) and section 269T of the Act (in the case of I. T. A. No. 778 of 2008). If an assessee successfully discharges the aforesaid obligations, then it is open to him to raise a claim that he should be excused from the consequential penal effect. 11. The explanation t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee, squarely rests on the shoulder of the respondent- assessee. In addition to the above, it is submitted that a breach of the provisions of the Act, cannot be justified on the alleged bona fide belief, which cannot be illustrated through cogent evidence. It is, therefore, the submission of the learned counsel for the appellant-Revenue, that in the facts and circumstances of the present case, the respondent-assessee, could not be deemed to have established a reasonable cause for not abiding by the provisions of sections 269SS and 269T of the Act. 13. Having given our thoughtful consideration to the submissions advanced by the learned counsel for the rival parties, we are of the view that the finding that there was reasonable cause shown by the respondent-assessee, is a finding of fact. This emerges from the decision rendered by this court in Saini Medical Store's case [2005] 277 ITR 420, wherein, this court has, inter alia, held as under (page 425) : As pointed out earlier, there is no doubt about the genuineness of the transactions which have been fully accepted in the assessment made for the year under consideration. Even if, there is any ignorance, which re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly, the said appeals are hereby dismissed. 18. We find the Hon ble Punjab Haryana High Court in the case of Saini Medical Store (Supra) while dealing with an identical issue has observed as under : 10. Section 273B of the Act provides that no penalty is imposable for any failure referred to in the said provisions, if the assessee proves that there was reasonable cause for the said failure. 11. Therefore, a combined reading of the provisions of sections 271E and 273B of the Act makes it clear that if the assessee shows reasonable cause for the failure to comply with any provision referred thereto, the penalty for its violation shall not be imposable on the assessee. 12. In the present case, the Commissioner of Income-tax (Appeals) while deleting the penalty in its order dated January 18, 1999, had accepted the explanation of the assessee that breach of the provisions of the Act was on account of bona fide belief of the assessee and the same was not with any intention to avoid or evade the tax. The observations of the Commissioner of Income-tax (Appeals) in paras. 6 and 6.1 are relevant and are reproduced as under : 6. I have carefully considere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hukaruppan (Supra) the Hon ble High Court has upheld the penalty levied u/s.271D and 271E on the ground that assessee was taking and giving back amounts exceeding ₹ 20,000/- to the money lender through cash repeatedly though entire transactions took place in major city and the assessee had neither explained as to the urgency, compulsion or any other important circumstances for breach. Similarly, in the case of Charan Dass Ashok Kumar (Supra) the Hon ble High Court upheld the penalty levied u/s.271D on the ground that assessee failed to establish any reasonable cause in taking or accepting such loan or deposit otherwise than by account payee cheque/account payee bank draft. 20. Since in the instant case the assessee had taken cash loan from her husband and mother-in-law which has been repaid in cash and there is no repeated transactions and the assessee has explained the reasonable cause for accepting such loans and repayment thereof in cash, therefore, in our opinion, the expression reasonable cause in section 273B for non imposition of penalty u/s.271D and 271E would have to be construed liberally. Accordingly we hold that penalty u/s.271D and 271E are not imposable in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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