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TMI Blog2019 (5) TMI 848X X X X Extracts X X X X X X X X Extracts X X X X ..... after, the AO initiated the penalty proceedings u/s 271D of the Act for accepting cash loans amounting to Rs. 2.00 lakhs from one Shri M. Srinivasa Raju and Rs. 6.00 lakhs from one Sri Pattan Ayub of totaling to Rs. 8.00 lakhs, by issuance of penalty notice. In response to the said notice the assessee, vide letter dated 13.3.2017, submitted that he had accepted cash loans from the above two persons in cash and that the loans were returned to them by way of cheques. He further submitted that since the assessee is a salaried employee was not aware of the provisions of section 269SS ad 269T and further that the loans have been repaid by NEFT/RTGS to the vendors and therefore, penalty u/s 271D may not be invoked. The AO however, held that the provisions of 269SS were applicable to all the persons, including salaried employees. With regard to the second objection that section 269T cannot be invoked, he observed that in the case of the assessee, the penalty u/s 271E is not levied. The AO further held that the assessee has failed to justify taking the loans in cash. Therefore, she levied the maximum penalty of 100% of cash loan which worked to Rs. 8.00 lakhs. Aggrieved, the assessee prefe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. He submitted that the CIT (A) has erroneously held that the penalty should have been imposed within six months of issuance of notice u/s 274 r.w.s. 271D and therefore, the penalty proceedings are well within the time. Thus, he prayed for the deletion of penalty u/s 271D of the Act. He also filed a copy of the order of the Coordinate Bench of this Tribunal in the case of M.S. Lakaiah in ITA No.1272/Hyd/2015 dated 3.8.2016 in support of his contention. 5. The learned DR, on the other hand, supported the orders of the authorities below and submitted that the assessee has failed to establish reasonable cause for accepting loans in cash and therefore, the penalty levied u/s 271D should be confirmed. 6. Having regard to the rival contentions and the material on record, we find that the assessee has stated before the CIT (A) that the loans were taken in cash on account of his sister's marriage and that the loans were repaid through banking channels by way of RTGS and therefore, the genuineness of the loan and the identity of the creditor has been established. We find that the penalty u/s 271D is subject to the provisions of section 273B of the Act. Therefore, penalty u/s 271D is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be distinguished by the ld DR on the premise that the money after accepting from the creditor was not routed through the banking channel for the payment to the seller. In our view, this argument is not available to the revenue as the revenue has neither challenged the registration of the sale deed in favour of the assessee nor has challenged the cash consideration paid by the assessee to the seller at the time of registration before the Sub-Registrar of sale deed. In our view the case of the Dimple Yadav is squarely applicable to the facts and circumstances of the case. In the light of the above, we are of the view, the assessee has shown the reasonable cause within the meaning of Section 273B of the Act, therefore, the penalty order of the lower authorities is quashed and the appeal of the assessee is allowed". 7. For coming to the above conclusion, the Coordinate Bench relied upon the judgment of the Hon'ble Allahabad High Court in the case of Dimple Yadav reported in 379 ITR 177 (All.) wherein the High Court considered the rigours of section 271D and also the provisions of section 273B to hold as under: "10. The object of introducing Section 269SS of the Act was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s very much mitigated by the inclusion of section 273B in the Act. If there was a genuine and bona fide transaction and if for any reason the taxpayer could not get a loan or deposit by account-payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power." 14. In Bhagwati Prasad Bajoria's (HUF) (supra) the Gauhati High Court held: "..... The transaction of loan has found place in the books of account of the assessee as well as the lender of the loan. None of the authorities have reached the conclusion that the transaction of the loan was not genuine and it was a sham transaction to cover up the unaccounted money. It appears to us that the assessee felt need of money and thus he approached the money-lender for advancement of the money, the transaction is reflected in the promissory notes executed by the assessee in favour of the lender. When there is an immediate need of money the person cannot get such money from the nationalised bank to satisfy the immediate requirement. ....." 15. In the instant case, we find that the Tribunal has given a categorical finding that the assessee had established a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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