TMI Blog2019 (6) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... the details of purchase orders required to be executed within time and most significantly did not co-relate the purchases made from such cash loans. This aspect has been highlighted by the Tribunal in the impugned judgment when the Tribunal recorded that the assessee has not given the dates on which he accepted the loans and the dates of purchase of raw material in the gray market and whether on such dates the funds were available with the assessee as per his account. Thus assessee relied all along on mere oral assertions of urgent requirement of funds without producing any material to establish such assertion. The Tribunal did not accept such bald assertion and has essentially came to the conclusion that the explanation offered by the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eration: (i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in confirming the penalty of ₹ 28,00,000/, under Section 271D of the Act by holding that there was no reasonable cause as contemplated by Section 273B of the Act? (ii) Whether on the facts and in the circumstances of the case and in law, the Tribunal misdirected itself in going beyond the scope and ambit of Section 271D r/w Section 273B of the Act and confirming the penalty, on grounds extraneous and alien to the proceedings under Section 271D r/w Section 273B of the Act? 3. For the assessment year 2008-09, the assessee had filed the return of income which was taken in scrutiny by the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er : 3.2 In response to the said letter, Shri Vijay Thakkar CA and AR appeared on 21.5.2013 and filed a written submission in the Tapal. He also filed a letter of authority before the undersigned. The submission made in the Tapal was brought during the course of hearing and the contentions therein were discussed with the A.R. with reference to the facts of taking cash deposits/loans by the assessee from the farmer friends vis-a-vis the genuineness of transactions and also the business necessity/exigency for taking such loans/deposits and also the facts and legal issues raised by the assessee in the submission so made. He sought time till 29.5.2013 to prove the exigency/necessity of taking cash loans for the purpose of assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al in time to execute the purchase orders. Loans raised from bank were not sufficient to meet this purpose. He therefore, had to make borrowing in cash from friends. 5. The Additional Commissioner of Income Tax did not accept this explanation. He imposed penalty under Section 271D of the Act by observing that no such explanation was adduced earlier. It was only during the remand report the assessee claimed that cash loans were utilized for making purchases from gray market. The authority was not satisfied with the explanation rendered by the assessee. He noticed that such loans and deposits which were taken by the assessee had not entered in the regular books of account and the assessee had started repaying such loans much later. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the virus of Section 271D of the Act, the Supreme Court made certain observations. 10. Reliance was placed on the decision of the Supreme Court in case of Commissioner of Income Tax Vs. Calcutta Knitwears (2014) 362 ITR 673 (SC) to contend that being a penalty provision, Section 271D of the Act should be viewed strictly. Reliance was placed on following decisions in the support of the contention that in the present case the transaction being genuine and bonafide, harsh consequence of imposition of the penalty under Section 271D of the Act should not follow: (i) Commissioner of Income-Tax Vs. Saini Medical Store 2005 Vol.276 ITR 79 (ii) Omec Engineers Vs. Commissioner of Income-Tax (2007) 294 ITR 599 (Jh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... appeal the assessee contended that the amounts were received through cash loans. The breach of Section 269SS of the Act even going by the assessee's contention was thus established. The consequences of the penalty under Section 271D of the Act would therefore ordinarily follow unless the assessee established as required under section 273B the reasonable cause for such failure. Thus, the onus was on the assessee to establish any such reasonable cause. 13. We have already noted that the Additional Commissioner had given sufficient opportunities to establish such reasonable cause. Assessee do not avail of such opportunity. The assessee finally made written submissions. In such written submissions also on facts the assessee stated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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