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TMI Blog2011 (12) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... he penalty levied u/s. 271D of the Act. For this, revenue has raised following two grounds: "1) That on the facts and circumstances and in law Ld. CIT(A) has erred in cancelling the penalty order passed u/s. 271D. 2) That on the facts and circumstances and in law Ld. CIT(A) has not considered the ratio of decision in the cases of Kasi Consultant Corporation Vs. DCIT (2009) 311 ITR 419 (MAD) and Thenamal Chhajjer Vs. JCIT (2005) 96 ITD 210 (Chennai) which are in favour of Department." 3. Brief facts are that during the course of assessment proceedings Assessing Officer noticed that the assessee has received loans from following fifteen persons, who are relatives, in cash: The Addl. CIT, Range-1, Central, Kolkata issued show cause n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of section 269SS and accordingly, impose a penalty of ₹ 10,07,360/-, which is equal to the total amount of loans received i.e. ₹ 10,07,360/- in such violations." 4. Aggrieved, assessee preferred appeal before CIT(A), who considering the submissions of the assessee and deleted the penalty vide para 3.4 of his appellate order, which is as under: "3.4. Hence considering above facts, submission of the Ld. A.r and relying upon the judgment rendered by the Punjab and Haryana High Court in CIT V. Saini Medical Store (2005) 277 ITR 420 (2006) 150 Taxman 246, it is held that bona fides and genuineness of the transaction would constitute a 'reasonable cause' for not invoking the provisions of section 271D and the assessee had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of record. The Assessing Officer as well as Addl. CIT could not prove that these were loans and utilised by the assessee for his business purpose and even otherwise these transactions are among family members. Whether this can be called loans or deposits within the meaning of section 269SS of the Act or not, this has been answered by Coordinate Bench decision in the case of Tervinder Singh Sethi Vs. Income-tax Officer, ITA No. 1074/K/2011 Assessment Year 2007-08 order dated 27.12.2011, wherein it has been held as under: "We have heard rival submissions and gone through facts and circumstances of the case. We find that the Assessing Officer during the course of assessment proceedings noticed that the assessee has accepted loan of ₹ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sense in terms of section 269SS of the Act or for that purpose for levy of penalty u/s. 271D of the Act. We find that Hon'ble Gujarat High Court in the case of CIT Vs. Natvarlal Purshottamdas Parekh (2008) 303 ITR 5 (Guj) has noted the fact and given finding that amounts, which are mere book entries and transactions on behalf of family members does not violate the provisions of section 269SS and 269T and penalty cannot be imposed u/s. 271D of the Act for violation of section 269SS & 269T of the Act i.e. penalties u/s. 271D and 271E of the Act. Hon'ble Gujarat High Court has confirmed the finding of Tribunal, wherein Tribunal held that assessee was prevented by reasonable cause in the light of the affidavit of one Shri J. B. Shah, the Advoca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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