TMI Blog2011 (9) TMI 1211X X X X Extracts X X X X X X X X Extracts X X X X ..... of law. 2. During hearing of this appeal, we have heard Shri Prakash Jain, ld. counsel for the assessee and Shri Arun Dewan, ld. Sr. DR. The crux of arguments on behalf of the assessee is that the transaction is genuine and there is reasonable and sufficient cause in accepting the loan in cash, therefore, there is no violation u/s 69SS of the Act, which resulted in to imposition of penalty u/s 271D of the Act. 3. On the other hand, the ld. Sr. DR, Shri Arun Dewan, defended the imposition of penalty by placing reliance upon the impugned order. The Ld. Counsel for assessee relied upon the decision from Hon ble Rajasthan High Court in the case of CIT vs. Maheshwari Nirman Udyog (2008) 302 ITR 201 (Raj). 4. We have considered the rival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposit so taken or accepted.] 80[(2) Any penalty imposable under sub-section (1) shall be imposed by the 81[Joint] Commissioner.] We are also reproducing hereunder section 269SS of the Act:- 60 269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,- (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bank shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; (iii) loan or deposit means loan or deposit of money.] 5. If the aforesaid sections are analyzed, it is clear that under the provisions of section 269SS of the Act, no person shall, after 30th June, 1984, take or accept from any other person, any loan or deposit, otherwise than by an account payee cheque and account payee draft, if such loan or deposit is of ₹ 20,000/- or more. Admittedly, penalty is imposable u/s 271D for violation of the provisions of Section 269SS. However, section 269SS has to be read alongwith sec. 273B of the Act and at the time of the imposition of penalty, the authorities required to consider wheth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch ground cannot be a good ground for imposing penalty. The ratio laid down by Hon ble Rajasthan High Court in Maheshwari Nirman Udyog (supra) on the issue of deposit or loan in cash exceeding prescribed limit held that section 269SS must be read with section 273B and if they are adequate reason, penalty cannot be imposed u/s 271D of the Act. Identical ratio was laid down by Hon ble Apex Court in Assistant Director of Inspection (Investigation) vs. Kum. A. B. Shanthi, 255 ITR 258 (S.C.) and CIT vs. Bhagwati Pd. Bajoriya (HUF), 263 ITR 487 (Gau). 6. The main object of section 269SS is to curb the menace of making false entry in the account books and to check the inflow of black money, but at the same time, the ld. Assessing Officer is exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... genuine and there was a reasonable cause of payment in cash. In such a situation, the decision of Hon ble Gauhati High Court in the case of Shri Bhagwati Pd. Bajoriya (HUF) comes to the rescue of the assessee, because President of the Society is a person, who is part and partial of the society and at the time of need, it is expected that the society is helped, especially when the transaction was not ingenuine. A harmonious construction of section 269SS, 271D and 273B is that a construction, which preserve the exercise of power in favour of assessee Under the circumstances, which warrant it is to be preferred to a construction, which would result to non-denial of relief and vice versa is not the intention of the legislature, otherwise there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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