TMI Blog2021 (8) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... bank account - in the present case, the purchase of property was done in cash which is apparent from the copy of purchase deed and whereas in that case the assessee had made payments through banking channels therefore this reason is also not sustainable as there is no point in first depositing the cash in the Bank account and then withdrawing it for making cash payment for purchase of property. Assessee could not establish reasonable cause for violating the provisions of Section 269SS of the Act - Assessee had borrowed funds in cash for conversion of leasehold right in to freehold rights and in the present case also the assessee had borrowed funds for purchase of an immovable property. Therefore, the third reason is also not sustainable. - Decided in favour of assessee. - ITA No. 126/Lkw/2020 - - - Dated:- 11-8-2021 - Shri T.S. Kapoor, Accountant Member For the Appellant : Shri Dharmendra Kumar, CA For the Respondent : Shri Ajay Kumar, DR ORDER This is an appeal filed by the assessee against the order of ld. CIT(A), Lucknow-2 dated 16.12.2019 pertaining to Assessment Year 2012-13. The assessee has taken following grounds of appeal: 1. That penalty i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itted that before the ld. CIT(A) it was submitted that the assessee had to raise funds immediately and the funds were raised from close relatives and therefore there was a reasonable cause for accepting loans in cash and therefore penalty was not imposable. Reliance in this respect was also placed on the case law of Hon'ble Allahabad High Court in the case of CIT vs. Dimple Yadav. It was submitted that the facts and circumstances of the case laws relied on by the assessee are similar however ld. CIT(A) did not accept the contentions of the assessee by holding that the facts were not similar whereas the facts are exactly similar as in that case also the assessee required funds on urgent basis for conversion of lease rights to the freehold rights and therefore it was prayed that the appeal filed by the assessee may be allowed. 4. The ld. DR, on the other hand, heavily placed reliance on the orders of the authorities below and submitted that ld. CIT(A) has already considered this argument of the assessee and has distinguished the case law on facts and therefore, the appeal filed by the assessee may be dismissed. 5. I have heard the rival parties and have gone through the mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uishable from the facts of the cases relied upon. 6. One of the reasons for distinguishing the facts of this case with the case of Dimple Yadav (Supra) is that appellant could not prove that loans given were duly reflected in the books of account of three persons who gave these cash loans. In this respect I find that the lenders to the assessee are individuals and they may not be maintaining books of accounts. However, they have filed confirmations of having advanced the moneys to the assessee and in the confirmations they have also confirmed that such loans were received back during the year itself. The assessee has reflected the receipt of such loans and repayment thereto in receipt and payment account a copy of receipt and payment account is placed at P.B. page 36. Therefore the first reason for rejecting the appeal of the assessee is not a valid reason. The second reason cited by ld. CIT(A) is that in that case the assessee had deposited such cash in the bank account and through that bank account the payment was made whereas in the present case the assessee did not deposit the same in the bank account. In this respect, I find that in the present case, the purchase of prope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... found place in the books of accounts of the assessee as well as by the lender, namely, the Samajwadi Party and that the assessing authority while completing the assessment order had found that the transaction of loan was genuine. The learned counsel submitted that in the absence of any finding that the transaction of loan was not genuine or it was a sham transaction to cover unaccounted money, no penalty could be imposed. In support of his submission, the learned Senior Counsel relied upon a decision of Gauhati High Court in Commissioner of Income Tax Vs. Bhagwati Prasad Bajoria (HUF), 263 ITR 487, Chamundi Granites Pvt. Ltd. Vs. Deputy Commissioner of Income Tax, 255 ITR 258 and M. Janardhana Rao Vs. Joint Commissioner of Income Tax, 2005 (2) SCC 324. In order to appreciate the submission of the learned counsel for the parties, it would be appropriate to refer to a few provisions which will have a bearing to the issue involved in the present case, namely, Sections 269SS, 271D and Section 273B of the Act. For facility, the said provisions are extracted hereunder: 269SS. No person shall take or accept from any other person (herein referred to as the depositor), any l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relation to transfer of an immovable property whether or not the transfer takes place. 271D.(1) If a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit or specified sum so taken or accepted. (2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner. 273B. Notwithstanding anything contained in the provisions of clause (b) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FAB, section 271FB, section 271G, section 271GA, section 271H, section 271-I, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub-section (1) of section 272AA, or section 272B or sub-section (1) or sub-section (1A) of section 272BB or clause (b) of sub- section (1) of section or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oan otherwise than by account-payee cheque or account-payee demand draft, then the penalty may not be levied. Therefore, undue hardship is 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. In Bhagwati Prasad Bajoria's (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 requ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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