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TMI Blog2021 (8) TMI 643X X X X Extracts X X X X X X X X Extracts X X X X ..... gency to complete the purchase transaction of property, accordingly section 273B of the Act was applicable, hence, no penalty could be imposed under section 271D of the Act. 5. That when AO had not recorded his satisfaction in assessment order to initiate penalty under section 271D of the Act; hence no penalty under such section can be imposed later on. 6. That Ld. Joint Commissioner of Income Tax failed to apply decision of jurisdictional High Court, which was directly applicable on appellant's case. 7. That the appellant seeks permission to modify and/or add any other ground or grounds of appeal as the circumstances of the case might require or justify. 8. That the assessment, made by the learned assessing officer are arbitrary, bad in law and against equity, justice and good conscious and deserve to be cancelled." 2. The ld. AR at the outset submitted that the assessee had purchased a property during the year under consideration which was sold during the year itself and in this respect our attention was invited to copy of purchase deed and sale deed placed at P.B. pgs. 63 to 81 and 38 to 62 respectively. It was submitted that to make payment for such purchase of pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... equired the funds immediately therefore there was a reasonable cause for accepting the loan in cash and therefore the penalty was not imposable and in this respect the assessee had relied on the case law of Hon'ble jurisdictional High Court of Allahabad in the case of CIT vs. Dimple Yadav and Akhilseh Kumar Yadav. The ld. CIT(A) has held that the facts in that case was distinguishable from the facts of the case of assessee by holding as under: "ii. The judgement in the case of CIT vs. Dimple Yadav and Akhilesh Kumar Yadav is also distinguishable due to the following facts: * The assessee established a reasonable cause for failure to comply with provisions of section 269SS. * Loan given by Samajwadi Party was a genuine loan and reflected in the books of accounts of Samajwadi Party and books of accounts of the assessee. * Cash given by parry was directly deposited in bank account of assessee and thereafter used for converting nazul land to free hold. * Cash was deposited in bank account of the assessee and then routed through banking channel for payment to Government for converting land into free hold property. However in the present case, the facts are as under: * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d borrowed funds for purchase of an immovable property. Therefore, the third reason is also not sustainable. 7. The Hon'ble jurisdictional High Court of Allahabad in the case of Dimple Yadav has clearly held that penalty under these circumstances is not leviable. For the sake of completeness the findings of the Hon'ble High Court are reproduced below: "The short question that arises for consideration is, whether any penalty could be imposed under Section 271D of the Act? The learned counsel for the department contended that the unsecured loan, which was more than Rs. 20,000/- taken by the assessee from a political party should have been taken by a cheque or a demand draft through banking channels, which had not been done. The taking of the loan in cash, which was more than Rs. 20,000/- was in gross violation of Section 269SS of the Act and, consequently, by operation of law, the penalty was rightly imposed, which had wrongly been deleted by the appellate authorities. The learned counsel contended that there was no urgency for the assessee to receive the entire amount in cash nor any dire need was shown for taking such huge amount in cash. In support of his submission, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by, - (a) the Government; (b) any banking company, post office savings bank or co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013); (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation. - For the purposes of this section, - (i) "banking company" means a company to which the provis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the account books and later give an explanation for the same. Section 269SS of the Act consequently, required that no person shall take or accept any loan or deposit, if it exceeds more than Rs. 20,000/- in cash. Section 271D of the Act provided that a person who takes or accepts any loan or deposit in contravention of the provision of Section 269SS of the Act, he would be liable to pay by way of penalty a sum equal to the amount of the loan or deposit so taken or accepted. Section 271D of the Act caused undue hardship to the tax payers where they took a loan or deposit in cash exceeding Rs. 20,000/- even where there was a genuine or bonafide transaction. The legislature accordingly, introduced Section 273B of the Act, which provided that if there was a genuine and bonafide transaction and the tax payer could not get a loan or deposit by an account payee cheque or demand transaction for some bonafide reason, the authority vested with the power to impose penalty had a discretion not to levy the penalty. In Chamundi Granites (supra) the Supreme Court considered the provision of Section 271D and 273B of the Act and held:- "It is important to note that another provision, n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , nonetheless, the loan transaction was a genuine transaction and was routed through the bank account of the assessee which clearly shows the bonafides of the assessee. The cash given by the lender was not unaccounted money but was duly reflected in their books of account. The Assessing Officer also accepted the explanation and found the transaction to be genuine. The contention of the learned counsel for the appellant that since there was no urgency, the assessee could have taken the loan through cheque and should have processed the matter through regular banking channels is immaterial, inasmuch as the genuineness of the transaction has not been disputed by the Assessing Officer. Further, we find that the cash was deposited in the bank account of the assessee and the money was thereafter, routed through the banking channel for payment to the government for converting the land into free hold property. In the light of the aforesaid, we are of the view that reasonable cause had been shown by the assessee and the provisions of Section 273B of the Act was applicable. The appellate authorities were justified in holding that no penalty could be imposed since a reasonable cause was show ..... X X X X Extracts X X X X X X X X Extracts X X X X
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