TMI Blog2007 (7) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... sioner of Income-tax (Appeals)-I, Jodhpur. 2. The respondent-assessee is a contractor and for the purpose of his business, he had taken certain loans from its sister concern. The particulars of loan taken by the respondent-assessee on various dates find place in the order of the Assessing Officer and the same are as under :- Date of loan/deposit Amount Rs. 27-09-1992 2,00,000 15-10-1992 2,00,000 5-11-1992 5,300 21-11-1992 1,00,000 5,05,300 3. It is submitted by learned counsel for the appellant that the aforesaid transactions are in violation of section 269SS of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), as the payment was made by cash and not by way of cheque or through bank draft. A show-cause notice was issued under section 274 read with section 271D of the Act to the respondent-assessee. In response to the aforesaid notice, the assessee appeared before the Assessing Officer and submitted his reply. The case of the respondent-assessee is that the payment was required to be made to the labourers at the site and for that reason, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness expediency and/or absolute need and in violation of mandatory provisions ?" 5. Learned counsel Mr. K. K. Bissa submitted that even though it is true that the respondent-assessee had taken loan from its sister concern, but the acceptance of the said amount is in violation of section 269SS of the Act. If any amount more than Rs. 20,000 is accepted, the same has to be accepted by cheque or bank draft and not by cash. Learned counsel further submitted that, therefore, it is a clear case of violation of the said provisions and, therefore, the first authority was justified in imposing the penalty. 6. On the other hand, learned counsel Mr. Anjay Kothari submitted that whether the transaction was genuine or not is a question of fact and, therefore, the same cannot be challenged in this appeal, as the appeal is maintainable on the substantial question of law. It is further submitted by Mr. Anjay Kothari that there is neither question of law much less substantial question of law, which is attracted in this appeal. It is also pointed out that the respondent-assessee had accepted the loans from its sister concern and both of them are maintaining the regular books of account. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We have considered the rival submissions. The learned authorized representative contended that the transactions between two sister concerns are not covered by the provisions of section 269SS. For the purpose he has relied upon four judgments. In the case of Muthoot M. George Bankers v. Asst. CIT [1993] 46 ITD 10 (Cochin) it was held as under (headnote): 'In the instant case, there was transfer of funds from and the sister concerns. There was no evidence to show that money was loaned or kept deposited for a fixed period or repayable on demand. Further, the sister concerns and the assessee were owned by the same family group of people with a common managing partner with centralised accounts under the same roof. Transfer of funds had taken place in a whimsical manner. Therefore, it was rather difficult to say that the transactions were in the nature of deposits or loans with certain conditions attached to them, either as regards the period of such deposits or loans or with regard to their repayments. From the copies of the accounts furnished all that could be gathered was that funds had been transferred from and to the sister concerns as and when required and since the managing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased on material on record. Whether a particular finding of fact is correct or not, is not a question which could be examined by this court in this appeal. 11. Considering the aforesaid aspects of the matter, in our view, the finding given by the appellate authority as well as the Tribunal that the transaction in question is a genuine transaction, cannot be disturbed by this court in the present appeal. It is also required to be noted that section 269SS has to be read along with section 273B of the Act and at the time of awarding penalty, the authority is required to consider whether there was a reasonable cause for the said failure as envisaged under section 269SS of the Act. While examining the constitutional validity of section 269SS, the hon'ble Supreme Court in the case of Asst. Director of Inspection (Investigation) v. Kum. A. B. Shanthi [2002] 255 ITR 258 has observed as under (page 266 of 255 ITR): "It is important to note that another provision, namely, section 273B was also incorporated which provides that notwithstanding anything contained in the provisions of section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y 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 requirement. To satisfy the immediate requirement of money the person normally approaches the money-lender or his friend or relative who could lend money to him to satisfy his immediate requirement. In those circumstances if cannot be said that the assessee has entered into a transaction to avoid the payment of tax or to defraud the Revenue. The element of mens rea is not borne out from the nature and the manner in which the transaction was carried out. In these circumstances we do not find any justification or reasonable cause to remanded the matter for adjudication afresh by the Commissioner of Income-tax for consideration of reasonableness within the meaning of section 273B of the Act. In the facts and circumstances of the case we hold that the Tribunal was justified and correct in law in upholding the judgment of the Commissioner of Income-tax in deleting the penalty of Rs. 4,50,000 imposed on the assessee under section 271D of the Income-tax Act, though for the different reasons." 13. Considering the aforesaid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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