TMI Blog2006 (12) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... d by P. D. Dinakaran J.— At the instance of the Revenue, the appeal is directed against the order of the Income-tax Appellate Tribunal dated June 12, 2002, in I. T. A. No. 1347/Mds/1995, raising the following substantial questions of law: "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that no penalty is leviable under section 271D when there has been repeated violations of section 269SS on the ground that the creditors are genuine persons and there was no revenue loss to the exchequer? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in law in holding that no penalty is leviable under section 271D, on the ground that tak ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the Assessing Officer refused to accept the above explanation and levied penalty to the tune of Rs. 12,30,000, by order dated July 19, 1994. 4. Aggrieved by the order of the Assessing Officer imposing penalty, the assessee filed appeal before the Commissioner of Income-tax (Appeals), who, by order dated February 8, 1995, even though observed that the assessee could have obtained loans by cheques or demand drafts in its favour and deposited the same in current account, rendered a finding that loans were taken mostly to make payments to master weavers living in village and suburban areas where banking facility was very much less and that loans were taken to meet the immediate business need and hence, there existed reasonable cau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tice of the Commissioners by Circular No. 551, dated January 23, 1990, reported in [1990] 183 ITR (St.) 7. In the present case, the assessee had consciously made the TDS. The creditors are genuine persons and the transactions were never doubted by the authorities below. There was no revenue loss to the State exchequer. Considering all these factual position, we are unable to accept the conclusion drawn by the authorities below. For all these reasons and discussions and considering the facts and materials, we cancel the levy of penalty sustained by the Commissioner of Income-tax (Appeals). It is ordered accordingly." 6. Assailing the said order of the Appellate Tribunal, Mr. Nareshkumar, learned counsel appearing for the Revenue cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... savings bank or co-operative bank ; (c) any corporation established by a Central, State or Provincial Act ; (d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; (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 where the person from whom the loan or deposit is taken or accepted and that person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of law that arises in this matter, as whether a particular transaction is genuine and bona fide is purely a question of fact. 9. We have given our careful consideration to the submissions made on either side. 10. This court in CIT v. Kundrathur Finance and Chit Co. [2006] 283 ITR 329, following the decision of the apex court in Assistant Director of Inspection (Investigation) v. Kum. A. B. Shanthi [2002] 255 ITR 258, held that if there was genuine and bona fide transaction and the taxpayer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reason, the authority vested with the power to impose penalty has a discretion not to levy penalty. 11. In the instant case, the Commissione ..... X X X X Extracts X X X X X X X X Extracts X X X X
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