TMI Blog1996 (9) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... as genuine and looking to the nature of the business of construction where large amount of labour charges and payments for raw materials purchased from unorganised trading sectors such as cement, bricks, etc are required to be made after the banking hours in particulars on the days of their festival, if their demand of cash payments are not met instantly they cancel works contract and refuse to complete work and prevent other contractors from undertaking the work till their dues are settled. The amount taken was for business expediency. It was also claimed that the AO did not invoke the provisions of s. 269SS and accepted the expenses claimed as genuine and deposits as bona fide. It was also submitted that general impression given by the press advertisement about the provision is that it prohibits accepting deposits above Rs. 20,000 by cash and such deposit is required to be made by account-payee cheques. Such advertisements created an understanding that if the loans deposits are upto Rs. 20,000 it should be made in cash and if it is more than Rs. 20,000 it is to be made by account-payee cheques. The Department should, therefore, not take advantage of its misleading advertisement a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot ask for any explanation about the said loans taken in contravention of provisions of s. 269SS. Rather there is no mention made about the issue in the assessment order. The assessee also sought permission to produce the books of account in support of the submission that the loans were taken because of business requirements as stated in the reply to the show-cause notice. The first appellate authority noted that there was a search in the case of the assessee during which certain incriminating documents were seized. It was noticed from such papers that no cash balance was drawn from 13th May, 1990, onwards. The aggregate amount of loan in each case was Rs. 20,000. He also noted that the decision of the Madras High Court has since been stayed by the Hon'ble Supreme Court and accordingly the claim of the assessee that the provisions of s. 269SS are ultra vires cannot be held as tenable. He further noted that it is well settled position of law that in a taxing statute one has to look merely at what is clearly said and there is no room for any intendment. He further noted that the language of s. 269SS does not leave any ambiguity that the reference to the amount of Rs. 20,000 is to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... osits in excess of Rs. 20,000 otherwise than by an account-payee cheque or bankdraft. This constituted a reasonable cause and as such the penalty was not leviable. He also made a submission that the case cited by the assessee before the CIT(A) of Vir Sales Corporation vs. Asstt. CIT which has identical facts was not considered by the CIT(A) and had the facts of the assessee's case were appreciated in light of the said decision, the penalty could not be sustained. He further submitted that the Dy. CIT before levying penalty neither asked for any material in support of the submissions made in writing nor he gave personal hearing and that was against the principles of natural justice. The learned counsel for the assessee, therefore, prayed that the penalty levied and confirmed by the CIT(A) is totally unjustified and the same is required to be cancelled. 5. The learned Departmental Representative on the other hand, relied upon the orders of the lower authorities and he has further submitted that apparently the loans taken in cash of Rs. 20,000 from each party was in violation of the provisions of s. 269SS. The assessee also failed to produce adequate evidence to show the any reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalty a sum equal to the amount of loan or deposit so taken or accepted and such penalty is to be imposed by the Dy. CIT. Further s. 273B provides that notwithstanding anything contained in ss. 271(1)(a), 271A, 271B, 271BB, 271C, 271D and 271E, etc. no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in any of the provisions if he proves that there was reasonable cause for the said failure. 6.2. Before we examine the question regarding the existence or absence of reasonable cause for the purpose of s. 271D, it would be appropriate to see the legislative intention or the object for which the provisions of s. 269SS were inserted by the Finance Act, 1984. The Board in its Circular No. 387, dt. 6th July, 1984 elaborately explained the scope and intention of inserting the provisions of s. 269SS in the following words in para 32.1 and 32.2: "32.1. Unaccounted cash found in the course of search carried out by the IT Department is often explained by taxpayers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of account in the form of such loans and deposits, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s genuine. The assessee during the course of penalty proceedings in written submissions filed claimed that the assessee carries on business of construction of buildings and in the course of such business large amount of labour charges and payments for raw material purchased from unorganised trading sectors and bricks etc. are required to be made after banking hours particularly on the festival days. If their demand for cash payment is not met they would cancel the contract work and refuse to complete the work and would also prevent the other contractors from undertaking the work till their dues are settled. Raw material would also not be made available for construction on time if the payment is not made in cash on such occasions. According to the assessee the loans were raised from various parties to meet exigencies of construction work. According to the Revenue no details or evidence in support of such contention were filed by the assessee. According to the learned counsel for the assessee the assessee gave such written submissions before the Dy. CIT in response to the show-cause notice given. The Dy. CIT never demanded any details or any evidence in support of such submissions ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... According to the learned counsel for the assessee the aforesaid Board circular as well as the advertisement given by Department for information of the taxpayers at large gave the impression that the default is committed and penalty is leviable only if the loan/deposit amount in cash involved is in excess of Rs. 20,000 and not Rs. 20,000. The facts in this behalf have neither been disputed nor denied by the Revenue. A plain reading of the circular as well as advertisement would no doubt makes one believe that only loan/deposit in excess of Rs. 20,000 is required to be taken by account-payee cheque or draft and such loan/deposit of Rs. 20,000 or below that amount could otherwise be taken by cash. 6.5. Looking to the facts and circumstances we are of the opinion that the loan/deposits taken to meet urgent and immediate requirements of business and the impression gathered as taxpayers from the aforesaid circular and the advertisement did constitute a reasonable cause for accepting the said loans/deposits of Rs. 20,000 from each party in cash within the meaning of 273B of the Act. 6.6. The assessee has also strongly relied upon the decision of the Tribunal in the case of Vir Sales ..... X X X X Extracts X X X X X X X X Extracts X X X X
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