TMI Blog2002 (1) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... ovisions of s. 269SS of the IT Act, 1961. The AO held that the assessee had either received deposit or loan and, therefore, the matter was referred to the Jt. CIT, Bhatinda, for imposition of penalty under s. 271D of the Act, who had the jurisdiction to impose the penalty for violation of the provisions of s. 269SS of the Act. A notice under s. 274 r/w s. 271D was issued to the assessee. In response to the said notice, the assessee stated as under: "The assessee Narotam Singh Mann and Smt. Jagtaran Kaur are husband and wife and amount of Rs. 75,000 and Rs. 2,00,000 belonging to Smt. Jagtaran Kaur was invested for the common cause of the family, through the bank a/c of Sh. Narotam Singh Mann; that hence the aforesaid amounts are neither loan nor any deposit with Shri Narotam Singh; that hence the assessee had not violated the provisions of s. 269SS of the IT Act, 1961." The Jt. CIT did not find any force in the above contention of the assessee. It is stated that both Shri Narotam Singh Mann and Smt. Jagtaran Kaur, i.e., husband and wife were State Govt. employees and were existing assessees with the IT Department, and, therefore, they were separate entities in the eyes of law. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cash for Rs. 75,000 and Rs. 2,00,000 on 26th Nov., 1996, and 28th Nov., 1996, it was explained that same were deposited in the bank out of the sale proceeds of aforesaid plot of land. The AO further stated that Smt. Jagtaran Kaur, wife of the assessee, was also maintaining her bank account independently. The AO further stated that this contention of the assessee that the amount was given by Smt. Jagtaran Kaur to the assessee for the safe custody of the amount independently could not be termed as "loan" or "deposit" was not acceptable because Smt. Jagtaran Kaur was herself maintaining the bank account independently and she could very well deposit the amount in her bank account for safe custody. The AO concluded in his letter that Smt. Jagtaran Kaur advanced a loan of Rs. 2,75,000 to the assessee in cash, which in turn, was deposited by him in his bank account and, thus, there was clear violation of the provisions of s. 269SS of the Act and the penalty of Rs. 2,75,000 under s. 271D of the Act was rightly imposed. 3.2 The learned CIT(A) concluded that a sum of Rs. 2,75,000 was deposited in cash on 26th Nov., 1996 and 28th Nov., 1996 in the bank account of the assessee even when Smt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uch liability to return has been shown and hence there was no liability to return it to Smt. Jagtaran Kaur, although the amounts were routed through the bank account of the assessee. Accordingly, it was submitted that the assessee had neither received a loan nor deposit and, therefore, penalty levied by the learned Jt. CIT was against the provisions of law. Alternatively, it was submitted by the learned counsel for the assessee that an innocent mistake due to ignorance of the relevant provisions of law coupled with the fact that the transactions, in question, were genuine and bona fide transaction will constitute a reasonable cause and accordingly, it was submitted that there was no justification for imposing the penalty under s. 271D of the Act. 5. Shri Tarsem Lal, the learned Departmental Representative supported the orders of the authorities below. He further submitted that there is no dispute that the assessee had accepted Rs. 75,000 and Rs. 2,00,000 on 26th Nov., 1996 and 28th Nov., 1996, respectively in cash from Smt. Jagtaran Kaur, which was deposited by him in his bank account. He, therefore, submitted that the provisions of s. 269SS of the Act are clearly applicable to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r at whose instance and for whose needs the money is advanced. In other words, the borrowing is primarily for the benefit of the borrower although the person, who lends the money, may also gain thereby earning interest on the amount lent. In the instant case, there was no intention on the part of Smt. Jagtaran Kaur to earn the interest on the amount of Rs. 2,75,000. At the same time, it is also not the case of the Revenue that the assessee was in need of any money or the assessee had borrowed the money for his benefit. In other words, the Department has miserably failed to show that the transaction was either a 'deposit' or 'loan' in any manner. It is also not the case of the Department that Smt. Jagtaran Kaur had received the interest from the assessee or the assessee had paid any interest on the amount of Rs. 2,75,000. Thus, it can safely be held that the assessee had not received any deposit or loan, as alleged by the Departmental authorities. Sec. 269SS of the Act provides that no person shall, after the 30th day of June, 1984, take or accept from any other person any loan or deposit otherwise than by an account payee cheque or account payee bank draft if the amount of such loa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amount given to her husband was utilised for the purchase of agricultural land in the name of their son. In this background and also keeping in view the Board's circular, it can be said that the authorities below were not justified in invoking the provisions of s. 269SS of the Act and ultimately levying the penalty of Rs. 2,75,000 under s. 271D of the Act. 6.1 In the case of Shreenath Builders vs. Dy. CIT (2000) 66 TTJ (Ahd) 113, the Ahmedabad Bench of the Tribunal held that a harmonious construction of the relevant provisions of ss. 271D, 271E and 273B clearly reveals that the use of the expression "shall be liable to pay" in ss. 271D and 271E and the provisions of s. 273B providing that no penalty would be leviable if the person concerned proves that there was reasonable cause for the said failure clearly indicates that these provisions give a discretion to the authorities to impose the penalty or not to impose the penalty. The Ahmedabad Bench of the Tribunal further held that such a discretion has to be exercised in a just and fair manner having regard to the entire relevant facts and materials existing on records. In the said decision, it has also been held that ordinarily ..... X X X X Extracts X X X X X X X X Extracts X X X X
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