2014 (5) TMI 1052 - AT - Income Tax

Assessee's Appeals Dismissed, Penalties Upheld for Tax Law Violations

The Tribunal dismissed all appeals filed by the assessee, confirming penalties under Sections 271D and 271E for violations of Sections 269SS and 269T of ... penalty u/s 271D and 271E - ITO has found during the survey proceedings that the assessee had violated the provisions of both the sections 269SS and 269T of the Income Tax Act as the assessee had accepted the loans in cash exceeding ₹ 20,000/- and repaid the loan exceeding ₹ 20,000/- - Held that:- From the penalty order, the facts are very clear that the assessee had borrowed ₹ 15.00 lakhs in cash and repaid 15.00 lakhs in cash in the assessment year 2008-09. Again he borrowed 20 lakhs on two occasions and repaid ₹ 24 lakhs in cash in the assessment year 2009-10. In the assessment year 2010-11, again, the assessee borrowed ₹ 20 lakhs and repaid in cash. In the assessment year 2011-12, he borrowed ₹ 20 lakhs and repaid ₹ 23 lakhs. Further, in the assessment year 2012-13, the assessee had repaid ₹ 13 lakhs in cash. These facts are not disputed by the assessee. He has not given any explanation neither before the Assessing Officer nor before the ld. CIT(Appeals) or even before us. He is not in a position to explain what is the reasonable cause for accepting loans in cash and repaid the same in cash. It is very clear from the order of the Assessing Officer that he has given as many as number of opportunities to explain his case before him. However, the assessee has not utilized those opportunities and he was not in a position to explain as to what was the reason for accepting and repaying monies in cash, which is contrary to the provisions of sections 269SS and 269T of the Act. After carefully going through the orders of the Assessing Officer and ld. CIT(Appeals), we are of the opinion that the assessee is not in a position to give any explanation either before the Assessing Officer or before the ld. CIT(Appeals) and therefore, he has avoided to attend before the lower authorities. Now, the ld. Counsel for the assessee is requesting to remit the matter back to the ld. CIT(Appeals), which appears to be not fair, just and proper. Once the assessee obtained loans in cash exceeding ₹ 20,000/- and repaid it in cash, if this factual position is correct, the only option for the assessee is to explain the reasons under what circumstances the assessee has obtained the loans and repaid the loans in cash as prescribed under sections 269SS and 269T. Other materials and arguments of the assessee are irrelevant and immaterial in the context of the present case. In this case, the assessee has not explained under what circumstances he has borrowed loans in cash and repaid in cash either before the Assessing Officer or before the ld. CIT(Appeals). Even before us, no explanation was given. Under these facts and circumstances, we are of the opinion that this is a fit case to impose penalty - Decided against assessee. Issues Involved:1. Violation of Section 269SS of the Income Tax Act, 1961.2. Violation of Section 269T of the Income Tax Act, 1961.3. Imposition of penalties under Sections 271D and 271E of the Income Tax Act, 1961.4. Adequacy of opportunities given to the assessee to explain the violations.5. Applicability of reasonable cause for accepting and repaying loans in cash.Issue-wise Detailed Analysis:1. Violation of Section 269SS of the Income Tax Act, 1961:The assessee was found to have accepted cash loans exceeding Rs. 20,000 in multiple instances across different assessment years. The transactions were discovered during a survey under section 133A conducted in the business premises of a money lender. The assessee did not dispute the acceptance of these loans in cash, nor did he provide any explanation for such transactions. The Commissioner of Income Tax (Appeals) confirmed the violation of Section 269SS, which mandates that loans above Rs. 20,000 must be accepted through an account payee cheque or bank draft.2. Violation of Section 269T of the Income Tax Act, 1961:Similar to the violation of Section 269SS, the assessee was also found to have repaid loans in cash exceeding Rs. 20,000. The details of these transactions were not contested by the assessee. The Commissioner of Income Tax (Appeals) confirmed the violation of Section 269T, which requires that repayment of loans above Rs. 20,000 must be made through an account payee cheque or bank draft.3. Imposition of Penalties under Sections 271D and 271E of the Income Tax Act, 1961:The Assessing Officer imposed penalties under Sections 271D and 271E for the violations of Sections 269SS and 269T, respectively. The penalties were confirmed by the Commissioner of Income Tax (Appeals) as the assessee did not provide any reasonable cause for accepting and repaying loans in cash. The Tribunal also upheld these penalties, emphasizing that the assessee failed to utilize the multiple opportunities given to explain his case.4. Adequacy of Opportunities Given to the Assessee to Explain the Violations:The assessee was given several opportunities by both the Assessing Officer and the Commissioner of Income Tax (Appeals) to explain the reasons for accepting and repaying loans in cash. Despite multiple notices and adjournments, the assessee did not provide any substantial explanation or evidence. The Tribunal noted that the assessee's repeated failure to attend hearings and provide explanations indicated a deliberate avoidance of compliance.5. Applicability of Reasonable Cause for Accepting and Repaying Loans in Cash:The assessee argued that the transactions were genuine and that the lender insisted on cash transactions. However, this argument was not substantiated with any evidence. The Tribunal referenced the case of P. Baskar v. CIT, where it was held that mere statements without material evidence do not constitute a reasonable cause. The Tribunal also noted that even genuine transactions must comply with Sections 269SS and 269T, and the assessee did not demonstrate any business exigency or reasonable cause for the cash transactions.Conclusion:The Tribunal dismissed all the appeals filed by the assessee, confirming the penalties imposed under Sections 271D and 271E for violations of Sections 269SS and 269T. The Tribunal emphasized the importance of compliance with the provisions of the Income Tax Act and the need for substantial evidence to justify any deviations. The judgement highlights that repeated failure to provide explanations and attend hearings will not be condoned, and penalties will be upheld in the absence of reasonable cause.