1995 (3) TMI 186 - AT - Income Tax

Tribunal confirms penalty for cash loan violation, rejects justifications. No reasonable cause found.

The Tribunal upheld the penalty imposed under section 271D for violating section 269SS, rejecting the assessee's justifications for the cash loans. It ... Assessing Officer, Assessment Proceedings, Penalty Proceedings, Reasonable Cause Issues Involved:1. Penalty u/s 271D for violation of section 269SS.2. Validity of penalty proceedings concerning the limitation period u/s 275(1)(c).3. Application of section 273B regarding reasonable cause.4. Non-speaking nature of the penalty order and alleged non-application of mind by the Dy. Commissioner.Summary:1. Penalty u/s 271D for violation of section 269SS:The assessee was penalized Rs. 1,35,500 for obtaining loans in cash exceeding the limit prescribed u/s 269SS. The Dy. Commissioner initiated penalty proceedings and rejected the assessee's contentions that the amounts were received in the course of current account flow, due to geographical constraints, and in situations of urgency.2. Validity of penalty proceedings concerning the limitation period u/s 275(1)(c):The assessee argued that the penalty proceedings were void ab initio due to the implicit bar of limitation provided by section 275(1)(c). The CIT(A) examined the office records and concluded that the penalty proceedings were initiated on 20-11-1991, not on 30-9-1991 as claimed by the assessee. The Tribunal upheld this finding, noting that the official records corroborated the initiation date of 20-11-1991, and thus, the penalty order was within the prescribed period.3. Application of section 273B regarding reasonable cause:The assessee contended that the Dy. Commissioner failed to consider section 273B, which provides for no penalty if there is reasonable cause. The CIT(A) and the Tribunal found that the Dy. Commissioner had examined the facts and circumstances, including the availability of cash and the necessity of the transactions, and concluded that there was no reasonable cause for the cash borrowings.4. Non-speaking nature of the penalty order and alleged non-application of mind by the Dy. Commissioner:The assessee argued that the penalty order was non-speaking and showed non-application of mind. The CIT(A) and the Tribunal found that the Dy. Commissioner had conducted multiple hearings, required further information, and examined the facts before concluding that there was no reasonable cause for the cash borrowings. The Tribunal endorsed the CIT(A)'s finding that there was no non-application of mind by the Dy. Commissioner.Conclusion:The Tribunal dismissed the appeal, holding that there was no legal or factual infirmity in the CIT(A)'s order. The penalty u/s 271D was upheld, and the initiation of penalty proceedings was found to be within the limitation period prescribed by section 275(1)(c). The Tribunal also confirmed that there was no reasonable cause for the cash borrowings and that the penalty order was not vitiated by non-application of mind.