2000 (5) TMI 175

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....r the assessment year 1990-91, it was found by the Assessing Officer that assessee-company has accepted deposits/loans in cash from the following persons:-- ------------------------------------------------------------------------------   (1) Smt. Laxmi Devi                             Rs. 1,01,750   (2) Sh. Ravindra Kumar                          Rs.   51,450   (3) Sh. Sunil Kumar Agarwal          &nbsp....

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.... Alwar did not accept the assessee's explanation and held that the assessee has violated the provisions of section 269SS and, therefore, he imposed the penalty amounting to Rs. 1,94,200 under section 271D vide order dated 16-3-1993. 4. On first appeal, the ld. CIT(A) has deleted the penalty in respect of first two deposits in the names of Smt. Laxmi Devi and Shri Ravindra Kumar amounting to Rs. 1,01,750 and Rs. 51,450 respectively. However, he confirmed the penalty in respect of third deposit of Rs. 4 1,000 in the name of Shri Sunil Kumar Agarwal. The assessee filed appeal against the confirmation of penalty of Rs. 41,000 before the ITAT, Jaipur, which was allowed by the Tribunal vide IT Appeal No. 1332/JP/93 dated 5-12-1994. 5. Now, the ....

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....y considered the rival submissions of the parties. At the out-set, we would like to mention the scope and effect of section 269SS, which was elaborated in the following portion of the Departmental Circular No. 387, dated 6-7-1984 as under:-- "32.1 Prohibition against taking or accepting certain loans and deposits in cash.--Unaccounted cash found in the course of searches carried out by the Income-tax 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, and taxpayers are also able to get confirmatory letters from such persons in support of their explanation. 32.2 With a view to cou....