TaxTMI 
TaxTMI 
2001 (5) TMI 158
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....e to the assessee. In reply, the assessee tried to show/establish a reasonable cause by explaining the urgency of funds required to meet the exigencies of payments and also by stating that the genuineness of all the transactions have been accepted by the Department. This plea of the assessee, however, was not accepted by Jt. CIT and he proceeded to impose a penalty under s. 271D holding that the assessee has clearly violated the provisions of s. 269SS without any reasonable cause. The assessee carried this matter before the learned CIT(A), Udaipur, who confirmed the said penalty observing that neither the reasonable cause nor the bona fide belief on the part of the assessee stands established in the facts and circumstances of the case. Aggr....
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....out the provisions of s. 269SS and this was for the first time such mistake was committed by the assessee. He, therefore, contended that the assessee being ignorant of the relevant provisions of the law, the urgent need of funds having been established, the genuineness of the deposits as well as the identity and capacity of the depositors having been accepted by the Department, there was a reasonable cause for accepting the cash deposits in contravention of provisions of s. 269SS and, therefore, the levy/sustenance of penalty under s. 271D was not justified in view of s. 273B. In support he placed reliance on the following decisions: (1) CIT vs. Harsiddh Construction (P) Ltd. (2000) 159 CTR (Guj) 364 : (2000) 244 ITR 417 (Guj) (2) Ban....
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.... provided penalty under s. 271D for a technical and venial default and, therefore, the assessee cannot seek any relief for the reason that the default is of technical or venial nature. He further submitted that the assessee comes from a business family and being an old taxpayer, the assessee should have been aware of the provisions of s. 269SS introduced in the Act in April, 1989, whereas the default has been committed by the assessee in the previous year relevant to the asst. yr. 1994-95. He, therefore, contended that there was no mistaken belief on the part of the assessee and it acted deliberately in defiance of law while accepting the deposits/loans in cash in contravention of the provisions of s. 269SS. 5. In rejoinder, the learned ....
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....enalise the genuine flow of funds for meeting the urgent business necessities. It is observed that the assessee tried to explain the urgent need of funds for construction expenses under exigencies before the authorities below but its plea was brushed aside merely on the basis of assumptions and presumptions without going into further details to ascertain the exact factual position. The learned counsel for the assessee has contended that the year under consideration was the first year of assessee's business operations and at that time the assessee was ignorant about the relevant provisions of the Act. The learned Departmental Representative, on the other hand, has contended that ignorance of law cannot be an excuse. In our opinion, this aspe....