TaxTMI 
TaxTMI 
TaxTMI 
2008 (2) TMI 494
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....essee is from Srikakulam Town, therefore, the assessee could have been repaid the deposits by way of cheque as per the provisions of section 269T. 3. The assessee went in appeal before the CIT(A), before the CIT(A) it was contended that all the deposit holders are from the rural areas and some of them were residing in the outskirts of Srikakulam Town who do not have any bank accounts and they happen to be with agricultural background. These deposit holders do not have any banking facilities, therefore, insisted for the repayment in cash, the assessee was compelled to return the said deposits in cash. The assessee being new in the business, in order to gain confidence from the deposit holders he paid the deposits without the knowledge of penalty provisions of the Income-tax Act. Thus the assessee has committed a bona fide mistake in returning deposits in cash; there was no intention to violate the provisions of the Act. 4. The CIT(A) on this issue deleted the penalty imposed. 5. Before us the learned DR submitted that there was no reasonable cause for the assessee for making payment of these deposits in cash. The parties are putting nearby Srikakulam, as per the provision of sect....
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.... of Rs. 11,30,934 where he found that the repayment of deposit related to the depositors putting up in remote area. The assessee is a Finance and Leasing Public Limited Company, and, therefore, it is duty bound to abide by the provisions of the Income-tax Act. We, therefore, set aside the order of the CIT(A) and restore the order of the Assessing Officer imposing penalty on the assessee in respect of cash repayment of the deposit for a sum of Rs. 3,80,000. Penalty is deterrent so that a person may abide by the Law of the country. 9. In the result, the appeal of the revenue is allowed. CO No. 12/Vizag/2004 10. We have considered the rival submissions, perused the material on record. 11. Ground Nos. 1 and 4 are general in nature and does not require any adjudication. 12. Ground No. 2 the objection raised by the assessee were merely to support the order of the CIT(A). We have already reversed the finding of the CIT(A). The assessee was not prevented by reasonable cause for repaying the loans and deposits in cash as held by us in ITA No. 3/Vizag/2002 hereinabove therefore, we dismiss the cross objection No. 2. 13. The ground No. 3 in the cross objection the assessee has taken the....
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.... the learned CIT(A) allowed the appeal of the assessee while cancelling the penalty levied by the Assessing Officer. 6. The revenue is in appeal before us. 7. The learned Sr. DR submitted before the Hon'ble Bench that the assessee during the assessment year 1997-98 has accepted deposits and repaid the deposits Rs. 15,10,934 violating the provisions of sections 269SS and 269T. The Assessing Officer while issuing the penalty proceeding has considered the facts on record circumstances and reasonable cause while arriving at penalty for Rs. 3.8 lakhs and, therefore, the penalty may please be sustained. 7.1 The learned Sr. counsel of the assessee submitted before us and brought to our notice the order of learned Bench of the Tribunal in ITA No. 18/V/02 wherein the appeal of the revenue was dismissed relates to the acceptance of deposits under section 269SS and thereby penalty under section 271D in the case of assessee and further submitted that this is the first year of the assessee and assessee was not having a complete knowledge of the various law, the transactions of accepting the deposits and payments were not doubted by the revenue during the regular assessment and no addition wa....
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....tion 273D confirm discretion on authorities to levy or not to levy the penalty". Transactions in question where bona fide made in the course of the business penalty cancelled. The views get support from the order of jurisdictional High Court in ITO v. Lakshmi Enterprises [1990] 185 ITR 595 (AP). 12. In the result, we dismiss the appeal of the revenue while allowing the appeal of the assessee. 13. Since the appeal of the revenue is dismissed, the CO filed by the assessee on the same ground supporting the order of learned CIT(A), the CO is allowed. REFERENCE UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 In the Income Tax Appeal No. 3/Vizag/2002, for the assessment year 1997-98, in the case of Asstt. CIT v. Vinman Finance & Leasing Ltd., Srikakulam, the Accountant Member has proposed the order, which was placed before the ld. Judicial Member and the ld. Judicial Member has dissented the same, by passing a separate order. Both the orders are placed before your Honour. Your Honour is requested to refer the following questions of difference to the Third Member: QUESTIONS OF DIFFERENCE (1) Whether the cancellation of the penalty imposed under section 271E is justified by the CIT(....
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....cord. The assessee, as the name suggests, is a finance and leasing company established during the previous year relevant to the assessment year 1994-95. The company accepted certain deposits in cash and also repaid certain amounts in cash in excess of Rs. 20,000 in contravention of the provisions of sections 269T and 269SS of the Act. The assessee declared income of Rs. 55,740 for the assessment year 1997-98 and the assessment was completed on 24-3-2000. In the 'Note not to the assessee' the Assessing Officer observed that there were certain deposits which were accepted in cash in contravention of provisions of section 269SS of the Act. Similarly, repayments were also made in cash contravening the provisions of section 269T of the Act. This information having been passed on to the Additional Commissioner of Income-tax, Visakhapatnam, penalty proceedings were initiated by the ACIT, Visakhapatnam, and a show cause notice was issued to the assessee on 1-5-2000 fixing the date of hearing on 15-5-2000 calling upon the assessee-company to show cause as to why penalty under section 271E of the Act should not be levied for contravention of the provisions of section 269T of the Act referabl....
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....Sujatha 1,00,000 2. V. Kanthamma 1,00,000 3. C.D. Gupta 30,000 4. K. Swamy Setty 1,50,000 ----------------------------------------------------- The Assessing Officer observed that the very contention of the assessee with regard to non-availability of banking facility would highlight that the assessee was conscious of the provisions of the Act, but did not follow due to circumstances best known to it. Further, all the Directors of the company are well-educated and having taken up a big venture they ought to have been aware of the provisions of the Income-tax Act. He thus concluded that ignorance of law cannot be considered as a reasonable cause in the above circumstances. He accordingly levied penalty of Rs. 3,80,000 on the ground that the....
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.... was no banking facility and, therefore, she insisted upon repayment in cash. Similarly, Smt. V. Kanthamma and Shri C.D. Gupta were residing in a village, but for practical convenience town address was mentioned while making the deposit. Since they were residing in village, repayment by cash was insisted upon and accordingly amounts were received in cash. In the case of Shri K. Swamy Setty, confirmation letter was filed stating that he suddenly suffered heart-attack in his native place and on account of urgency his family members requested telephonically for repayment of the money by cash. The learned counsel submitted that these factors were not properly appreciated by the learned Accountant Member, whereas, learned Judicial Member, while concluding that the depositors are from villages and have no banking facility and the repayments in cash were on account of a reasonable cause, appreciated the facts in a correct perspective and hence the order of the learned Judicial Member deserves to be upheld. In support of his contention that if the transactions are genuine and payments were made on account of insistence of the parties - coupled with the fact that the innocent mistake of pay....
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....erations of business expediency and other relevant factors are not excluded. Genuine and bona fide transactions are not taken out of the sweep of the section. It is open to the assessee to furnish to the satisfaction of the Assessing Officer the circumstances under which the payment in the manner prescribed in section 40A(3) was not practicable or would have caused genuine difficulty to the payee." In the light of the principle laid down by the Apex Court supra, merely because the transaction is genuine, it cannot be taken out of the sweep of section 269T/271E of the Act. 11. However, the fact remains that the depositors have stated before the Assessing Officer that they insisted upon cash payment due to certain compelling circumstances and they have also explained as to the reasons for giving a separate address for the purpose of making a deposit though three out of the four were actually residing in a village where there were no banking facilities. The statement of the parties and the explanation of the assessee with regard to the compelling circumstances for making payment in cash was not found to be false. In other words, there is no evidence on the record of the Assessing Of....
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....ver a hundred and thirty years ago, Maula J. pointed out in Martindale v. Falkner [1846] 2CB 706: "There is no presumption in this country that every person knows the law: it would be contrary to common sense and reason if it were so." Scrutton L.J. also once said: "It is impossible to know all the statutory laws, and not very possible to know all the common laws." But it was Lord Atkin who, as in so many other spheres, put the point in its proper context when he said in Evans v. Bartlam [1937] AC 473: "...the fact is that there is not and never has been a presumption that every one knows the law. There is the rule that ignorance of the law does not excuse, a maxim of very different scope and application." It is, therefore, not possible to presume, in the absence of any material placed before the Court, that the appellant had full knowledge of its right to exemption so as to warrant an inference that the appellant waived such right by addressing the letter dated 25-6-1970". (ii) WTO v. S.P. Jayakumar [1983] 3 ITD 221 (Mad.) "That the tax laws of this country are complex and complicated and often require for compliance, therewith the assistance of tax practitioners specializing in....