TaxTMI 
TaxTMI 
2000 (6) TMI 157
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....sp; (Amt. in Rs.) -------------------------------------------------------------------------- Sr. Name Loan taken Re-paid No. -------------------------------------------------------------------------- Date Amount Date Amount -------------------------------------------------------------------------- 1. Shri Ganesh 8-7-1991 20,000 ....
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....nbsp; 15-10-1991 10,000 12-12-1991 7,000 20-1-1992 10,000 27-12-1991 2,000 24-03-1992 10,000 ---------- ---------  ....
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.....L. Rs. 20,000 & S.L. Rs. 29,000), and the amount as shown in the notice is not correct. (ii) that both the that both the depositors are farmers and they are residing in a village and they came to the assessee in evening time after bank hours as they were in need of money as such the assessee has repaid Rs. 49,000 to them in cash. Considering the sudden need of money, it is requested to drop the penalty proceedings." The DCIT was not satisfied with the explanation of the assessee and accordingly, the penalty was held to be leviable under both the sections by observing (1) that there was no dispute that assessee had accepted the loan/deposit in cash and also repaid the same in cash, (2) that every person is obliged to act not only in accordance with the law of land, but also in such manner that no provisions of law are violated, (3) when the lenders had no Bank A/c., the assessee itself would have taken due care and efforts to ensure that Account Payee Drafts were got prepared, (4) the assessee has failed to substantiate the business exigency for accepting/paying the amounts in cash. Accordingly, the penalty of Rs. 82,000 each was levied under sections 271D and 271E. 3. The matt....
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....ated anywhere. Accordingly, she confirmed the penalty under section 271D. However, she deleted the penalty levied under section 271E by holding that re-payment was against loans and therefore, there was no contravention under section 269T. Aggrieved by the aforesaid order, both the parties are in appeal before the Tribunal. 4. The Ld. counsel for the assessee has reiterated the submissions before us which were taken before the CIT(A) and therefore, need not be repeated. However, he has drawn our attention to the extracts from the cash book to point out that all the loans were taken when there was urgent business need for making the payment to M/s. Nagpur Distillery. The assessee had to approach the lenders as it was short of funds and since the lenders were agriculturists having no Bank A/c., the loans had to be taken in cash. On the other hand, the ld. D.R. has relied on the reasonings given by the Assessing Officer. 5. Rival submissions have been considered carefully. As far as penalty under section 271E is concerned, we do not find any merit in the appeal of the Revenue. The penalty under section 271E can be levied if a person re-pays any deposit referred to in section 269T ot....
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.... for the purpose of ascertaining the object which the Legislature had in view in using the words in question." In our opinion, the language of section 269SS is unambiguous and therefore, the genuine transaction cannot be taken out of the ambit of this section. Accordingly, this contention of assessee is rejected. 6.1 It would be useful to refer to the provisions of Section 40A(3) which were also brought on statute to counter the evasion of tax. This sub-section provided that assessee would not make any payment exceeding the prescribed amount otherwise than by way of crossed cheque or draft and in case of failure, it was provided that such expenditure would be disallowable. This provision was considered by Supreme Court in the case of Attar Singh Gurmukh Singh v. ITO [1991] 191 ITR 667, wherein it was held that genuine and bona fide transactions are not taken out of the sweep of the section though it, was open to the assessee to furnish to the satisfaction of the Assessing Officer the circumstances under which the payment in the prescribed manner was not practicable or would have caused genuine difficulty to the payee. In our opinion, the similar logic can be applied while interpr....
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....he transport expenses were also paid to the extent of Rs. 2,490. This clearly shows that Drafts were purchased for securing the consignment. Therefore, finding of the CIT(A) in this regard is vacated. We have also gone through the extract of cash book dated 15-10-1991 where the assessee had to make the payment of Rs. 88,000 by Demand Draft. Since the assessee was short of funds, it had to raise the loans and deposit the same in Sangli Urban Co-op. Bank, Parbhani, so that the Draft for the sum of Rs. 88,000 could be purchased. However, we find that there was no urgency for raising the loan of Rs. 8,000 from Shri Ganesh on 27-12-1991 as is apparent from the Extract of Cash book that there was enough cash balance at the beginning of the day as well as at the end of the day. After considering the relevant extract of cash books, we find that there were business exigencies for raising loans on various dates except the sum of Rs. 8,000 from Shri Ganesh as mentioned above. We have also gone through the affidavits of the creditors and find that these two creditors are agriculturists and residents of Pimpalgaon Hajam, Distt. Parbhani. Such persons do not have any Bank account which did compe....