TaxTMI 
TaxTMI 
2002 (2) TMI 358
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....6 at Rs. 9,410 after making an addition of Rs. 5,000. 3. During the course of scrutiny, the Assessing Officer found that the assessee had received advances from the following parties: (1) Shri Bhagwan Namdeo Rs. 1,30,000 (2) Shri Maruti Kishan Rao Rs. 61,000 (3) Shri Chimanji Sambaji Rs. 25,000 (4) Shri Chandrakant Shankar Rao Joshi Rs. 1,20,000 The account of the party showed that the amounts were taken on different dates and repaid also on different dates. Since the amounts were received and paid in cash, i.e. otherwise than by way of crossed cheque or demand draft, penalty proceedings under sections 271D and 271E were initiated and referred to the Dy. CIT, Range-3, Aurangabad. 4. It was submitted before the Dy. CIT that the amounts received from the parties were only for the purpose of safe custody and these amounts were nei....
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....in that behalf also was to be rejected. According to the Assessing Officer, the provisions are to be strictly followed and to be implemented. On actual consideration of the transactions, however, the DCIT imposed penalty of Rs. 3,06,000 under section 271D of the Act. On similar grounds, he imposed a penalty of Rs. 2,91,000 under section 271 E for alleged default under section 269T. 6. The assessee appealed to the ld. CIT(A) and made the following submissions: (1) The assessee's business comprised of dealings in agricultural produce and therefore, it was required to render certain services to its constituents mostly farmers and such services also included keeping in safe custody money occasionally kept by the constituents with the assessee firm. This kind of service was necessary because the constituents who were agriculturists resided in remote villages and visited the place where the assessee was carrying on the business for purchase of seeds, pesticides, fertilizers etc. and considering the risk involving carrying cash physically, they sometimes kept certain sums with the assessee firm. (2) The amounts in question were never accepted by way of loans or deposits, but were....
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....-2-1990 wherein the CBDT had clarified that where a Kacha Arhatiya sells goods belonging to an agriculturist, the sale proceeds thereof which remain with him cannot be regarded as a deposit made by the agriculturist with the Kacha Arhatiya and further, where the Kacha Arhatiya remits only a part of the sale proceeds to the agriculturist, the unremitted part of the sale proceeds would also not assume the character of a deposit. Therefore, the repayment of such sale proceeds does not fall within the purview of section 269T. According to the assessee, it was under a bona fide belief that a Kacha Arhatiya could keep money of the constituents in safe custody in the aforesaid circumstances. Such a bona fide belief was considered by the Amritsar Bench of the Tribunal as a reasonable cause. Further reliance was also placed on the decision of the Mumbai Bench in the case of Dr. Deepak Muchala v. ITO [1997] 58 TTJ (Bom.) 524 where it was held that in case of genuine transactions, even if there was an infraction of law resulting from ignorance of law which did not prejudice the interests of Revenue, the default was only a technical or venial infraction and could be excused in view of the deci....
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....der of the CIT(A) holding that there was a reasonable cause in the assessee's case, inasmuch as the assessee was under a bona fide belief that its case was covered by the Circular No. 556 dated 23-2-1990. According to the learned counsel, the said Circular does give an impression that a Kacha Arhatia keeping the amounts of his constituents would not be hit by the provisions of section 269SS or 269T. Though technically speaking one could say that the said Circular did not apply, the fact that a person from a small place earning a very small income could reasonably be considered to hold a bona fide belief that the concerned provisions did not apply. He therefore submitted that the CIT(A) is justified in deleting the impugned penalties. In support of his contentions, he relied upon the following authorities (i) Harpal Singh Jaswant Singh's case (ii) Dr. Deepak Muchala's case; (iii) Hindustan Steel Ltd.'s case; (iv) CIT v. Eetachi Agencies [2001] 248 ITR 525 (Bom.) (v) Dy. CIT v. Dhanji R. Zalte [2001] 78 ITD 397 (Pune). 10. I have considered the rival submissions and perused the facts on record. After taking into consideration the facts and circumstances of the case,....