TaxTMI 
TaxTMI 
2003 (3) TMI 323
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....; Rs. 61,651 All by cash the assessee (3) Sou. Pramila S. Kasliwal w/o Rs. 41,500 the assessee (4) Sou. Chandralekha R. Khivansara Rs. 50,000 (5) Sou. Zankarbai Khivansara Rs. 50,000 (6) Sunil M. Kasliwal (HUF) Rs. 2,78,000 -------------- &nbs....
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....of Hon'ble IT AT, Cochin Bench, in the case of Muthoot M. George Bankeras v. Asstt. CIT [1993] 46 ITD 10. Accordingly, the transactions relating to the acceptance of cash amounting to Rs. 5,44,150 have to be examined in this context. On going through the assessment order passed by Assessing Officer vide his order under section 143(3) dated 24-8-1992, it is observed that except for the cash gift of Rs. 41,500. No other amount, involved in the cash transaction, has been treated as unexplained. As per the assessment order, following two transactions involving receipt of gifts in the names of Kum. Anuja and Smt. Pramila Sunil Kasliwal, have been treated as unexplained and added to the income of the appellant. Particulars of these gifts are as under: "Date Particulars of gifts 26-1-1989 Gift of Rs. 20,500 in the name of Kum. Anuja, given by Shri Mohanlal Kishrilal Ut....
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....visions must be reasonably construed having regard to the object of section 269SS. The object was explained by the CBDT in their Circular No. 387 dated 6-7-1984 and the learned counsel read the first para of the said circular which is as follows: "Unaccounted cash found in the course of searches carried out by the Income-tax Department is often explained by the tax payers as representing loans taken from various persons. Unaccounted income is also brought into the books of account in the form of such loans, and tax payers are also able to get confirmatory letters from such persons in support of their explanations." Relying upon the above circular, the learned counsel submitted that it is very clear that only if some unaccounted money was involved then the section becomes applicable and in the case of the assessee, there is no dispute whatsoever about the source of money. In such a case, therefore, it will be highly technical to hold that there is any default as contemplated under section 271D. In this regard, he placed reliance on the judgment of the Supreme Court in the case of Hindustan Steel Ltd v. State of Orissa [1972] 83 ITR 26 where it has been held that penalty is not....
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....ncealment of income. At the most, it was a case of negligence, but a negligent person does not have any intention or mens rea to purposely violate any provision of law so as to be visited with stringent punishment of heavy penalty. In the case before us, admittedly, there is no attempt for introducing unaccounted income by the assessee in the form of loans and deposits. In the case of Muthoot M. George Bankers, the Cochin Bench of the Tribunal, has relying upon the aforesaid circular of the CBDT, held that provisions of section 269SS are not applicable on deposits or loans from different firms being sister concerns. In the case of the assessee, he has accepted deposits from his family members who were living under the same roof and the cash was already available under the same roof and it would be too much to expect that the assessee should first go to the bank and buy some demand drafts by paying bank commission and then advance such deposits. In any case, that is not the intention of the Legislature. In CIT v. J.H. Gotla [1985] 156 ITR 323, the Hon'ble Supreme Court has held that where the plain literal interpretation of a statutory provision produces a manifestly unjust resu....
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....rsuance of resolution passed, two directors of the assessee company brought in cash by withdrawing the same from their partnership firm as share application for additional shares in order to increase its paid-up share capital. Later, it decided against increase in capital and repaid them in cash. The assessee claimed that on all occasions when subscribers were due on prized chits and it was short of requisite liquid funds, its directors brought in cash after withdrawing from their partnership firms to tide over temporary financial needs and relevant amount was later repaid in cash. This exercise was repeated every month and accordingly, the Assessing Officer treated it as in the nature of loan or deposit and imposed penalty under section 271D. Except saying that to tide over temporary financial need, no reasonable cause was proved before the authorities below and accordingly, the Delhi Bench upheld the levy of penalty. In the case before us, there was a reasonable cause as elaborated by us in the above paras and accordingly, the facts are distinguishable. 11. As regards the reliance placed by the ld. D.R. on the judgment of the Patna Bench in the case of ITO v. Narsing Ram Ashok....
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....ection 269SS. (i) Ankush S. Kasliwal (Minor) son of Rs. 63,000 the assessee (ii) Anuja S. Kasliwal (Minor) d/o Rs. 61,651 All by cash the assessee (iii) Sou. Pramila S. Kasliwal w/o Rs. 41,500 the assessee (iv) Sou. Chandralekha R. Khinvasara Rs. 50,000 (v) Sou. Zankarbai Khinvasara Rs. 50,000 (vi) Sunil M. Kasliwal (HUF) Rs. 2,78,000 &....
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....o other amounts. 18. The revenue is in appeal against the deletion of penalty order passed by the learned CIT(A) and it was pleaded that section 269SS makes a mention about acceptance about taking or accepting of any loan or deposit otherwise than by account payee cheque or account payee bank draft by a person from the other persons and therefore, the HUF and the individual are separate legal entities under the taxation laws as such relief allowed by the learned CIT(A) should not be allowed. Reliance was placed on the decisions in Bhushan Chemicals's case, Prabhavshali Chit Fund Co. (P.) Ltd.'s case, Narsingh Ram Ashok Kumar's case to plead for restoration of the order of the Assessing Officer as even the loan or deposit was taken or accepted from the sister concern are also hit by the provisions of section 269SS and violation thereof makes the assessee liable for penalty which has been rightly imposed. Therefore, it was strongly pleaded that the action of learned CIT(A) is unjustified in deleting the same. It was urged for restoring the order of the Assessing Officer. 19. The learned counsel for the assessee while highlighting the objects for introduction of the ....
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....s that of the assessee in order to take these amounts out of the purview of penalty under section 271D of the Act, for violation of section 269SS as their case is distinct and different than that of the sister concern. Therefore, while accepting the appeal of the revenue partly, I set aside the order of the learned CIT(A) with respect to penalty of Rs. 2,24,650 relatable to transactions with relatives of the assessee and restore the order of the Assessing Officer in this regard, as a consequence whereof, the penalty levied by the Assessing Officer is restored to the extent bf Rs. 2,24,650 while order of deletion of penalty to the extent of Rs. 2,78,000 by the learned CIT(A) gets confirmed. Therefore, while accepting the appeal of the revenue partly, I restrict the penalty of Rs. 2,24,650 imposed by the Assessing Officer. My above view is supported by Pune Bench decision in the case of ITO v. Mrs. Shantabai Tukaram Gaikwad [I.T. Appeal No. 949 (Pune) of 1998 for assessment year 1993-94 dated 30-8-2001]. 21. As a result, the appeal of the revenue gets partly accepted. ORDER UNDER SECTION 255(4) OF THE INCOME-TAX ACT, 1961 Per B.L. Chhibber, Accountant Member- As there is a d....
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....sp; (wife of the assessee) (Rs. 41,500 minus Rs. 21,000) (4) Smt. Chandralekha R. Khivansara Rs. 50,000 (5) Smt. Zankarbai Khivansara Rs. 50,000 ---------------- Rs. 2,24,650 &n....
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.... in the case of Chamundi Granites (P.) Ltd. v. Dy. CIT [2002] 255 ITR 2583 has held that the object of introducing section 269SS was to ensure that taxpayer is not allowed to give false explanation for his unaccounted money, or if he makes some false entries, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relatives or friends and it is easy for the so-called lender also to manipulate his records to suit the plea of the taxpayer. The main object of section 269SS was to curb this menace of making false entries in the account books and later giving an explanation for the same. 8. From the scrutiny of the records it revealed that penalty was also maintained in respect of the loans taken by the assessee from his family members as under:- (1) Ankush S. Kasliwal, minor son Rs. 63,000 (2) Anuja S. Kasliwal, minor daughter Rs. 41,1....
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....ssue. As such, I do not make any comment on this aspect. It is trite law that de hors reasonable cause assessee cannot be exonerated from the rigour of penalty. It must be demonstrated beyond the shadow of doubt that the cash loans were accepted under extraordinary circumstances. It was stated that there was no sufficient cash balance to pay for the machinery. Both these ladies were income-tax payees. Both of them did not have any bank accounts. The amounts borrowed from them were required for purchase of the machinery. The cash was collected from these ladies on 15-8-1989. Due to the ill health of the assessee, the purchase could be effected only 5-9-1989. For delay caused due to the illness, the assessee had to pay extra money to the seller. The assessee enclosed certificate dated 1-11-1993 from Jain Engineering Company to the effect that the deal for the purchase of machinery by the assessee at Rs. 1,25,000 was cancelled due to the assessee's non-attendance on 16-8-1989. Two assessment orders in respect of these two ladies were also submitted before the Assessing Officer. It transpired from the perusal of the said assessment orders that the returns were filed on 30-11-1990, ....
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....h proposition of law. There is no ambiguity in the language of the provision. As such, there is no need to apply the purposive theory of interpretation. Subject to the existence of mitigating circumstances penalty cannot be deleted. The assessee must prove beyond the shadow of doubt that there existed a reasonable cause for not complying with the conditions contained in section 269SS. Circumstances under which the cash was accepted must be explained. Unfortunately, no cogent material was produced in that direction. The exigency was stated to be the requirement of machine. How urgent that requirement was not known. The machine was not purchased soon after taking the loan. This indicates that the assessee could have complied with the requirements of section 269SS of the Act, without much difficulty. It is the duty of every citizen to respect law. Majesty of law is to be maintained. 15. Taking into consideration the entire conspectus of the case, I am of the opinion that there existed no reasonable cause for accepting the loan of Rs. 1,00,000 i.e., Rs. 50,000 each from Smt. Chandralekha R. Khivansara and Smt. Zankarbai Khivansara. Penalty can therefore be maintained protanto. I, th....