2014 (1) TMI 712

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....23.12.2009. 3. By a notice dated 23.6.2010 the Joint Commissioner of Income Tax called upon the appellant to furnish extract of the ledger account of six creditors in whose names amount was due and payable. It was indicated that the appellant had accepted loan exceeding the limits specified under S.269SS from six creditors during the financial year 2006-2007 for the relevant assessment year 2007-2008. Appellant submitted his explanation. However, penalty was imposed under S. 271D equal to the loan amount taken amounting to Rs.29,47,500/-. The appellant preferred an appeal before the Commissioner of Income Tax (Appeals). It is found that the levy of penalty under S.271D was not justified. The revenue preferred a further appeal before the In....

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....eal? (iii) Is not the order of the Appellate Tribunal Annexure -G arbitrary and illegal and liable to be set aside?". 5. The Tribunal after referring to S. 269SS and S.271D of the Income Tax Act found that after 30th of June, 1984 there is a mandate that no person shall accept or take loan or deposit from any person other than an account payee cheque or account payee bank draft, if such loan or deposit exceeds Rs. 20,000/-. The constitutional validity of the said provision was upheld by the Madras High Court. It was further indicated in K.R.M.V.Ponnuswamy Nadar Sons v. Union of India (1992) 196 ITR 431 (Mad)) that the assessee will have to show that there was a reasonable cause for failure to receive or accept loan or deposit by way of ac....

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....onable cause in the present case is not forthcoming is the finding of the Tribunal. It is contended by learned counsel appearing for the appellant that since the appellant had to put up an industrial unit and he was not in a position to get loan from the bank he had to collect cash from various agriculturists, who are residing in the State of Tamil Nadu and since it is found that the transactions were genuine and bona fide, there was no reason to impose penalty on the petitioner. As rightly observed by the Tribunal setting up an industry/business is a long process and it is for the assessee to demonstrate with sufficient material that he required cash urgently to meet his requirements. It was open for him to prove that he had applied for lo....