TaxTMI 
TaxTMI 
2014 (8) TMI 603
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....Tax Appellate Tribunal was right in upholding the order of CIT(A) who had deleted the penalty of Rs. 35,33,242/- levied under Section 271D? 2. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in deleting the penalty especially when the cash loans amounting to Rs. 35 lakhs was received by the assessee from the Creditors where the banking facilities are available and no reasonable cause for taking the loans in cash or any exceptional circumstances had been stated by the assessee? 3. Whether the genuineness of a loan is not a reasonable cause postulated under Section 271D and therefore levy of penalty under Section 271 D is proper especially in the places where the creditors resided there....
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....re the Commissioner of Income Tax (Appeals). 3. The Commissioner of Income Tax (Appeals) accepted the contention of the assessee that the penalty proceedings was not sustained on the ground of limitation and also on merits and allowed the appeal filed by the assessee holding as follows: "Over and above, the legal position as mentioned above, the AR of the appellant submitted confirmation letters from all the loan creditors and also ledger abstract from the books of the accounts for sundry loans received during the year under consideration. The appellant has borrowed loans to the extent of Rs. 35,30,978/- as on 31.3.2006 relating to the previous assessment year and during the year has taken cash loans to the tune of Rs. 35,35,242/-. All th....
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....ppeal, (wrongly stated as appeal dismissed). In so far as the limitation is concerned, the Tribunal held as follows: "12. Taking cue from the Hon'ble Special Bench decision, we also have no hesitation to hold that in the present case as well, the ACIT/A.O. had no jurisdiction to issue notice of penalty under sec.271D read with sec.274 of the Act. Further, the competent authority issued notice on 9.6.2010 followed by penalty order dated 31.12.2010 which is valid in the eyes of law since it was passed within six months from the end of month in which the penalty action was initiated. Hence, on limitation aspect only, we are of the view that the CIT(Appeals) has wrongly held the penalty imposed under sec.271D of the Act as barred by limita....
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....t coupled with creditors' confirmation letters who stated in unequivocal terms that they had lent the money to the assessee without interest in cash in view of absence of banking facility in the concerned locality. In our considered opinion, the assessee has successfully discharged onus in leading above cogent evidence. It is not the case of the Revenue that the amount received by the assessee per creditor in any case exceeds Rs. 20,000/- which could endoubt the credibility of the assessee's version. Admittedly in assessment proceedings, neither there is any addition made by Assessing Officer, nor there is any iota of any act on assessee's part concealment. Accordingly, we do not find any reason to interfere with CIT(Appeals)....
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....SS because, as the assessee in this case has satisfied the test of reasonable cause as required under Section 273B of the Income Tax Act. 9. The above view was fortified by the decision of the Apex Court reported in (2002) 255 ITR 258 (Assistant Director of Inspection (investigation) V. Kum.A.B.Shanthi), wherein it was held it is important to note that another provision, namely section 273B was also incorporated which provides that notwithstanding anything contained in the provisions of section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause for such failure and if the assessee proves that there was reasona....