TaxTMI 
TaxTMI 
2015 (4) TMI 920
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....11 (A.Y. 2003-04) : 4. Facts of the case, in brief, are that a search and seizure action u/s.132(1) of the Act was conducted by the Department in the Pawar group of cases, Malegaon on 27-01-2005. The assessee belongs to the above group which is engaged in the business of refining of Gold, Trading in Gold Jewellery, Silver Articles and imitation of jewellery. This group is also engaged in the business of money lending. During the course of search 2 long pads and diaries were found and seized wherein it was seen that the group was collecting loans in cash from various persons in violation of provisions of section 269SS. The AO informed the JCIT, Central Range, Nashik about the acceptance of loan in cash amounting to Rs. 2 lakhs during previous year relevant to the impugned assessment year. The JCIT, therefore, issued a show cause notice to the assessee asking him to explain as to why penalty u/s.271D should not be levied. It was explained by the assessee that the Karta of the HUF Shri Shivaji R. Pawar is educated only upto 4th standard and was ignorant about the provisions of section 269SS. Further, the Karta always resided in rural areas of Kaledhone Village and Malegaon. There w....
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....received from Shri Ravindra cannot be said to be in violation of provisions of section 269SS in view of the decision of Hon'ble Bombay High Court in the case of CIT Vs. Madhukar B. Pawar where it has been held that in view of CBDT Circular No.572 dated 03- 09-1990 penalty u/s.271D can be levied only in a case where the loan or deposit is taken in cash in excess of Rs. 20,000/-. Penalty u/s.271D is not leviable on the assessee for accepting cash loan of Rs. 20,000/- from each person. He accordingly submitted that no penalty u/s.271D can be levied on account of cash loan received from Shri Ravindra amounting to Rs. 20,000/-. 8.1 So far as amount of Rs. 80,000/- received from Shri Balkrishna Nagmoti is concerned he drew the attention of the Bench to pages 71 to 73 of the paper book and submitted that these are the seized papers relating to this assessment year and the name of this person does not appear in the notings of the seized diary. Therefore, he has no objection if the matter is sent back to the file of the AO with a direction to verify the same. If the name of the person does not appear in the seized diary, then the penalty so levied has to be cancelled. 8.2 So far as Rs....
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.... by the Board would be binding on all officers and persons employed in the execution of the Act under s. 5(8) of the Act." Navnit Lal (supra) was followed in Ellerman Lines Ltd. vs. CIT 1972 CTR (SC) 71 : (1971) 82 ITR 913 (SC). In UCO Bank vs. CIT (1999) 154 CTR (SC) 88 : (1999) 237 ITR 889 (SC), the law was restated and it was held that circulars of CBDT are legally binding on the Revenue and this binding character attaches to the circulars even if they be found not in accordance with the correct interpretation of the section and they depart or deviate from such construction, when they are issued in exercise of the statutory powers under s. 119. It was however clarified that the Board cannot pre-empt a judicial interpretation of the scope and ambit of the provision and further could not impose a burden on the taxpayer higher than what the Act itself, on a true interpretation, envisages. It was observed that the Board has the statutory power under s. 119 to tone down the rigour of the law for the benefit of the assessee by issuing circulars to ensure a proper administration of the fiscal statute. In CST vs. Indra Industries (2001) 168 CTR (SC) 50 : (2001) 248 ITR 338 (SC), the Cou....
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....1.04.2003 50000 5 NITA DEVI MALPANI Tuesday 01.04.2003 50000 6 RAMESH PAWAR REKHA PATIL Saturday 26.07.2003 50000 7 RUPALI MALPANI Tuesday 01.04.2003 50000 8 SHIVAJI M.KOTHAWADE Tuesday 06.01.2004 130000 9 S.LPATIL Thursday Tuesday 01.01.2004 13.01.2004 60000 80000 10 SONALI MALPANI Tuesday Thursday 01.04:2003 29.01.2004 50000 70000 Jagganath L. Pawar Thursday Wednesday 26.06.2003 17.12.2003 160000 17000 11 SUJATA BHAMRE Tuesday 16.12.2003 90000 Total 1527000 12.1 The AO, therefore, informed the JCIT about the acceptance of such cash loans in violation of provisions of section 269SS. The JCIT accordingly issued show cause notice to the assessee asking him to explain as to why penalty u/s.271D of the Income Tax Act, 1961 should not be levied. 12.2 On the basis of various submissions made by the assessee, the JCIT noted that the assessee has received an amount of Rs. 50,000/- from S.L. Patil and Rs. 90,000/- from Mrs. Sujata Bhamre which has been added by the AO u/s.68 of the I.T. Act. Similarly, an amoun....
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.... as follows : Shri S.R. Pawar HUF - Rs. 16,000/- M/s. S.R. Pawar (Debtors Diary) - Rs. 18,000/- Accordingly, the entries were made in the books of accounts prepared and accepted by the A.O. in assessment proceedings. The transactions are also reflected in above manner by the lender in her books of account and return filed. Shivaji M. Kothawade 6/1/04 1,30,000 The lender is agriculturist, like the assessee's HUF and is residing at Desherwade Tal. Sakri, Dist. Dhule. No banking facility available in the village. S.L. Patil 1/1/04 13/1/04 60,000 80,000 The A.O. has taxed the amount of Rs. 60,000/- as unexplained cash credit in assessment order passed u/s.143(3) r.w.s. 153C. Further, the amount of Rs. 80,000/- has been received by A/c. Payee Cheque by M/s. R.S. Pawar. This fact of cheque payment is mentioned in seized diary. Therefore the assessee is not concerned with the said loan of Rs. 80,000/- accepted by M/s. R.S. Pawar by A/c. Payee Cheque Sonali Malpani 1/4/03 29/1/04 50,000 70,000 Actually amount of Rs. 50,000/- belongs to Rupali and same is accepted in cheque, appearing in the books of Pawar Jewellers and same is also sho....
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....having no banking facility. Under these circumstances, there was a reasonable cause for accepting the cash loan. Therefore, the same has to be deleted. He however submitted that the issue of having no banking facility in the village of the lender Shri Ramesh D. Pawar can be set-aside to the file of the AO with a direction to verify the same and delete the penalty if the contention of the assessee is found to be correct. As regards the cash loan of Rs. 1,30,000/- taken from Shri Shivaji Kothawade on 06-01-2004 is concerned he submitted that the case of this person is like that of Shri Ramesh D. Pawar who is also not having any banking facility and residing in a remote village. Therefore, this issue also may be restored to the file of the AO for verification. 12.7 So far as amount of Rs. 1,40,000/- taken from Shri S.L. Patil is concerned he submitted that out of the above amount the assessee has received an amount of Rs. 80,000/- by account payee cheque in the name of M/s. R.S. Pawar. This fact of cheque payment is mentioned in the seized diary, therefore, no penalty is leviable. So far as the balance amount of Rs. 60,000/- is concerned he submitted that the amount has already bee....
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....of the submission of the Ld. Counsel for the assessee the amounts are taken from different persons not exceeding Rs. 20,000/- in each case, the same are restored to the file of the AO with a direction to verify from the seized diary and take appropriate decision as per law and facts after giving due opportunity of being heard to the assessee. 14.2 So far as the amount of Rs. 50,000/- received from Shri Ramesh D. Pawar and Rs. 1,30,000/- from Shri Shivaji Kothawade are concerned the same is restored to the file of the AO with a direction to verify the submission of the Ld. Counsel for the assessee that the above persons are agriculturists and have no banking facility at their respective villages. If the same is found to be correct, then in our opinion there exists reasonable cause for accepting such cash loan from the agriculturists having no banking facility and the Assessing Officer is directed to cancel the penalty u/s.271D. 14.3 So far as the amount of Rs. 1,40,000/- received from Shri S.L. Patil is concerned, it is the submission of the Ld. Counsel for the assessee that he has received an amount of Rs. 80,000/- by account payee cheque from Shri S.L. Patil and the loan of Rs.....
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....hart giving the details of deposits/loans accepted by Shivaji R. Pawar (HUF) : Name of the Depositor /lender Date as per A.O. Amount as per A.O. Remark Anant P. More 27/12/04 26,000 The lender is agriculturist and was not having bank account. Further the A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. Anjanabai Chaudhari 1/1/05 25,000 The lender is agriculturist and was not having bank account. Further the A.O, has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. A.R. Salunke 20/12/04 7,25,000 The lender is agriculturist, amount actually belongs to Vinayak Borse Asha Bahalkar 1/6/04 20,000 The amount is not exceeding Rs. 20,000/- and as held by Rajasthan High Court and various other courts, no contravention of provisions of section 269SS resulted. Asha G. Hinge 1/1/05 12/12/04 50,000 25,000 Amount accepted on Sunday . Ashok B. Vaidya 12/12/04 40,000 Amount accepted on Sunday . Lender was retired person . He is now no more. Ashok G. Varkhede 14/1/05 3/12/04 50,000 15,000 In ....
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....ed. Dattu Chaudhari 21/1/05 28,000 The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. Dilip Jaju 12/12/04 2/1/05 1/1/05 1/1/05 1,00,000 1,00,000 4,00,000 2,00,000 First two payment reed, on Sunday. ..............do.............. Dinesh Wani 19/7/04 10/6/04 20,000 2,60,000 In respect of Rs. 20000/- as held by Rajasthan High Court and various other courts, no contravention of provisions of section 269SS resulted. Dhanraj D. Patil 22/1/05 85,000 - Dharmendra Sonawane 1/12/04 13/12/04 1/12/04 15/12/04 1,00,000 40,000 36,000 12,000 The lender is agriculturist, like the assessee's H.U.F. In respect of amount less than Rs. 20000/- as held by Rajasthan High Court and various other courts, no contravention of provisions of section 269SS resulted. Residing at remote village from Malegaon Taluka. Dilip Joshi 27/12/04 40,000 He is Labour, having No Bank A/c at the time . Dinesh Jagtap 22/1/05 80,000 The lender is agriculturist, like the assessee's H.U.F. Dinesh Sonar 14/1/05 64,000 He is Labou....
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....ous other courts, no contravention of revisions of section 269SS resulted, 'he A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s.143(3) r.w.s.153C Kiran G. Bhavsar 19/12/04 60,000 Amount accepted on Sunday . The lender is agriculturist, like the assessee's H.U.F. Kishor C. C. 12/11/04 10,000 The lender is agriculturist, like the Amrutkar 11/12/04 10,000 assessee's H.U.F. In respect of amount 27/12/04 10,000 up to Rs. 20000/- as held by Rajasthan 27/12/04 10,000 High Court and various other courts, 29/12/04 20,000 no contravention of provisions of 3/12/04 12/11/04 40,000 10,000 section 269SS resulted. 19 23/11/04 15/12/04 25/12/04 28/12/04 20,000 15,000 16,000 10,000 Kranti G. Ahire 27/12/04 8,14,000 - Madhav B. Joshi 28/12/04 55,000 Senior Citizen. Labour charges income Madhukar Chaudhari Sir 5/1/05 20/12/14 4,00,000 Senior Citizen. Retired person Madhukar Mangle 12/11/04 50,000 Retired person. The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s.143(3) r.w.s.153C Madhukar Pawar 1/1/05 1,20,000 The lender....
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....9SS resulted Narendra O. Mali 2/1/05 60,000 Amount received on Sunday . Nimbabai Chaudhari 5/12/04 5/12/04 24/11/04 6/12/04 60,000 2,000 2,000 4,000 Amount of Rs. 60000/-& Rs. 2000/- received on Sunday . The lender is agriculturist, like the assessee's H.U.F. Nirmala G. Patil 1/1/05 20,000 The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. In respect of amount upto 20,0000/- as held by Rajasthan High Court and various other courts, no contravention of provisions of section 269SS resulted Parul J. Doshi 12/8/04 20,000 The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. In respect of amount upto 20,0000/- as held by Rajasthan High Court and various other courts, no contravention of provisions of section 269SS resulted Prakash R. Khairnar 25/12/04 2,00,000 Retired Person. The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. Premabai G. Sisodia 6/12/04 1,00,000 Housewife and Senior Citizen. Prema Joshi ....
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....2/04 6/12/04 21/11/04 50,000 25,000 5,000 The lender is agriculturist, like the assessee's H.U.F. The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C.In respect of amount recd.Rs.5,000/- same is received on Sunday. Sonu U. Chaudhari 13/12/04 13/1/05 18,000 The lender is agriculturist, like the 17,000 assessee's H.U.F .Amount of Rs. 17,000 /- already taxed as unexplained cash credit in assessment proceedings. In respect of amount of Rs. 18,000/- as held by Rajasthan High Court and various other courts, no contravention of provisions of section 269SS resulted, being amount less than Rs. 20000/-. Subhash Kankrej Sir 1/1/05 1,00,000 20,000 The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. In respect of amount up to Rs. 20000/- as held by Rajasthan High Court and various other courts, no contravention of provisions of section 269 SS resulted. Subhash K. Agnihotri 1/11/04 20,000 Pensioner. The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. In re....
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....on 269SS resulted. Usha G. Wani 1/1/05 50,000 Amount already taxed as unexplained cash credit in assessment proceedings. Vaishali G. Sonje 20/12/04 27/12/04 27/12/04 14/12/04 27/1/05 1/10/04 1/12/04 1 8,000 12,000 5,000 30,000 35,000 24,000 2,000 In respect of amount up to Rs. 20,000/-as held by Rajasthan High Court and various other courts, no contravention of provisions of section 269SS resulted. Vijay A. Yeola 17/10/04 90,000 Amount accepted on Sunday. Vijay Bhandarkar 7/12/04 17/12/04 1,10,000 1,00,000 He is residing at Kalwadi village. Vijay K. Agnihotri 23/12/04 29,000 The A.O. has taxed the amount as unexplained cash credit in assessment order passed u/s. 143(3) r.w.s. 153C. Vijaya W. Patwardhan 5/12/04 31,000 Amount accepted on Sunday. Vishwanath A. Joshi 1/1/05 26/12/04 75,000 25,000 Amount of Rs. 25000/-received on Sunday. V.T. Wani Sir 15/12/04 2,00,000 The lender is agriculturist, like the assessee's H.U.F. As well he is getting pension income also. Waman R. Shinde 21/9/04 24/9/04 23/9/04 ....
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....en when the amount of cash loan is less than Rs. 20,000/- the AO has levied penalty and therefore he may be directed to cancel the penalty on such amount. Referring to the case of Shri Balkrishna Nagmoti where loan of Rs. 15,000/- taken on 21-12-2004 and Shri Rajasbai Trambak where loan of Rs. 10,000/- taken on 12-12-2004 and Rs. 5,000/- taken from Shri Shankar Sonwane on 01-01-2005 he submitted that narration for accepting the loan from the above persons has already been explained in the remarks column and the table filed where loan is admittedly less than Rs. 20,000/- in each case. He accordingly submitted that appropriate decision may be taken. 17. The Ld. Departmental Representative on the other hand heavily relied on the order of the CIT(A). 18. We have considered the rival arguments made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. So far as the amount of Rs. 20,000/- each received from Shri Asha Bahalkar, Balu Dandagavhal, Smt. Kamalabai K. Patil, Shri Narendra Maharaj, Shri Nirmala G. Patil, Shri Praul J. Doshi and Shri Su....