TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 201
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....regard by the Income Tax Officer Ward 9(3) Hyderabad, penalty notice u/s 271D of the I.T. Act was issued to the assessee on 25.04.2013 which was duly served on the assessee. The assessee filed reply dated 17.05.2013 as under: "During the course of assessment proceedings the AO required to prove the genuineness of the cash credit of Rs. 30.00lakhs. The assessee filed a letter of confirmation from Sri E. Kotaiah on 30.01.2012. In the said letter he confirmed the fact that an amount of Rs. 30.00 lakhs was given on 10.05.2009. It was stated by the creditor that he is an income-tax assessee. He confirmed the fact that he received interest of Rs. 3,15,000 during the financial year 2009-10 on the said loan. He also stated that he filed the return of income for A.Y 2010-11 admitting the said interest. The AO while completing the assessment accepted the cash credit as genuine. Therefore, the assessee humbly submits that it is a genuine cash credit. There is no doubt with regard to the genuineness of the transaction. It is further submitted that: (a) On 10.05.2009 the assessee was in urgent need of the said amount. The day 10.05.2009 happened to be a bank holiday being Sunday and there ....
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....le Karnataka High Court in the case of Chamundi Granite Pvt. Ltd vs. DCIT (239 ITR 694). 6. The Add. CIT concluded that there was no reasonable cause to violate the provisions of section 269SS of the I.T. Act and observed that the reasons cited by the assessee did not suggest dire requirement of funds with no exceptional circumstances prevailed which made the assessee accept the cash loan. The Add. CIT levied penalty u/s 271D of the IT Act which is equal to the amount of loan accepted and hence levied a penalty of Rs. 30.00 lakhs u/s 271D of the I.T. Act. 7. Aggrieved, the assessee is in appeal before us. The ld Counsel of the assessee Smt. Vijayalakshmi submitted that assessee had entered into negotiations with the builder of the apartment on 10-5-2009 and during the course of the negotiations he realised that payment of a substantial advance to the builder immediately would ensure significant financial gain in terms of a discount and availability of a flat of his choice which might not be available at a later date and therefore. he felt a compelling need to mobilise cash for making payment to the builder. Accordingly, assessee approached Sri E. Kotaiah and requested him for a l....
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....1 D were constitutionally valid or not and the Hon'ble High Court held that the provisions are not ultra vires. It was submitted that this decision is not applicable to the case of the assessee. 10. The ld counsel further stressed that the failure in complying with the provisions of section 269SS was occasioned by a reasonable cause and whether a particular cause is reasonable or not has to be judged from the point of view of the persons engaged in the concerned transaction. The ld Counsel stated that the Addl. CIT while levying the penalty has advised that the assessee should have waited for one more day. It was pointed out by the ld Counsel that such advice may not be apt considering that delay would have caused the assessee financial damage and loss of the chosen flat. The ld Counsel submitted that the day on which the cash loan was taken happened to be a bank holiday and as this was a financial transaction of some urgency and as there was dire need for money and the bank was closed being Sunday, the assessee, had no choice but to raise a loan from Shri E. Kotaiah. Therefore, it was argued that in the circumstances, the assessee has proved that the default occurred due to a rea....
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....entity of lenders was established and there was no intention to avoid tax. 15. The facts are that on 10.05.2009, the assessee stated that he was in urgent need of an amount of Rs. 30.00 lakhs for booking the flat and had borrowed Rs. 30.00 lakhs in cash from Shri E. Kotaiah. It was submitted that the payment of advance to the builder immediately on a Sunday was due to the financial gain which would be obtained in terms of discount and availability of flat of assessee's choice and hence there is reasonable cause for the default on the part of the assessee. 16. The copy of the sale deed is filed at pages 11 to 31 of the paper book. At page 24, it was stated that Rs. 25,58,829 is to be paid by cash. 17. The confirmation letter from the creditor has been produced. The assessee brought out the need for taking loan in cash by giving reason that financial loss would be incurred if the deal had not been concluded immediately and also the flat chosen by him could not be available later. The ld Counsel for the assessee explained as to what constituted reasonable cause and hence prayed for the penalty to be deleted. 18. However, we also notice that there has been a long gap from the time ....