TaxTMI 
TaxTMI 
2015 (7) TMI 848
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....e Tribunal is correct in law in upholding the orders of the respondent in levying penalty u/s 271E of the Act for repayment of loan in cash in excess of Rs. 20,000/- within the purview of the provisions in section 269T of the Act for the assessment years 2008-09 to 2012-13 even though the transactions were admittedly genuine and bona fide? (3) Whether the Appellate Tribunal is correct in law in sustaining the penalties imposed u/s 271D & 271E of the Act by overlooking the fact of emergency borrowings in cash and the repayments in relation thereto both on the commercial/business as well as personal compulsions/ reasons, thereby establishing the reasonable/sufficient cause as contemplated in section 273B of the Act and further thereby vitiating the respondent's action in proceeding in the matter of levy of such penalties for the assessment years under consideration on the facts and in the circumstances of the case?" 2. The issue raised in all these appeals is pertaining to the levy of penalty under Sections 271D & 271E of the Income Tax Act for the assessment years 2008-09, 2009-10, 2010-11, 2011-12 & 2012-13 respectively on the appellant-assessee for violation of the provision....
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....emand draft as the lender insisted on transacting in cash and the said fact has been confirmed by the lender.'' When the appellant has specifically taken a ground that the transactions were all genuine and bona fide, inasmuch as he was unable to get the loan by account payee cheque or demand draft, as the lender insisted on transacting in cash and the said fact was also affirmed by the lender, it was not open to the assessing authority to turn down the justification of reasonable cause shown by the assessee, in order to exercise his discretionary power under Section 273B of the Income Tax Act. In the case on hand, no doubt the appellant, for the fault committed by his Chartered Accountant in not appearing before the assessing authority, however, has brought this fact to the notice of the appellate authority, making it clear that the transactions are all genuine and bona fide, therefore the appellate authority, in all fairness, ought to have accepted the grounds and justification taken by the appellant, but, unfortunately and erroneously, the order passed by the assessing authority has been confirmed by the appellate authority, he pleaded. 4. Aggrieved by the same, the app....
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....ity. He has also cited the following judgments in support of his submissions:- (i) Commissioner of Income Tax v. Speedways Rubber (P) Ltd., (2010) 326 ITR 31 (P&H); (ii) Commissioner of Income Tax v. Rashi Injection Moulders, (2014) 90 CCH 025 (Mad); (iii) Commissioner of Income Tax v. MAA Khodiyar Construction, (2014) 365 ITR 474 (Guj.) (iv) Commissioner of Income Tax v. Lakshmi Trust Co., (2008) 303 ITR 99 (Mad.) (v) Commissioner of Income Tax v. Balaji Traders, (2008) 303 ITR 312 (Mad.) (vi) Commissioner of Income Tax v. Ratna Agencies, (2006) 284 ITR 609 (Mad.) (vii) Commissioner of Income Tax v. Sunil Kumar Goel, (2009) 315 ITR 163 (P&H) Further contending that when the appellant at no point of time has committed any error, as he received cash from the financier and this also has been accepted as a genuine transaction, the impugned order passed by the Tribunal is liable to be interfered with. 6. Concluding his arguments, reliance was placed on the judgment of the Punjab and Haryana High Court in the case of Commissioner of Income Tax v. Sunil Kumar Goel, (2009) 315 ITR 163, the learned counsel submitted that in an almost identical situation, on a challenge to the fami....
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....of the repeated opportunities given, he is not entitled to rely upon the observation or the ratio laid down by either this Court or the Punjab and Haryana High Court in Sunil Kumar Goel's case. In all those cases, the assessee therein appeared before the assessing authority at the first instance and satisfied the assessing authority for having received the cash amount. But in the present case, the assessee did not explain his cause or represent his case before the authority. Therefore, it is not a good case for this Court to entertain the present appeals. 8. We find more merit in the submissions made by the learned counsel for the respondent-Department. For answering the issue, it will be useful to extract Sections 269SS and 269T of the Act, which read as follows:- ''Mode of taking or accepting certain loans and deposits. 269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,- (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or (b) on th....
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....ve bank or, as the case may be, the other company or co-operative society or the firm, or other person either in his own name or jointly with any other person on the date of such repayment together with the interest, if any, payable on such loans or deposits, is twenty thousand rupees or more: Provided that where the repayment is by a branch of a banking company or cooperative bank, such repayment may also be made by crediting the amount of such loan or deposit to the savings bank account or the current account (if any) with such branch of the person to whom such loan or deposit has to be repaid : [Provided further that nothing contained in this section shall apply to repayment of any loan or deposit taken or accepted from- (i) Government; (ii) any banking company, post office savings bank or co-operative bank; (iii) any corporation established by a Central, State or Provincial Act; (iv) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); (v) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Offi....
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....transactions and that the said transactions were never doubted by the Revenue at any point of time. 10. But in the present case, the entire transactions took place in Pondicherry, a major city and there appears to be no reason as to why the assessee should not have repaid the amount in cheque or demand draft (i.e.) through bank, assuming for a moment he received the loan in cash. The entire transaction between the assessee, a financier and the financier, who was also financing large number of persons, is apparently to evade the provisions of the tax authorities, which came to light after a survey was conducted and some documents and records were seized. Therefore, it is a case of infraction of law and it cannot be said to be a mere technical or venial breach. Indeed, it is a clear case of prejudice caused to the Revenue, because the nature of transactions conducted by the financier with the assessee and third parties are clearly not in accordance with the provisions of the Act. In one statement the financier clearly states that he used to conduct the money lending business in the names of third parties. The assessee on his part has been repeatedly, for every assessment year, condu....
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....lent Rs. 2 lakhs to the appellant. When a specific question was posed to him as to whether he was doing the money lending business by cheque or cash, he has answered that till then he has been doing the money lending business only by cash payment and cash repayment. Again Mr.Kannan, Prop. of M/s Vadamalayan Finance has also further admitted that he has been doing money lending business for the last 30 years. The appellant having taken loan amount by cash in contravention of the provisions of Section 269SS and repaying the same by cash in contravention of the provisions of Section 269T, cannot seek the support of Section 273B. The appellant has not explained as to the urgency, compulsion or any other important circumstance for the breach and that too repeatedly. As a matter of fact, Section 273B shows that no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions, if he proves that there was reasonable cause for the said failure. In the case on hand, as mentioned above, when the appellant was issued with the show cause notice under Sections 271D & 271E on 16.12.2011, having sent a letter dated 11.1.2012 seekin....
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....in the present case, after taking repeated adjournments before the assessing authority, the appellant-assessee neither came forward to file any reply nor even bothered to take part in the enquiry to explain the genuineness of the transaction. In addition thereto, in the case on hand, as the financier has been doing money lending business for 30 long years by giving and taking back loan amounts only through cash, there has been a huge revenue loss to the exchequer. It is not a case of business exigency. Hence the contention that there was no revenue loss to the exchequer is not tenable plea. Therefore, in our considered view, the said judgment is not applicable to the present case. 13. Similarly, the judgment of the Punjab and Haryana High Court in the case of Commissioner of Income Tax v. Sunil Kumar Goel, (2009) 315 ITR 163 relied upon by the learned counsel for the appellant is also inapplicable to the present case, since in the said case, the Tribunal reached its conclusion by holding that a reasonable cause was shown by the assessee, for the failure to comply with the provisions of Section 269T of the Act, at the very first instance before the assessing authority. In the prese....