TaxTMI 
TaxTMI 
2016 (3) TMI 242
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....f the assessee to an extent of Rs. 33,33,450. Assessee explained that an amount of Rs. 9,60,000 was borrowed for purchase of house property along with his brother and balance was his business turnover. AO accepted the explanation and estimated income on the turnover so stated, But, he treated the loans received in cash in violation of the provisions of S.269SS of the Act. He accordingly initiated penalty proceedings under S.271D of the Act, which ultimately culminated in imposition of penalty of Rs. 10,10,000 vide order of the Additional commissioner of Income tax dated 29.10.2010 passed under S.271D read with S.274 of the Act. On appeal before the CIT(A), assessee filed certain evidence to explain the circumstances under which the amounts in question were received in cash in violation of provision of S.269SS of the Act, and pleaded for the cancellation of the penalty as there was reasonable cause justifying the receipt of the amounts in cash. The CIT(A), however, did not admit the said evidence on the ground that it constituted additional evidence, which was filed for the first time before him, and confirming the penalty imposed by the Assessing Officer dismissed the appeal of the....
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....he CIT(A) confronted the assessee with the above comments of the Assessing Officer, and after considering the objections of the assessee in response thereto proceeded to dispose of the appeal before him by the impugned order, confirming the penalty imposed by the Assessing Officer under S.271D, for the reasons discussed in paras 4.3 onwards, on pages 6 to 9 of the impugned order, which read as under - "4.3 Perused the observations of the A.O in the assessment order as well as the Remand Report as regard to the additional Information brought on record, for explaining the reasonable cause involved in this case, for borrowing the amounts in cash, along with the submissions of the appellant. As could be seen from the facts of the case, the appellant borrowed an amount of Rs. 10,10,000/- from 3 parties namely, Mr.K.Nageswara Rao (Rs. 3,60,000), Sri M.V. Kondaiah(Rs.3,50,000) and Mrs. B. Venkata Subbamma (Rs. 3,00,000). As far as the first reasonable cause, i.e. obtaining the cash loans from agriculturists, who do not have bank accounts or having only agricultural incomes, which is an exception to Sec. 269 SS, is concerned, the nature of activities carried and the only source of....
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....e the limit of 45 days for paying the balance of sale consideration as per agreement of sale dated 1.6.2006, expired on 15.07.2006, but registration has taken place on 19.08.2006, it was not difficult for the appellant to take more time and complete the borrowals through banking channel, more so in case where appellant has borrowed certain amounts from Mr,Nageswara Rao, his father-inlaw, or earlier occasions and the lender as well as lendee having taxable incomes. It may also be not out of context to observe that an amount of loan of Rs. 10,10,000/- was borrowed for the purpose of acquiring a property worth Rs. 10,01,000/- without much of investment of appellant applied in the process and this itself shows the truth behind the transactions of cash loans and the explanations offered by appellant with the help of certain piecemeal information during the assessment proceedings, as well as the appellate proceedings and it surely indicate the afterthought on the part of the appellant, to escape from the pangs of the provisions of Sec. 269SS and 271D of IT. Act. Thus, based on the facts of the case, there is no merit in the argument of the appellant, to fall on the theory of reasonable c....
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....s registration of the relevant property in favour of the assessee has taken place on 19.8.2006. Out of the above, as noted the CIT(A) in the impugned order, as far as Shri Kondaiah and Smt. Venkata Subbamma are concerned, the activities carried on by them and the income earned by them are proved to be agriculture and the Assessing Officer has not brought anything on record to prove that they have taxable income from other sources or that they are having bank accounts, and there is no dispute on those aspects. As far as Shri Nageswara Rao is concerned, being a teacher, by profession, it was noted that he cannot be said to be having agriculture as the only source of income. Since the assessee himself is having taxable income, including from business, the CIT(A) held that the case of the assessee is not covered by the exceptions envisaged in S.269SS, being that an agriculturist borrowing from others having only agriculture as source of income. We are not convinced with the approach of the Revenue authorities, while rejecting the explanation offered by the assessee and justifying the impugned penalty. Assessee has shown a cause for acceptance of the loans in cash, viz. to complete the ....