TaxTMI 
TaxTMI 
2016 (4) TMI 128
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....ter, amend any ground of appeal. 3. Briefly stated facts are that, during the course of scrutiny assessment for Assessment Year 2008-09, the learned Assessing Officer observed that the assessee has deposited cash on various dates aggregating to Rs. 7,50,000/- and was unable to provide any information for the source of the cash deposited on various dates for Rs. 7,50,000/-. Accordingly, the Assessing Officer made addition u/s 68 of the Act for unexplained cash credit. Thereafter, in the course of appellate proceedings before the learned CIT(A), it was revealed that source of cash of Rs. 7,50,000/- deposited in the bank account of the assessee is from cash loan taken by the assessee from the sole proprietary concern of assessee's brother for the purpose of repayment of monthly EMIs/installments of various personal loans taken by the assessee from various banks. The learned CIT(A) in his appellate order has mentioned that addition u/s 68 of the Act should not have been made in the case of the assessee as the source of cash of Rs. 7,50,000/- has been duly disclosed by the assessee; however, learned CIT(A) ordered for initiation of penalty proceedings u/s 271D of the Act as the asses....
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....s. 7,50,000/- was received by the assessee as loan and this fact of receiving cash loan by assessee from his brother's sole proprietary concern has not been controverted by the assessee. Due to this reason, learned CIT(A) held that the assessee has been able to explain the source of cash of Rs. 7,50,000/- and no addition should be called for u/s 68 of the Income-tax Act. However, as the assessee has made contravention of the provisions of Section 269SS of the Act for accepting the loan exceeding Rs. 20,000/-, otherwise than by an account payee cheque or account payee bank draft, proceedings u/s 271D need to be initiated in the case of the assessee. 6.1 On the basis of the order of the learned CIT(A) dated 01.03.2013, a show-cause notice dated 19.08.2013 was issued by learned Assessing Officer and served upon the assessee, asking to show-cause as to why penalty u/s 271D of the Act should not be levied in this case and thereafter, order u/s 271D was framed on 28.03.2014. 6.2 Now, we look into the aspect as to whether the penalty order u/s 271D was time-barred or not. We will first go through the provisions of Section 275 of the Act, which read as under:- "275. (1) No order i....
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....ancelling penalty or dropping the proceedings for the imposition of penalty is passed before the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by the [Principal Chief Commissioner or] Chief Commissioner or the [Principal Commissioner or] Commissioner or the order of revision under section 263 or section 264 is passed, an order imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty may be passed on the basis of assessment as revised by giving effect to such order of the Commissioner (Appeals) or, the Appellate Tribunal or the High Court, or the Supreme Court or order of revision under section 263or section 264: Provided that no order of imposing or enhancing or reducing or cancelling penalty or dropping the proceedings for the imposition of penalty shall be passed- (a) unless the assessee has been heard, or has been given a reasonable opportunity of being heard; (b) after the expiry of six months from the end of the month in which the order of the Commissioner (Appeals) or the Appellate Tribunal or the High Court or the Supreme Court is received by t....
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....order of CIT(A) is received, which in this case the order of the CIT(A) in which the proceedings u/s 271D have been initiated is dated 01.03.2013 and one year from the end of financial year in which this order is passed will complete on 31.03.2014. So, applying this proviso, we find that the last date before which the penalty order u/s 271D could have been passed by the Revenue was 31.03.2014 and the date of passing the order u/s 271D of the Act is 28.03.2014, which is well within the time limit prescribed under the provisions of Section 275(1)(a) of the Act. We are, therefore, of the view that the order u/s 271D is not time-barred and is valid. We, therefore, dismiss first ground of the appeal of the assessee. 7. Now, we take up Ground No.2 raised by the assessee against the action of the learned CIT(A) for confirming the penalty u/s 271D of the Act of Rs. 7,50,000/- in contravention of the provisions of Section 269SS of the Act. 7.1 On going through the records placed before us, we find that the assessee himself has submitted the date-wise details on which cash loans have been received aggregating to Rs. 7,50,000/- from M/s. Karmayog Commercial Corporation, which is a sole ....
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....his fact of cash deposits/loans in the submissions made during the assessment proceedings as well as the appellate proceedings. The details of the transactions as given in the confirmation letter while showing the debit side of the account has mentioned the cash transaction as 'Udhar' which means loans. The appellant has not mentioned any business connection with M/s KaramYog Commercial Corporation in respect of these transactions. The provisions of sec. 271D are clearly attracted. It is no doubt true that the heading of Chapter XX-B provides that the sections in this chapter are to counteract the evasion of tax. At the same time, it is equally true that nowhere in the body of section 269SS or other sections falling in this chapter has it been provided that if the transactions are found to be genuine then the provisions of these sections would not apply. The marginal note only indicates the intention of the legislature and cannot override the clear language incorporated in the sections. It is well-settled that while interpreting the provisions of section the marginal note is not decisive and cannot run contrary to substantive provisions contained therein. Only in case of do....
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....nsaction may be genuine and bonafide but may still violate the provisions of Section 269SS. The legislature has provided for relaxing the rigour of technical breach by giving an opportunity to the appellant to show that there was a reasonable cause for not complying with the provisions of Section 269SS. In the present case, clear findings have been recorded by the AO that the appellant could not establish the reason for cash loans as a reasonable cause for non-compliance of Section 269SS of the Act. The Supreme Court in Asstt. Director of Inspection (Investigation) v. Kum. A.B. Shanthi [2002] 255 ITR 258 (SC), while upholding the constitutional validity of sections 269SS and 271D, held as under: . "The new section 271D provides only for fine equal to the amount of loan or deposit taken or accepted. 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 271 D, no penalty shall be imposable on the person or the appellant, as the case maybe, for any failure referred to in the said provision if he proves that there was reasonable cause for such failure and if ....
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....l- Ground No. 3 pertains to is levying penalty u/s 271D without giving immunity u/s 273B and without properly considering the "reasonable causes for requisites of such cash funds from brother" duly submitted by appellant as stipulated under provisions of section 273B. The appellant has not been able to demonstrate any reasonable cause before the AO during the penalty proceedings as envisaged in the provisions of sec. 273B of the Act. The appellant has not been able to demonstrate that what circumstances prevented him from taking these loans/deposits by account payee cheques if the purpose as claimed was make payments towards installments. The appellant was maintaining bank account and the loans/deposits could have been transferred in these accounts. But no reason has been provided by the appellant during the assessment proceedings as well as appellate proceedings. This issue has already been dealt in detail while adjudicating ground of appeal No.2. The claim of the appellant does not attract the provisions of sec. 273B of the Act and therefore the ground of appeal is dismissed." 8.1 We further find that provisions of Section 269SS of the Act are squarely applicable on the cash l....
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....ken from M/s. Karmayog Commercial Corporation. 14.1 Appeal before the learned CIT(A) could not bring any relief to the assessee. 14.2 Aggrieved the assessee is now in appeal before the Tribunal. 15. We have heard the rival contentions and perused the material on record. The only issue in this case before us for adjudication is whether the assessee should be visited with penalty u/s 271E for repayment of loan in cash of Rs. 5,13,440/-. From the perusal of record, we find that the assessee has submitted ledger account of M/s. Karmayog Commercial Corporation for the Financial Year 2007-08 which is appearing at page Nos. 27 & 28 of the paper-book. From going through the ledger account, we find that as on 01.04.2007 there is a credit balance of Rs. 18,32,305.50 in the name of M/s. Karmayog Commercial Corporation in the books of assessee as on 01.04.2007, which means that M/s. Karmayog Commercial Corporation was standing in the books of assessee under the category of unsecured loans. Thereafter, during the Financial Year 2007-08, the assessee has taken cash loans on various dates which aggregated to Rs. 7,50,000/- and we have already decided by sustaining the penalty u/s 271D of....