TaxTMI 
TaxTMI 
2004 (3) TMI 768
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....the following conformation letter from the vendors, in regard to the amounts advanced by them, to the Assessing Officer on 29-03-1993: Sr no St. Date of No. Certificate Name of Vendors Amount Period of advance 1 25.12.1992 C.V. Nagaraju (nephew) Rs. 20,000 May 1990-July 1990 2. 25.12.1992 C.V. Srinivas (Nephew) Rs. 20,000 May-1990-July-1990 3. 15.12.1992 James Rodrigues Rs. 30,000 28.04.1990 to 1.07.1990 4. 12.12.1994 S. Ramanna Rs. 20,000 22.12.1989 to 20.08.1990 5. 25.12.1992 B. K Ranjana Rs. 20,000 01.04.1990 to 31.03.1991 6. 18.12.1992 C. S. V. Rao Rs. 20,000 22-12-1989 to 28-03-1990 7. 31-01-1993 A. Subbaramu Rs. 20,000 ....
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....ed the matter to the Deputy Commissioner (Income Tax), Mysore Range, Mysore, on 21.07-1993 for action. Therefore, the assessee submitted a reply dated 20.04.1993 to the Assessing Officer on 27-07.1993 wherein he gave the following reasons for accepting the loan amounts otherwise than by way of crossed cheques and demands drafts. "...I have not violated nay of the provisions of Section 269Ss of the Act, in as much as all the transactions made while constructing my officer building have been made in good-faith and it was necessary on account of urgency Secondly, it was beyond my control and there was no sufficient time to accept cheques or by demand drafts from them when I Or we visited their places to request for money. To cite an e....
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.... (ITA2/Coorg/CIT(A)III/93-94) before the Commissioner of Income Tax, Appeals-III Bangalore. The appellate authority dismissed the appeal by order dated 27.01.1999. The assessee thereafter filed a further appeal before the Income Tax Appellate Tribunal, Bangalore Bench, in ITA No. 260/Bang/99 which was dismissed by order dated 31-07-2003. The Tribunal upheld levy of penalty. It was of the view that the borrowing of amounts on Saturdays and Sundays by the assessee was a pre-planned arrangement and the assessee being an Income Tax Practitioner knew full well that he could not have borrowed the amount otherwise than though crossed cheques and demand drafts and therefore there was no reasonable cause for the failure to fallow Section 269SS. 6....
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....D, no penalty shall be imposable on the assessee for any failure referred to therein if the proves that there was reasonable cause for the said failure. 8. The Supreme court consider3ed the scope of the Section 269SS. 271D and 273B in ASSISTANT DIRECTOR OF INSPECTION (INVESTIGATION) -VS- A. B. SHANTHI (255 (2002)ITR258) And observed thus: "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 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause of such failure.....therefore, undue har....
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....re to comply with 269SS mainly on the ground that the assessee being an Income Tax practitioner was not expected to violate Section 269SS. But, what is significant is that all the three authorities have failed to note that the assessee had in fact furnished a reasonable cause. He has clearly stated that during the progress of construction he could visit his friends and relatives only on Saturday afternoons and Sunday to seek loans, as he was busy during the week days; that when he visited them on Saturday afternoons and Sunday the Banks were closed and therefore he used to obtain small amounts in cash to that he can disburse the same for fine construction work. The confirmation certificates also made it clear that the amounts were advance b....