2016 (8) TMI 609

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....eal of the revenue by confirming the order of the Commissioner of Income-tax (Appeals). 2. While admitting the appeal, this court framed the following substantial questions of law: (A) Whether on the facts and in the circumstances of the case and in law Appellate Tribunal is right in deleting the penalty under section 271D of the I.T. Act? (B) Whether on the facts and in the circumstances of the case and in law Appellate Tribunal is right in treating the deposit/loan of Rs. 40,00,000/- as capital contribution of the member of AOP, for the AOP and not violation of the provisions of section 269SS of the I.T. Act?" 3. The facts of the case are the assessee filed return of income for assessment year 1994-95 on 9.3.1998 d....

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....Thus, existence of the money is proved. From these facts, I am of the view that it cannot be held that capital contribution by a member of an AOP in the account of AOP can be treated as a deposit or loan in its true sense. The Ahmedabad ITAT in the case of Shrepak Enterprises Vs. DCIT 60 TTJ (Ahd) 199 has held that amount paid by firm to partners and vice-versa is payment to self and does not partake the character of loan or deposit in general law. Therefore, provision of section 269SS are not applicable to such facts. In this case there is deposit from a member of AP in the account of AOP, therefore, this case is squarely covered by the decision of I.T.A.T. Ahmedabad. Following the decision of the I.T.A.T., it cannot be held that the membe....

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....hus, I am of the view that there was pressing need for paying the sum of Rs. 40 lacs in cash to the farmers. The Ahmedabad ITAT in the case of Vir Sales Corporation has held that `the bona fide of the transaction in question has not been disputed at any stage of the proceedings, there is no material whatsoever on the records giving any inkling of the transaction being of the dubious nature. The urgency about the business necessity or the commercial exigencies are solely within the domain of the trade's own decision. Ordinarily a plea as to ignorance of law cannot support the breach of a statutory provision. But then an innocent mistake due to ignorance of the relevant provisions of law, coupled with the facts that the transactions are genui....

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.... iii) Chamundi Granites P. Ltd. Vs. DCIT, 112 Taxman 417 iv) Jay Builders Vs. ACIT. Case Digest 211. For the proposition that when reasonable cause is established penalty under section 271B cannot be imposed. 4. We have heard rival contentions and perused material available on record. Facts have been narrated above. Genuineness of the transaction has not been disputed by the lower authorities, so also importance and urgency of raising cash loan, its payment to farmers for acquiring regranted land from "GHB" and conveyance of the same land by these farmers in favour of the assessee on the same day, has also not been disputed. We are of the view that there were compelling circumstances for the assessee to raise cash....