TaxTMI 
TaxTMI 
2016 (9) TMI 262
X X X X Extracts X X X X
X X X X Extracts X X X X
.... was suffering from serious health problems the appeals were filed late. He submitted that the delay in filing of appeals is not deliberate and there was no negligence on the part of the assessee. Relying on various decisions he submitted that the delay in filing of the appeals should be condoned. 4. After hearing the Ld. Departmental Representative and after considering the contents of the affidavit as well as the arguments advanced by the Ld. Counsel for the assessee, we are of the considered opinion that there was a reasonable cause for delay in filing of these appeals. Therefore, we condone the delay in filing of the appeals and admit the appeals for adjudication. 5. Facts of the case, in brief, are that the assessee is an individual. The AO made a reference in his letter addressed to the Addl.CIT that the assessee has violated the provisions of section 269SS and 269T of the I.T. Act. According to the AO, the assessee has accepted loans/advances of Rs. 45,000/- from Smt. Aparna A. Joshi and Rs. 1,30,000/- from Smt. Mandar A. Joshi in cash and has violated provisions of section 269SS. Similarly, the assessee had repaid a sum of Rs. 2,35,000/- in cash to Smt. Aparna A. Joshi an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the case of Dhanji R. Zalte Vs. ACIT (2004) 265 ITR 204 held that the penalty u/s.271D and 271E are leviable if there is contravention of Sections 269SS and 269T. In this judgement, the case decided by the Supreme Court in Asstt. Director of Investigation Vs. Kum. A.B. Shanti (2002) 174 CTR 513 (SC) was also discussed. This judgement of the High Court has been upheld by the Supreme in (2003) 264 ITR (St.) 140 SC. In view of these facts and legal position I impose a penalty of Rs. 1,75,000/- (45,000 + 1,30,000) u/s.271D and Rs. 2,35,000/- u/s. 271E of the Income Tax Act, 1961. Issue Demand notice and challan accordingly." 7. Before CIT(A) the assessee challenged the levy of penalty under the aforementioned provisions. It was argued that the provisions of section 269SS/269T were introduced with a view to counter the evasion of tax. In the instant case the genuineness of the receipt of loan and repayment thereof has not been doubted. Relying on various decisions it was submitted that there was a reasonable cause on the part of the assessee in accepting such cash loans from close relatives, i.e. husband and mother-in-law of the assessee. It was argued that the penalty....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pon the decision of Hon'ble Madras High Court in the case of CIT Vs. M. Yeshodha, 55(1) ITCL 391. In this regard also, it is seen that the appellant has failed to substantiate that there was urgent necessity to borrow the amount. Accordingly, on the facts and circumstances of the case, penalty of Rs. 1,75,000/- levied by the Assessing Officer u/s. 271D of Income-tax Act is upheld. Thus, the ground is dismissed." 8.1 Identical observations have been given by the Ld.CIT(A) while upholding the penalty levied u/s.271E of the Act. 9. Aggrieved with such orders of the CIT(A) the assessee is in appeal before us with the following grounds : Grounds in ITA No.2092/PN/2014 : "Without prejudice to each other 1. On the facts and circumstances of the case and in law the Ld. CIT(A)-V was not justified in confirming the penalty levied of Rs. 1,75,000/- by the A. O. under S. 271-D of the Act. The transaction between the mother-in-law of the assessee and the assessee was a 'reasonable transaction' the genuinity of which was not in doubt. There was no attempt of the assessee to avoid or evade any tax. The penalty levied by A. O. and confirmed by Ld. CIT(A) is illegal and wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee due to business exigency has taken the loans in cash from her husband and mother-in-law. There was no attempt to evade the tax on the part of the assessee. Referring to the decision of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Sunil Kumar Goel reported in 315 ITR 163 he submitted that the Hon'ble High Court in the said decision has held that family transactions between two independent assessees based on an act of casualness, specially in a case where the disclosure thereof is contained in the compilation of accounts and which has no tax effect establishes reasonable cause u/s.273B for invoking the penal provisions of section 271D and 271E of the Act. 11. Referring to another decision of the Hon'ble Punjab & Haryana High Court in the case of CIT Vs. Saini Medical Store reported in 277 ITR 420 he submitted that the Hon'ble High Court in the said decision has upheld the decision of the Tribunal where the Tribunal has accepted the explanation of the assessee that failure to comply with the provisions of section 269T was on account of bonafide belief of the assessee and thereby cancelled the penalty levied u/s.271E of the I.T. Act. Referring to the decision of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the case of P. Muthukaruppan Vs. JCIT reported in 375 ITR 243 he submitted that the Hon'ble High Court in the said decision has held that where assessee accepted and repaid loan exceeding Rs. 20,000/- in cash from/ to money lender repeatedly, even when transaction took place in a major city and offered no explanation regarding urgency or compulsion, levy of penalty was in consonance with law. Referring to the decision of Hon'ble Punjab & Haryana High Court in the case of Charan Dass Ashok Kumar Vs. CIT reported in 365 ITR 367 he submitted that the Hon'ble High Court in the said decision has held that where the assessee firm accepted loan in cash but failed to establish reasonable cause in accepting said loan otherwise than by account payee cheque/bank draft penalty was justified. He accordingly submitted that since the assessee has failed to establish a reasonable cause in accepting such cash loans and repaying thereof in cash, therefore, the order of the CIT(A) be upheld. 15. The Ld. Counsel for the assessee in his rejoinder submitted that both the decisions relied on by the Ld. Departmental Representative are distinguishable and not applicable to the facts of the present c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... been doubted. We find the Hon'ble Punjab & Haryana High Court in the case of Sunil Kumar Goel (Supra) while deciding an identical issue has observed as under : "10. We have considered the submission advanced by the learned counsel for the respondent-assessee. We are satisfied that section 273B of the Act envisages a non-obstante clause as against sections 271D and 271E of the Act (which have been sought to be invoked for penalising the respondent- assessee). In the exceptional situation envisaged in section 273B of the Act, it is permissible for an assessee to substantiate " reasonable cause" for his failure to comply with the provisions on the basis whereof, penalty is sought to be imposed upon him. Taken to the logical conclusion in so far as the present controversy is concerned, it is open to the respondent-assessee, in the present case, to establish a reasonable cause for having not complied with the provisions of section 269SS of the Act (in the case of I. T. A. No. 777 of 2008) and section 269T of the Act (in the case of I. T. A. No. 778 of 2008). If an assessee successfully discharges the aforesaid obligations, then it is open to him to raise a claim that he should b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s to establish bona fides at the hands of the respondent-assessee, squarely rests on the shoulder of the respondent- assessee. In addition to the above, it is submitted that a breach of the provisions of the Act, cannot be justified on the alleged bona fide belief, which cannot be illustrated through cogent evidence. It is, therefore, the submission of the learned counsel for the appellant-Revenue, that in the facts and circumstances of the present case, the respondent-assessee, could not be deemed to have established a reasonable cause for not abiding by the provisions of sections 269SS and 269T of the Act. 13. Having given our thoughtful consideration to the submissions advanced by the learned counsel for the rival parties, we are of the view that the finding that there was reasonable cause shown by the respondent-assessee, is a finding of fact. This emerges from the decision rendered by this court in Saini Medical Store's case [2005] 277 ITR 420, wherein, this court has, inter alia, held as under (page 425) : "As pointed out earlier, there is no doubt about the genuineness of the transactions which have been fully accepted in the assessment made for the year under consid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s. 777 and 778 of 2008, and accordingly, the said appeals are hereby dismissed." 18. We find the Hon'ble Punjab & Haryana High Court in the case of Saini Medical Store (Supra) while dealing with an identical issue has observed as under : "10. Section 273B of the Act provides that no penalty is imposable for any failure referred to in the said provisions, if the assessee proves that there was "reasonable cause" for the said failure. 11. Therefore, a combined reading of the provisions of sections 271E and 273B of the Act makes it clear that if the assessee shows "reasonable cause" for the failure to comply with any provision referred thereto, the penalty for its violation shall not be imposable on the assessee. 12. In the present case, the Commissioner of Income-tax (Appeals) while deleting the penalty in its order dated January 18, 1999, had accepted the explanation of the assessee that breach of the provisions of the Act was on account of bona fide belief of the assessee and the same was not with any intention to avoid or evade the tax. The observations of the Commissioner of Income-tax (Appeals) in paras. 6 and 6.1 are relevant and are reproduced as under : "6. I have car....