TaxTMI 
TaxTMI 
2010 (8) TMI 1058
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.... cash Rs. 1,18,000/- on 12.4.2004 in his current account maintained for the proprietary business in the name of M/s Adcom with Union Bank of India, Relief Road Branch having A/c No.11162. It was explained that a sum of Rs. 1,00,000 was borrowed from his son Shri Rahul H. Shah on 7.4.2004 and another sum of Rs. 18,000/- was borrowed by him on 12.4.2004 and was deposited in the bank account. According to the AO depositing money in cash in bank account is violation of section 269SS as assessee has taken loan and deposited money otherwise than by way of bank draft and cheque. The assessee explained that the money was immediately deposited in the bank account to clear the debit balance with the said bank and as per directions of the bank. The necessary confirmation from Shri Rahul . H. Shah, his son, was submitted with his PAN. In the original assessment proceedings for Asst. Year 2005-06 this sum was added under section 68 but subsequently the matter was restored to the AO by ld. CIT(A). The AO accepted the credit as genuine and no addition was made. In the assessment order no mention of any violation of provision of section 269SS has been made. According to the assessee it was for the....
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....T in the case of Sharda Educational Trust vs. CIT (2006) 99 TTJ 212. 5. Where genuineness of transaction is accepted, penalty u/s 271-D is not leviable as held in the following decisions:- i) Dr. Deepak Muchhala 58 TTJ 524 ii) Bombay Conductors & Electricals Ltd. 56 TTJ 580 iii) Harpal Singh Jaswant Singh 82 Taxman (Mag) 81 iv) Vir Sales Corporation 121 CTR 46 (A'bad)" 4. The ld. CIT(A) confirmed the levy of penalty on the ground that the cause shown by the assessee is not a reasonable cause. He observed as under :- "5. The matter has been considered but I am afraid I cannot agree with the Authorised Representative. Section 269SS imposes an obligation of an assessee to do transaction through banking channels, over a certain specified limit, and for not following this section penalty is leviable u/s 271D. Having committed a default u/s 269SS the only escape for non-levy of penalty is either to be covered by one of the proviso to section 269SS or section 273B, if the assessee is able to advance a reasonable cause which prevented him to follow such a laid down provision of law. A reasonable cause has to be equated to an happening which assessee could not have fore....
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....rities cited by the assessee. 6. Against this, the ld. DR on the other hand submitted that it is incorrect to say that provisions of section 269SS will not be applicable if loan is taken from son or close relative. 7. We have considered the rival submissions and perused the material on record. In our considered view there is a reasonable cause with the assessee for depositing the money in bank account. Where bank directs to clear the debit balance then some sort of panic is created in the businessman and any how he makes arrangement to clear the debit balance. If the money is taken from son and deposited in the bank then unless AO carries out enquiries and rebut the claim of the assessee by pointing out that there is no panic point caused by the bank, the claim of the assessee would then constitute a reasonable cause. In this regard we derive support from the decision of the Tribunal 'SMC' Bench in ITA No.2121/Ahd/2010 for Asst. Year 2006-07 in the case of Shri Bhupendrakumar Bhailalbhai Patel, Prop. Of M/s Silphochem Indus. Vs. Jt. CIT, Range-6, Ahmedabad pronounced on 7/7/2010 wherein a similar proposition of penalty under section 271-D was cancelled. The SMC Bench had held....
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....les Corporation v AC1T (1994) 50TTJ 130(Ahd), have held that in respect of transactions inter se between the sister concerns made with a view to meet the business needs under The bona fide belief and with reasonable cause, no penalty is imposable under such circumstances. In the case under consideration, admittedly transactions are between family members. Hon'ble Punjab & Haryana High Court in the case of Sunil Kumar Goel{supra} while relying upon their decision in the case of CIT Vs.Saini Medical Store,277 ITR 420(P&H) concluded that bonafide belief coupled with the genuineness of transactions would constitute reasonable cause within the meaning of provisions of sec, 273B of the Act It was held that a family transaction between two independent assessees based on an act of casualness, specially when disclosure is contained in The accounts would establish reasonable cause within The meaning of provisions of sec. 273B of the Act. Coming to the facts of the case under consideration, we notice that no loss of revenue has occurred in this case and the genuineness of the transaction has not been doubted. The Hon'ble Apex court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ....