TaxTMI 
TaxTMI 
2017 (7) TMI 654
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....d on 31.12.2008 determining total income of Rs. 2,03,840/-. Thereafter, the assessment proceedings were re-opened u/s 147 of the Act, for the reason that the income chargeable to tax had escaped assessment. The assessment was completed u/s 143(3) r.w.s. 147 on 18.3.2013 determining total income of Rs. 7,51,640/-. 3. During the course of assessment proceedings, it was observed by the A.O. that the assessee was in receipt of unsecured loans in cash/bearer cheques in violation of provisions of section 269SS of the Act which attracts levy of penalty u/s 271D of the Act. On the basis of the information received from the A.O., the Additional Commissioner of Income Tax issued a show cause notice dated 22.11.2013 requiring the assessee to show cause as to why an order imposing penalty should not be passed u/s 271D of the Act. In response to show cause notice, the assessee submitted that he had accepted loans in cash/bearer cheques for making advance payments to M/s. Sita Rama Housing Pvt. Ltd. so as to facilitate acquisition of property in Koheda village of R.R. Dist. and also purchase of landed property in the same village. The assessee further submitted that due to urgency involved an....
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....ble to explain a reasonable cause then, there will be no penalty u/s 271D of the Act. In this case, the assessee has failed to prove that he had accepted the loans with a reasonable cause. In the case of ITO Vs. Sunil M. Kasliwal (2005) 94 ITR 281, it was held by the Tribunal that since the urgent requirement was not known the assessee could have complied with the requirement of section 269SS of the Act without much difficulty and as such penalty in respect of loan was justified. Since the assessee failed to prove that he has accepted the cash loans with a reasonable cause and also based on the judicial pronouncements in the case of Thenamal Chhajjer Vs. CIT (2005) 96 ITD 210 (Chennai), ITO Vs. Sunil M. Khasliwal (2005) 94 ITR 281 (Pune), it can be concluded that the assessee has violated the provisions of section 269SS of the Act and hence, is liable for penalty u/s 271D of the Act. Accordingly levied penalty u/s 271D of the Act for Rs. 59,03,725/- and Rs. 10,00,000/- respectively for the assessment year 2006-07 and 2007-08. 5. Aggrieved by the penalty order, the assessee preferred an appeal before the CIT(A). Before the CIT(A) the assessee reiterated the submissions made befor....
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....nnot be treated as an urgency so as to bring within the ambit of reasonable cause as stipulated in section 273B of the Act. With these observations, confirmed penalty levied by the A.O. u/s 271D of the Act, to the extent of Rs. 53,55,925/- and Rs. 10,00,000/- for the assessment year 2006-07 and 2007-08 respectively. Aggrieved by the CIT(A) order, the assessee is in appeal before us. 7. The Ld. A.R. for the assessee submitted that the A.O. was erred in levying penalty u/s 271D of the Act, for the financial transaction took place between the assessee and his close relatives, as the provisions of section 269SS r.w.s. 271D of the Act are not applicable to the facts of the case. The A.R. further submitted that the purpose of insertion of section 269SS of the Act to the statute book is to curb the flow unaccounted money in the form of purported unsecured loans to explain the unaccounted assets or money at the time of search, however, the genuine transactions are not coming under the rigors of the provisions of section 271D of the Act. The assessee has explained with necessary evidences that he had a business exigency in as much he needs to make urgent payments to M/s. Sita Rama Housin....
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....oming within the purview of provisions of section 271D of the Act, when assessee fails to explain the reasons for not accepting the loans in cheques. It is the contention of the assessee that the loans accepted by him were genuine transactions and the A.O. has accepted these loans are genuine in the assessment proceedings u/s 143 r.w.s. 147 of the Act. The assessee further contended that out of total credits at Rs. 53,55,925/- a sum of Rs. 41,30,000/- has been accepted from close relatives like wife, brotherin- law and other relatives. The creditors have confirmed the transactions and also explained the sources for advancing loans which were not doubted by the A.O. The A.O. levied penalty merely on technical and venial breach of provisions of section 271D of the Act, however, the facts remain that the provisions of section 269SS of the Act was inserted to the statute books to curb the flow of black money in the form of purported unsecured loans to explain the unaccounted money or assets at the time of search. The assessee has explained the reasons for accepting the cash loans, therefore, the A.O. was erred in levying penalty u/s 271D of the Act. 9. Section 271D of the Act, provi....
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....uch he needs to make urgent payments to M/s. Sita Rama Housing Private Ltd. for the purpose of buying landed properties. The seller M/s. Sita Rama Housing Private Ltd. has mounted pressure on the assessee for making payment. To meet the urgent financial necessities, the assessee has approached these creditors and these creditors are kind enough to make the payment to the assessee, therefore, it cannot be considered as loans or deposit accepted in contravention of the provisions of section 269SS of the Act. 11. The assessee claims that there is a reasonable cause for not complying the provisions of section 269SS of the Act, in as much he had purchased landed property for the purpose of commercial exploitation of property, therefore, the transaction is a genuine business transaction which is outside the purview of loans and deposits coming under the rigors of section 269SS of the Act. Though, the assessee claims to have received loans in cash/bearer cheques for the purpose of urgent financial requirements, fails to prove the reasons with necessary evidences. Therefore, we are of the view that the reasons given by the assessee that he needs to make the payments to M/s. Sita Rama Ho....