TaxTMI 
TaxTMI 
2017 (9) TMI 637
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....ial in all case where the penalty is imposable. 3. That the authorities below have erred in confirming the penalty under section 271D of I T Act 1961 by not considering the settled legal pronouncement which was before them even without discussing the same in her order that how the facts of the case is different from the fact of the case of the assessee. 2. In this appeal, the only issue involved is against sustaining the penalty levied U/s 271D of the Income Tax Act, 1961 (in short the Act) of Rs. 5,76,000/-. The Addl. CIT, Range-6, Jaipur had levied the penalty of Rs. 5,76,000/- lacs by violating the provisions of Section 269SS of the Act. 3. In first appeal, the ld. CIT(A) confirmed the penalty of Rs. 5,76,000/- by holding as under:- "2.3 I have perused the facts of the case, the penalty order and the submissions of the appellant. The first submission made by the Authorized Representative on the issue is that the loans were taken in cash in extreme and urgent situation. It was sated that the accounts were used to fund shortage of part payment to honour the cheques issued to Rajasthan Financial Corporation installments so that financial offences against the co....
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....ct to the existence of mitigating circumstances penalty cannot be deleted. The assessee must prove beyond the shadow of the doubt that there existed a reasonable cause for not complying with the conditions contained in section 269SS. Circumstances under which cash was accepted must be explained. Conclusion The majesty of law is to be maintained. The commissioner (Appeals) is not justified in accepting the oral explanation offered by the assessee without any cogent material brought on record to delete the penalty." In the present case, the assessee could not prove that a reasonable cause existed for the above violation. Payments of installments of the financial institution was in the knowledge of the assessee, well in time and it was not a liability which suddenly cropped out. Further, the reasonableness can be accepted for one occasion but the assessee has taken cash loans in different months violating the provisions of the section. As already discussed above, it is not that every loan has been taken for the liability of the financial institution, as discussed largely the cash loans have been taken from routine payments. As already quoted above, it has been consis....
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....- cash deposited in HDFC Bank Payment to RFC 2202000/- and balance in bank was Rs. 2121242=00 3. Rekha Goyal (DIRECTOR) a) 22/6/2009 100000/- cash deposited in HDFC Bank i. Balance was short in bank. Cheque of Rs. 400000/- issued to Disha Construction Co., cheque was already once returned and was re lodged hence it was necessary to deposit the cash to get the cheque honour otherwise serious legal consequences may happen against the company. ii. 200000/- cash deposited on 1/7/2009 in BOR Cheque issued to Mrs. Ragini of Rs. 200000/- and the balance in bank was Rs. 1007/- as on 30/6/2009 4. Shobhit Goyal (COUSIN OF DIRECTOR RAHUL GOYAL (a) 33500/- cash deposited on 10/8/2009 in The Bank of Rajasthan Ltd. company has to issue cheques of interest to the persons from whom loan were taken by the company These parties are:- Premchandkeshwani Rs. 6600/- Arti Keshwani Rs. 8800/- Godawani Devi Rs. 8800/- Kantesh Kumar Keshwani Rs. 8800/- Rs. 33000/- 5. SHRI ANIL KUAMR GOYAL (A.K.GOYAL) (HUSBAND OF DIRECRTOR SMT REKHA GOYAL) (a) Rs. 8000/- cash deposited on 24/6/2009 on that ba....
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....se explanation for his unaccounted money or if the tax payer made some false entries, he would not escape by giving false explanation for the same. It was found that during the search and seizure, unaccounted money was found and the tax payer usually gave an explanation that he had borrowed or received deposits from his relatives or friends and, consequently, it became easy for the so called lender : manipulate his record to suit the plea of the tax payer. In order to curb this menace, Section 269SS of the Act was introduced to do away with the menace of making false entries in the account books and later give an explanation for the same. Section 269SS of the Act consequently, required that no person shall take or accept any loan or deposit, if it exceeds more than Rs. 20,000/- in cash. Section 271D of the Act provided that a person who takes or accepts any loan or deposit in contravention of the provision of Section 269SS of the Act, he would be liable to pay by way of penalty a sum equal to the amount of the loan or deposit so taken or accepted. Section 271D of the Act caused undue hardship to the tax payers where they took a loan or deposit in cash exceeding Rs. 20,000/....
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....oney the person cannot get such money from the nationalised bank to satisfy the immediate requirement....." In the instant case, we find that the Tribunal has given a categorical finding that the assessee had established a reasonable cause for failure to comply with the provision of Section 269SS of the Act. The Tribunal further found that the loan given by the Samajwadi Party was a genuine loan, which was reflected in the books of accounts on account of the Samajwadi Party as well as in the books of account of the assessee and that the cash given by the party was deposited in the bank of the assessee and, thereafter, used for the purpose of converting the nazul land into free hold. The Tribunal found that the genuineness of the transaction was also not disputed by the Assessing Officer. In the light of the aforesaid, we find that even though the assessee had taken a loan in cash, nonetheless, the loan transaction was a genuine transaction and was routed through the bank account of the assessee which clearly shows the bonafides of the assessee. The cash given by the lender was not unaccounted money but was duly reflected in their books of account. The Ass....
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....ted the loans in cash and transactions with director or their relatives which are assessed to tax. Further the amount was taken during the year through cheques and Cash both in case if exigency. Loans were held to be genuine by the assessing officer in the assessment proceedings. Assess has reasonable cause u/s 273B .Hence no penalty is leviable u/s 271D." The ld AR also relied on the following decisions of the Hon'ble ITAT Jaipur Benches, Jaipur. (i) ITA No. 847/JP/2011 order dated 13/06/2014. (ii) ITA No. 41/JP/2016 order dated 01/11/2016. (iii) ITA No. 36/JP/2013 order dated 31/01/2017. 5. On the contrary, the ld DR has vehemently supported the orders of the authorities below. 6. I have heard the rival contentions of both the parties and perused the material available on the record. From perusal of the record, it transpires that the assessee is a private limited company engaged in the business of builders. It is not in dispute that during the year under consideration, the assessee had taken loan of Rs. 5,76,000/- from five persons. All these persons are either director of the company or close relatives of the director of the company. The....