TaxTMI 
TaxTMI 
2017 (11) TMI 1358
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....Del)/2005 for the assessment year 1999-2000, on the following question of law:- "(a) Whether in view of the division bench judgment of the Hon'ble Rajasthan High Court in the case of C.I.T. vs. M/s Ajanta Dyeing and Printing Mills (supra), the Tribunal was legally justified in disallowing the adjustment of Rs. 40,000/- in the amount of penalty imposed." Briefly, it is undisputed fact that the appellant had taken cash loan for its business purpose on five different dates being 2.5.1998, 28.5.1998, 2.6.1998, 7.11.1998 and 30.1.1999 for Rs. 50,000/-, Rs. 1,00,000/-, Rs. 70,000/-, Rs. 50,000/- and Rs. 2,00,000/- respectively. All the loans having been taken in cash, the Assessing Officer invoking the provision of Section 271-D r....
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....l restricting the penalty to Rs. 80,000/- and Rs. 50,000/- for the other two loans has been allowed and those penalties have been restored. Learned counsel for the assessee submitted that in view of the statutory limit of Rs. 20,000/-, penalty could have been imposed only in respect of cash loans taken by the assessee in excess of that amount. Learned counsel for the respondent, on the other hand submits that the language of Section 269 SS read with Section 271-D of the Act is mandatory and the penalty is automatic for violation of this provisions. In this regard, the provision of Section 269 SS read with Section 271-D are quoted below:- "269SS. Mode of taking or accepting certain loans, deposits and specified sum. N....
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....hich the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette"- Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. " 271D. Penalty for failure to comply with the provisions of Section 269SS:- (1) If a person takes or accepts any loan or deposit in contravention of the provisions of Section 269SS, he shall be liable to pay, by way of penalty....
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.... been taken by it in parts such that one part of the cash loan was for Rs. 20,000/- and the other in excess thereof. In fact the aggregate amount of loan taken by the assessee from Vikas Motor Finance Company was Rs. 1,00,000/- and that from Singh Traders was in excess of Rs. 70,000/-. Thus, the bar created by Section 269SS of the Act is clearly attracted. Reliance has been placed by learned counsel for the assessee on the judgment of the Rajasthan High Court in the case of Commissioner of Income Tax Vs. Ajanta Dyeing and Printing Mills reported in (2003) 264 ITR 505. It is true in that Rajasthan High Court has made an interpretation in favour of the assessee and granted adjustment of Rs, 20,000/-. However, with due respect, we dis....