2017 (11) TMI 1358

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...., 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 read with Section 269 SS of the Income Tax Act (herei....

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.... 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. No person shall take or accept from any other person (herein referred to as t....

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....hat 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, a sum equal to the amount of the loan or deposit so taken or accepted. (2) Any penalty impossible under sub-section (1) shall be imposed by the Joint C....