2011 (11) TMI 796

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....Assessment Years 2003-04 and 2004-05 vide his separate orders dated 31.12.2007. The penalties in dispute were levied by Addl. CIT, Range- VI(C), Kolkata u/s 271D of the Act vide his separate orders dated 20.02.2008. 2. The only common issue in these two appeals of assessee is against the order of CIT(A) confirming levy of penalty by Addl. CIT u/s. 271D of the Act for violation of provisions of section 269SS of the Act. For Assessment Year 2003-04 in ITA No. 331/K/2010 assessee raised following two effective grounds: "1) For that on the facts and in the circumstances of the case, the 1d. C.I.T.(Appeals) erred in confirming the penalty of Rs. 5,00,000/- imposed by the Additional CIT u/s. 271D by wrongly invoking the provisions of ....

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.... 143(3) of the Act on 31.12.2007 accepting the returned income. During the course of assessment proceedings, Assessing Officer noticed that assessee has received loan in cash amounting to Rs. 5 lacs and Rs. 3 lacs in Assessment Years 2003-04 and 2004-05 respectively from Shri R. K. Gupta, who is father in law of the assessee, in violation of the provisions of section 269SS of the Act. Accordingly, Assessing Officer initiated penalty proceedings u/s. 271D of the Act and penalty was referred to Addl. CIT for levy of penalty u/s. 271D of the Act for contravention of provisions of section 269SS of the Act for these two assessment years i.e. 2003-04 and 2004-05. Assessing Officer noticed the following receipt of cash loan from Shri R. K. Gupta, ....

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....admittedly in cash. It is also an admitted position that these cash loans were accepted by assessee and confirmed upto Tribunal "B" Bench in the case of Shri R. K. Gupta Vs. ACIT in ITA Nos. 2142&2143/K/2010, Assessment Year 2003-04 and 2004-05 vide order dated 12.08.2011. The Ld. Counsel for the assessee Shri Subash Agarwal fairly pointed out and admitted that this is cash loan in violation of provisions of section 269SS of the Act but he narrated that there is a reasonable cause for violation of this provision as enumerated in section 273B of the Act where penalty will not be imposed in certain cases where assessee proves that there was a reasonable cause for the said failure. In the present case, Ld. Counsel for the assessee stated that ....

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.... held to be out of the purview of section 269SS in view of the decision of Hon'ble Madras High Court in the case CIT Vs. Idhayam Publications Ltd. (2006) 285 ITR 221 (Mad), wherein Hon'ble High Court has confirmed the findings of Tribunal as the Tribunal found that M, the proprietor of sister concern was one of the directors of the company and there was a running account in his name and it does not attract provisions of section 269SS of the Act. Hon'ble High Court also dismissed the appeal of revenue by holding that the transaction between the assessee and the director cum shareholder was not that of loan or deposit and it was only a current account in nature and no interest was being charged in the above transaction. Going through the fact....