TaxTMI 
TaxTMI 
2003 (7) TMI 66
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....e penalty of Rs. 4,50,000 imposed on the respondent under section 271D of the Act? Whether, on the facts and in the circumstances of the case, the Commissioner of Income-tax (Appeals) as well as the Tribunal did not err in law in deleting the penalty of Rs. 4,50,000 imposed on the respondent under section 271D of the Income-tax Act, 1961?" The brief and necessary facts of the case are that during a search and seizure operation of the premises of one Umadutta Jhunjhunwalla of Shillong a large number of promissory notes were found and seized from his residence. Among them three promissory notes were found to have been executed by the assessee, Bhagwati Prasad Bajoria, the preset respondent. These promissory notes were of the date ....
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.... proceedings could have been taken for imposition of penalty under section 271D of the Income-tax Act. The appellate authority has also said that the loan appears to have been taken without following the prescribed mode as provided under section 269SS of the Act because the assessee was not aware of the rigours of law of requirement of payment of penalty under section 271D of the Act if the method of taking loan as provided under section 269SS is not followed. Consequent thereto the appellate authority set aside the order of imposition of penalty against an assessee. Aggrieved by the said order the Revenue preferred an appeal before the Income-tax Appellate Tribunal, Guwahati. The Tribunal accepted the order passed by the appellate authorit....
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....ee for not imposing the penalty and, therefore, a case is made out for remand of the case to the appellate authority for reconsideration of the matter and decision thereon. Section 273B of the Income-tax Act provides that notwithstanding anything contained in the provisions of section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the provisions of section 269SS of the Income-tax Act, if there is a reasonable cause for such failure and if the assessee proves that there was a reasonable cause for failure to take a loan otherwise than by account payee cheque or account payee bank draft and in such circumstances the penalty shall not be levied. In view of this provision ....
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....also to manipulate his records later to suit the plea of the taxpayer. The main object of section 269SS was to curb this menace. As regards the tax legislations, it is a policy matter, and it is for Parliament to decide in which manner the legislation should be made. Of course, it should stand the test of constitutional validity...The object sought to be achieved was to eradicate the evil practice of making of false entries in the account books and later giving explanation for the same." Keeping in view the object of introducing section 269SS, the Legislature has given discretion to the assessing authority under section 273B of the Income-tax Act to levy the penalty as provided under section 271D of the Act or not. Under section 273B ....