TaxTMI 
TaxTMI 
2016 (3) TMI 1298
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....nance, No. C-4, II Floor, Thiyagaraja Apartment, First Main Road, Thanthai Periyar Nagar, Pondicherry 605 005. Books of account and supporting documents were impounded under section 133A(3) of the Act during the course of survey. The finance operates from the residence of Shri A. Kannan from the above address. The survey revealed the following facts. Shri A. Kannan himself writes the books of account for the finance. His Finance is not licensed by the state government authorities for financing activities. He lends money on pro-notes and returns the same on repayment. He takes the interest portion on loan on the day of lending and collects the balance in 10 monthly instalments. This period of collection may be delayed by loan debtors. The details of loan debtors are entered in the Party Register called by name "Kisthi Vasool List Book". This book has been maintained as a single book for the period 13.12.1986 to 22.06.2011 and contains the full history of financing of 24 years. The principal amount borrowed is entered in the respective year and month. The repayments are entered against each debtor in the respective dates against his name. A Receipt Book is maintained for issuing out ....
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....the case of Shri P. Muthukaruppan v. ACIT in I.T.A. Nos. 220 to 228/Mds/2014 dated 29.05.2014 as well as decision of the Jurisdictional High Court in the case of P. Muthukaruppan v. JCIT [2015] 375 ITR 243 and prayed that the order of the ld. CIT(A) should be reversed. 6. On the other hand, the ld. Counsel for the assessee has submitted that the issue involved in this appeal is covered in favour of the assessee by the decision of the Coordinate Bench of the Tribunal in I.T.A Nos.1905 to 1908/Mds/2013 in assessee's own case passed under section 271E of the Act. 7. We have heard both sides, perused the materials on record and gone through the orders of authorities below. From the penalty order, the facts are very clear that the assessee borrowed Rs..20.00 lakhs in cash and repaid Rs.. 20.00 lakhs in cash in the assessment year 2008-09 on many occasions. During the penalty proceedings, the assessee has explained before the Assessing Officer with regard to repayment of loan of Rs..20.00 lakhs in cash that the repayments were at the instant of the lenders. The assessee has submitted that the borrowings are from genuine lenders and they are not unaccounted money. If it is not unaccount....
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....avoided to attend before the lower authorities. Now, the ld. Counsel for the assessee is requesting to remit the matter back to the ld. CIT(Appeals), which appears to be not fair, just and proper. Once the assessee's intention is clear that he chose not to appear before the authorities below, it is not justified for us to set aside the order passed by the ld. CIT(Appeals). Therefore, the request of the ld. Counsel for the assessee is rejected. The only argument of the ld. Counsel for the assessee is that the documents found during the course of survey was not given to the assessee. This argument was not pressed either before the Assessing Officer or before the ld. CIT(Appeals). He has not disputed the material fact of accepting loans in cash and repaying the loans in cash. Therefore, this argument of the ld. Counsel for the assessee cannot be accepted at this stage. Once the assessee obtained loans in cash exceeding Rs..20,000/- and repaid it in cash, if this factual position is correct, the only option for the assessee is to explain the reasons under what circumstances the assessee has obtained the loans and repaid the loans in cash as prescribed under sections 269SS and 269T. Oth....
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....ompelled the assessee to go for cash loan and Tribunal was therefore justified in law in confirming the levy of penalty under s. 271D." 10. Further, in the case of Kasi Consultant Corporation v. CIT (supra), the Hon'ble Jurisdictional High Court had considered similar issue of imposition of penalty under section 271D of the Act and held that the assessee being received deposits from public in violation of section 269SS, there being no material to show reasonable cause, the Tribunal was justified in restoring the order of the Assessing Officer in imposing penalty under section 271D while reversing the order of the ld. CIT(Appeals) deleting the penalty. In the present case, the assessee has not given any reason to show the reasonable cause for him to obtain loan in cash and repaid the same in cash. In this case, the assessee has received huge amount in cash and repaid the same in cash and no reasons were explained. The judgement of the Hon'ble Jurisdictional High Court squarely applies to the case in hand. 11. In so far as the case law relied on by the ld. Counsel for the assessee on the decision in the case of CIT v. Lakshmi Trust Co. (supra), the Hon'ble Madras High Court has o....
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.... to in clause (a) together with the amount or the aggregate amount referred to in clause (b) is twenty thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,- (a) Government; (b) any banking company, post office savings bank or co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956); (e) such other institution, association or body or class of institutions, associations or bodies which 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 where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation:- For the purposes of this section,- (i) 'banking company' means a company to whic....
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.... it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ; (iii) 'loan or deposit' means any loan or deposit of money which is repayable after notice or repayable after a period and, in the case of a person other than a company, includes loan or deposit of any nature." 9. The provisions of sections 269SS and 269T mandate that no amount should be received in cash in excess of the amount prescribed thereunder. The statement of the financier produced by the counsel for the Department and also relied upon by the appellant would be a case of money-lending business by the financier repeatedly indulging in violation of the provisions of sections 269SS and 269T of the Act. It is one thing to say that there was a compulsion on the part of the financier. Nevertheless, factually we find that the assessee has been taking loan and paying it in cash in total violation of the said provisions. The test in so far as non-levy of penalty under sections 271D and 271 E is established by the Department. For invoking section 273B the appellant has to establish a reasonable cause and satisfy the requirement therein. In the instant case, the assessing authority, the appellate authority as....
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.... of the parties is more important to exercise the discretion under section 273B of the Act. As the assessee has not passed the test of reasonable cause showing his bona fides, the provisions of section 273B do not get attracted, more so, in a case of no explanation offered in spite of giving repeated chances therefor. On the facts in issue before us, there appears to be no justification to claim the benefit of section 273B of the Act. 11. In the present case, as mentioned above, the appellant has been charged for violation of the provisions of section 269SS and section 269T of the Act on the ground that when a survey was conducted under section 133A in the business premises of Mr. A. Kannan, proprietor of Vadamalayan Finance on October 8, 2011, it was found that Mr. A. Kannan was doing money-lending business, who chose to give loans to only selected group of persons after deducting interest for ten months; that the whole transaction was done in cash only, namely, no cheque or draft came into play; that the appellant was also found as one of the borrowers, as he received cash loan of Rs. 15 lakhs on June 21, 2007, and the same was found to be repaid in cash for the assessment year....
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....other adjournment for one more week on the ground that a close associate and senior citizen of his community passed away on February 16, 2012. Once again after receiving fresh notice dated February 16, 2012, and another notice dated February 24, 2012, the appellant finally sent Mr. V. Jayachander, chartered accountant, who also filed adjournment letter on July 24, 2012. When the said Mr. V. Jayachander, chartered accountant appeared on May 11, 2012, thereafter, sadly, no one appeared. That apart, the assessee had not even filed any reply nor even the particulars called for vide order-sheet entry dated May 11, 2012, and letter dated May 2, 2012. In the above background, taking into account the conduct of the assessee, the assessing authority, after giving repeated reasonable opportunities, finding no explanation whatsoever, was unable to exercise his discretion under section 273B and, accordingly, imposed the penalty under sections 271D and 271E of the Act. This finding has been affirmed by both the appellate authority and the Tribunal. When the finding of facts have been reached by all the authorities below, taking note of the conduct of the appellant, who was given sufficient oppo....
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....f this court, in which one of us R. Sudhakar J., who was speaking for the court has held clearly that the assessee therein had shown reasonable cause for availing of loan from the agriculturists by properly placing the genuineness of the creditors who have been verified and the said transaction being found incapable of any suspicion by the authorities, hence, on that score, this court refused to interfere with the order of the Tribunal, however, in the present case, as there was no explanation offered for availing of such a huge cash loan transaction for number of years. We hold that the cited judgment cannot be made applicable to the facts of the present case. 14. For all the aforementioned reasons, we find the penalty order at the hands of the assessing authority is in consonance with law. The said order having been confirmed by both the appellate authority and the Tribunal, does not call for any interference by this court. In fine, we finding no merits in the appeals no questions of law arises, much less no substantial questions of law. These tax case appeals are dismissed. Consequently, M. P. Nos. 1 of 2014 are also dismissed. No costs." 9. In this case, there is no justifia....