TaxTMI 
TaxTMI 
2019 (1) TMI 283
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....isions of section 269SS of the Act. 2.2 As per the provisions of section 269SS of the Act, no person shall accept loan above Rs. 20,000/- in cash. Under section 271D of the Act, any person who takes or accepts any loan or deposit in contravention of the provisions of section 269SS, shall be liable to pay by way of penalty, a sum equal to the amount of loan or deposit so taken. Since the cash loan taken in the case on hand was accepted beyond the limit of Rs. 20,000/- as laid down in section 269SS of the Act, the AO initiated penalty proceedings from imposing penalty proceedings u/s 271D of the Act. As per the provisions of section 273 B of the Act, no penalty u/s 271D of the Act shall be levied if the assessee is able to establish reasonable cause for failure to comply with the provisions of section 269SS of the Act. 2.3 In penalty proceedings, the assessee, inter alia, submitted that the transactions in question cannot be strictly construed as loan but rather are in the nature of gifts from his father-in-law Shri. G. P. Padmakumar because of the fact that the person giving the money and the person accepting the money were close relatives; being members of the same family. Apart ....
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.... to appreciate that the imposition of penalty under section 271D of the Act is not automatic and the teamed assessing officer ought to have considered the explanations filed by the appellant as reasonable and ought to have deleted the penalty levied, by considering the provisions of section 273B of the Act under the facts and circumstances of the case. 7. The tower authorities failed to appreciate that the impugned cash was not received by the appellant and was paid by the close relative of the Appellant for meeting Appellant's business exigencies and that provisions of Section 271D are not applicable on the facts and circumstances of the case 8. Without prejudice to the above, the penalty levied is highly excessive and to be reduced substantially. 9. The Appellant craves leave to add, alter, modify, delete or substitute any of the grounds urged above. 10. In the view of the above and other grounds that may be urged at the time of the hearing of the appeal, the Appellant prays that the appeal may be allowed in the interest of justice and equity. 3.2 The learned AR for the assessee was heard in support of the grounds raised seeking deletion of the penalty of Rs. 3,20,00....
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....for the benefit of the person who deposits the money and the benefit normally being the earning of interest from the party who customarily accepts deposit. In the case of loan it is the borrower at whose instance and for whose needs the money is advanced. The borrowing is primarily for the benefit of a borrower although the person who lends the money may also stand to gain thereby earning interest on the money lent. In the instant case, this condition was not applicable because there was no relationship of the depositor or a creditor as no interest was involved. This was neither a loan nor a deposit. At the same time. the words 'any other person' are obviously a reference to the depositor as per the intention of the Legislature. The communication/transaction between the husband and wife are protected from the legislation as long as they are not for commercial use. Otherwise, there would be a powerful tendency to disturb the peace of families. to promote domestic broils, and to weaken or to destroy the feeling of mutual confidence which is the most enduring solace of married life. In the instant case, the wife gave money to husband for construction of a house which was n....
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.... to punish a party involved in a genuine transaction. Therefore, by taking a liberal view in the instant case, the assessee had a reasonable cause within the meaning of section 273D. Thus, keeping in view the entire facts of the instant case, and also keeping in view the intention of the Legislature in enacting the provisions of section 269SS, it was to be held that the assessee was prevented by sufficient cause from receiving the money by an account payee cheque or account payee bank draft. In the instant case, the assessee was of the opinion that the amount in question did not require to be received by an account payee cheque or account payee draft. Thus, there was a reasonable cause and no penalty should have been levied. From the above, it would be clear that the assessee had taken plea that firstly there was no violation of the provisions of section 269SS. Secondly, there was a reasonable cause. Thirdly, the assessee was under the bona fide belief that he was not required to receive the amount otherwise than by an account payee cheque or account payee draft. As an alternative submission, it was contended that the default could be considered either technical or venial breach ....