TaxTMI 
TaxTMI 
2019 (6) TMI 444
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....ience we may record facts from the said appeal. 2. Appellant is an individual and is a proprietor of an industrial manufacturing unit. The appeal relates to the penalty imposed by the Competent Authority and reinstated by the Tribunal under Section 271D of the Income Tax Act, 1961 ("the Act" for short) in relation to the assessment year 200809. The assessee had presented following questions for our consideration: "(i) Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in confirming the penalty of Rs. 28,00,000/, under Section 271D of the Act by holding that there was no reasonable cause as contemplated by Section 273B of the Act? (ii) Whether on the facts and in the circumstances of the cas....
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....quirement of Section 269SS of not accepting loans in access of specified amounts otherwise than through banking channels. In the order of penalty that the Competent Authority has eventually passed, he recorded that several opportunities were given to the assessee to give such explanation which the assessee had not availed of. Relevant portion of this order reads as under : "3.2 In response to the said letter, Shri Vijay Thakkar CA and AR appeared on 21.5.2013 and filed a written submission in the Tapal. He also filed a letter of authority before the undersigned. The submission made in the Tapal was brought during the course of hearing and the contentions therein were discussed with the A.R. with reference to the facts of taking cash depos....
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.... of materials from open/ gray market and the amount was received from farmer friends. The asessee further stated that the assessee had fully utilized the cash credit limit sanctioned by the bank. He had to make purchases from the open/gray market for which he needed money for fulfilling orders. It was therefore, essential for the assessee to buy material in time to execute the purchase orders. Loans raised from bank were not sufficient to meet this purpose. He therefore, had to make borrowing in cash from friends. 5. The Additional Commissioner of Income Tax did not accept this explanation. He imposed penalty under Section 271D of the Act by observing that no such explanation was adduced earlier. It was only during the remand report the as....
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....orders. For such purpose, the assessee was forced to accept cash loans from friends. The Tribunal ought to have accepted the explanation. 9. Counsel relied on the decision of the Supreme Court in case of Asst. Director of Inspection (Investigation) Vs. Kum. A.B.Shanthi Vol. 255 ITR 258 in which in the context of the virus of Section 271D of the Act, the Supreme Court made certain observations. 10. Reliance was placed on the decision of the Supreme Court in case of Commissioner of Income Tax Vs. Calcutta Knitwears (2014) 362 ITR 673 (SC) to contend that being a penalty provision, Section 271D of the Act should be viewed strictly. Reliance was placed on following decisions in the support of the contention that in the present case the transa....
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....reasonable cause for the said failure. 12. Facts in the present case are substantially established. As noted, the Assessing Officer during the course of assessment doubted various sundry creditors claimed by the assessee. In appeal the assessee contended that the amounts were received through cash loans. The breach of Section 269SS of the Act even going by the assessee's contention was thus established. The consequences of the penalty under Section 271D of the Act would therefore ordinarily follow unless the assessee established as required under section 273B the reasonable cause for such failure. Thus, the onus was on the assessee to establish any such reasonable cause. 13. We have already noted that the Additional Commissioner had g....