TaxTMI 
TaxTMI 
2016 (2) TMI 1244
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....ved is 2008-09. The assessee had cash deposit of Rs. 1 lakh on 9.7.2007 and Rs. 2 lakhs 7.9.2007 from his close relatives. The Assessing officer took the view that the assessee had accepted cash loans / deposit in contravention of section 269SS of the Act. The Assessing officer initiated the penalty proceedings u/s 271D of the Act. In response to the show cause notice issued by the Assessing officer, the assessee submitted that the receipt of Rs. 3 lakhs by him from Shri Gajja Singh was not a loan but a business transaction and Shri Gajja Singh has given the amounts to him for making investment in shares / LIC on behalf of Shri Gajja Singh, which was not accepted by the Assessing officer. Accordingly, the Assessing officer imposed a penalty....
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....ajja Singh may also be recorded on oath. In compliance to the said direction of the CIT(A), the Assessing officer recorded the statement of Shri Gajja Singh on 14.5.2015. In reply to Question No.6, Shir Gajja Singh has stated as under:- "Ans. I have given Rs. 3,00,000/- (Rs. Three lacs only) To Shri Mohanjeet Singh on 4.6.2007 and this amount had been paid after withdrawing from my saving account No.. 65321010000 with Bank of India, Doraha on 7.6.2007. I have withdrawn Rs. 5,00,000/- from my account on this date and out of this, I had given Rs. 3,00,000/- to Shri Mohanjeet Singh to invest on my behalf in certain profitable ventures / shares / LIC etc." Shri Gajja Singh, in reply to Question No.8 has stated as under:- "A....
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.... 269SS of the Act are not attracted in this case. As an alternative contention, the case of the assessee is that if the transaction is treated as a 'loan or deposit', in that case also penalty u/s 271D of the Act cannot be levied as the transaction has been made through banking channels and the transfers finds place in the books of account of the assessee as well as the lender also confirmed the same and the Assessing officer has nowhere recorded in the assessment order that the transactions were non genuine. Shri Sudhir Sehgal, Ld. Counsel for the assessee pointed out that assessee was under bonafide belief that such transactions with the agriculturist was covered in the exception clause of section 269SS of the Act and, therefore, the tran....
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....ith amount or the aggregate amount referred to in clause (b) is Rs. 20,000/- or more w.e.f. 1.4.1989. For failure to comply with the provisions of section 269SS, the penalty is leviable u/s 271D of the Act which empowers the Jt. CIT to impose penalty to any person who takes or accept any loan or deposit in contravention of the provisions of section 269 SS of the Act. The penalty under this section is leviable in a sum equal to the amount or loan or deposit so taken or accepted. The Hon'ble Supreme Court in the case of Asst. Director of Inspection (Investigation) Vs. Kum. A.B. Shanthi (2002) 255 ITR 258 (SC) has observed the object of introducing of section 269 SS of the Act, which reads as under:- "The object of introducing sec....
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....e instant case, the cash was deposited by Shri Gajender Singh who is an agriculturist. There is no doubt that the source of such money was completely from explained sources, the evidence of which was submitted before the Assessing officer. The amount in question has not been treated as cash credits u/s 68 of the Act. It is not the case of the Revenue that the transactions were not genuine or that it was a sham transaction to cover up unaccounted money. In the case of CIT Vs. Sunil Kumar Goel (2009) 315 ITR 163 (P&H), it has been held that cash transactions with sister concern which had no tax effect, established 'reasonable cause' u/s273B of the Act, therefore, no penalty u/s 271D is leviable. Shri Gajender Singh is a close friend of the as....