2018 (4) TMI 1783

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....cts of the case are that the Joint Commissioner of Income Tax observed that the assessee has accepted cash loan of Rs. 3,00,000/- from Sachidananda Nayak on 21.11.2014 and another cash loan of Rs. 4,50,000/- from Dambarudhar Nayak on 19.11.2014 in contravention of the provisions of section 269SS of I.T. Act, 1961. The assessee was show-caused to explain as to why penalty u/s. 271D of I.T. Act, 1961 should not be imposed. In reply the assessee stated that creditor has sold Bolero car for Rs. 3,40,000/- and his sons are working in different banks and he has withdrawn cash from bank account and that out of these sources cash loan of Rs. 3,00,000/- was given to the assessee. However, the AO found that the assessee did not produce the bank state....

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.... have any Bank account. As per the provisions of the Act an agriculturalist who does not have the Bank account can give the loan in cash. Therefore, there is no violation of the provisions of section 269SS of the Act and no penalty is imposable. Mr.Sachidananda Nayak is the cousin brother of the assessee and has sold Bolero vehicle and out the sale proceeds loan of Rs. 3,00,000. Both the loans are genuine and the transactions was explained with sources. Hence, there is no intention of tax evasion and there is no violation of provisions of Section 269SS of the Act. Therefore no penalty can be imposed. 6. Contra, ld. DR submitted that the assessee has not given any explanation as to why cash loan of Rs. 7.5 lakh was obtained. The assessee w....

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....essee was holding the cash for the business operations at Jaipur and there is no malafide intention and the said transaction was disclosed in the income tax returns. Whereas the ld. DR submitted that the assessee has violated the provisions by accepting the cash loan. Further the ld. AR emphasized that the assessee has no intention to violate the provisions and has a reasonable cause in accepting the cash as the business transaction performed at Jaipur to be on cash to cash basis. The ld. AR supported his submission with judicial decisions which are as under :- i) CIT Vs. Maheshwari Nirman Udyog [2008] 302 ITR 201 (Rajasthan) :  "Held ; Sec. 273B provides that if the assessee proves that there was reasonable cause for any failu....

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....eai. It is also required to be noted that s. 269SS has to be read along with s. 273B and at the time of awarding penalty, authority is required to consider whether there was a reasonable cause for the said failure as envisaged under s. 269SS. Considering the aforesaid aspect of the matter, it cannot be said that any substantial question of law arises for the determination of the Court in the present appeal and the same stands dismissed." ii) CIT Vs. Bhagwati Prasad Bajoria (HUF) (2003) 263 ITR 0487 "Held: Keeping in view the object of introducing s. 269SS the legislature has given discretion to the assessing authority under s. 273B to levy the penalty as provided under s. 27ID or not. Under s. 273B if the Court finds that there was ....