TaxTMI 
TaxTMI 
2019 (5) TMI 1783
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....71D of the I.T.Act should not be levied. After considering the explanation given by the assessee, penalty u/s 271D of the I.T.Act was imposed. On further appeal by the assessee, the penalty imposed u/s 271D of the I.T.Act was confirmed by the CIT(A) and ITAT. 4. Aggrieved, the assessee filed appeal u/s 260A of the I.T.Act before the Hon'ble High Court. The Hon'ble High Court restored the matter to the Assessing Officer to consider if there is a reasonable cause on the part of the assessee for having accepted deposits and advanced loan in cash (High Court judgment is reported in 364 ITR 81). The Assessing Officer passed order giving effect to the High Court judgment on 27.06.2014, wherein he levied penalty u/s 271D of the I.T.Act amounting to Rs. 4,74,15,591. The relevant finding of the Assessing Officer in imposing penalty amounting to Rs. 4,74,15,591 reads as follow:- "(6) The arguments given by the assessee are considered one by one and these are summarized below: (a) The provisions of section 269SS are applicable to all categories of assessee. (b) Ignorance of law is no excuse. The provisions was introduced way back in the year 2004. (c) The claim that the assessee come....
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....d that the only consideration would be what was the reasonable cause for receiving such a huge amount by way of cash or what was the reason for not receiving the loan or deposit by way of account payee cheque or demand draft a matter to be explained by the assessee. In other words, the burden is on the assessee to establish what was the reasonable cause for not receiving the loan or deposit by way of account payee cheque or a demand draft. It is not a single transaction but several transactions which have to be explained by the appellant assessee. (g) Even though the assessee has been given another opportunity to prove that it had a reasonable excuse to accept the deposits in cash it was unable to state anything more than what had been stated earlier. The assessee has clearly no justification for accepting deposits in cash and there is no reasonable cause for accepting deposits during the year in cash exceeding the permissible limit. 7) The CIT appeal had directed the AO to verify whether any deposit was below Rs. 20000/- and if so these were to be deleted. After due verification it is seen that the total deposit equal to or more than Rs. 20000/- from a depositor during the yea....
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....epartment itself as a reasonable cause and as such no penalty can be levied u/s 271D of the I.T.Act. It was submitted that in the instant case also, the source has been proved and the violation is only technical. It was contended that there was no finding by the Department for any evasion of tax and therefore penalty u/s 271D of the I.T.Act should be deleted. 7. The learned Departmental Representative strongly supported the order of the Income-tax authorities. 8. We have heard the rival submissions and perused the material on record. The order imposing penalty u/s 271D of the I.T.Act was confirmed by the CIT(A) and the ITAT in the first round of litigation. The Hon'ble High Court restored the matter to the A.O. on an appeal filed by the assessee u/s 260A of the I.T.Act. Therefore, the directions of the Hon'ble High Court while restoring the issue to the A.O. needs to be examined. The relevant observation of the Hon'ble High Court in restoring the case to the A.O. reads as follow:- "7. Learned standing counsel arguing for the Revenue submits, the only defence raised by the assessee at the earliest point of time was ignorance and further contends that the ignorance of law cannot ....
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....eiving the loan or deposit by way of account payee cheque or a demand draft. It is not a single transaction but several transactions which have to be explained by the appellant-assessee. Though there is no specific consistent stand as stated above on behalf of the appellantassessee, since the matter is remitted back to the Assessing Officer for fresh consideration, so far as the factual situation whether all transactions were Rs. 20,000 and above, we are of the opinion, no prejudice would be caused to the Revenue if an opportunity is given to the appellant- assessee to explain such transactions which are Rs. 20,000 and above. After giving an opportunity to the appellantassessee, the Assessing Officer shall proceed with the matter and decide the controversial issue either accepting or rejecting the explanation depending upon the nature of the explanation." 8.1 From the above judgment of the Hon'ble High Court, it is clear that the assessee has to prove, that there was reasonable cause as mandated u/s 273B of the I.T.Act for receiving huge deposits in cash and not by way of account payee cheque or demand draft. The burden of proving that there was reasonable cause is on the assessee....