TaxTMI 
TaxTMI 
2023 (6) TMI 332
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 2. The grounds of appeal raised by assessee in ITA No. 46/Alld./2019 for assessment year 2012-13, in memo of appeal filed with Income-Tax Appellate Tribunal, Allahabad Bench, Allahabad (hereinafter called "the tribunal"), reads as under:- "1- That in any view of the matter penalty order dated 12-12-2017 passed u/s 271D of the IT Act by JCIT,CC, Varanasi by imposing a penalty of Rs. 1,10,02,000/- is bad both on the fact and in law as well as without justification. 2- That in any view of the matter the Ld. CIT (A) is highly unjustified and incorrect in confirming the penalty by ignoring the correct facts and her observations in the order dated 19-03-2019 are totally incorrect and contrary to the actual facts as the CIT (A) failed to consider correct facts, cited case law and affidavit, hence the penalty so levied and maintained arbitrarily is liable to be delete in the facts and circumstances of the case. 3- That in any view of the matter since the entire transaction between the company and its director was held genuine in respect of Rs. 60 Lakh as deleted by the CIT (A) in the light of facts and evidence. Therefore the penalty so imposed on that count is ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Hemant Kumar Sindhi, Allahabad on various dates, in contravention of provisions of Section 269SS of the 1961 Act, and for such default the assessee is liable to be penalized under Section 271D of the Act. The details of such cash loans taken by the assessee, are as under: Amount (Rs.) Date Nature of Receipt 10,00,000 26.9.2011 In cash 50,00,000 4.10.2011 In cash 50,00,000 4.11.2011 In cash Total Rs. 1,10,00,000 4. The AO i.e. ACIT, Central Circle, Allahabad made reference / proposal to the office of the Joint Commissioner of Income Tax, Central Range, Varanasi vide Letter No. ACIT/CC/Alld/2017-18/581 dated 20.09.2017 for initiation of penalty proceedings against the assessee under the provisions of Section 271D of the 1961 Act for contravention of provisions of Section 269SS of the 1961Act. The Ld. JCIT, Varanasi initiated penalty proceedings against the assessee u/s 271D of the 1961 Act and a show cause notice was issued to the assessee on 21.09.2017 to explain the case and to show cause as to why penalty under Section 271D may not be imposed upon the assessee. This notice was duly served on the assessee through AO. The....
X X X X Extracts X X X X
X X X X Extracts X X X X
....assessee company. It was observed by Ld. JCIT that since cash was deposited in the bank account of the assessee company, it is required to be entered in cash book otherwise there will be shortage or negative cash balance in the cash book, which is against the principles of accountancy. It was also observed by the Ld. JCIT that similarly the liability of the assessee company, paid by the Director, in cash, from own sources is also a cash loan accepted/taken by the assessee company. The ld. JCIT observed that its entry is also required to be appropriately entered in the cash book. The ld. JCIT observed that the assessee has not denied these loans and rather the assessee has shown these transactions under the "unsecured loans" in its books of account. The relevant copy of the ledger account of Shri Hemant Kumar Sindhi in the books of the assessee company were reproduced by ld. JCIT in his order dated 12.12.2017, which is reproduced as hereinunder: The Ld. JCIT referred to the provision of Section 269SS of the 1961 Act and observed that provision of Section 269SS is clear and unambiguous. The ld. JCIT observed that the assessee cannot take shelter of direct cash deposit by the direc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntention of the assessee before Ld. CIT(A) was that the transactions between the Company and the Director does not fall under the category of 'loan or deposit' and there is no element of any interest. It was also submitted that the urgency about the business necessity or commercial exigencies are solely within the domiman of the trade and hence the transaction of cash directly deposited by the Director in company's bank account cannot be called "loan or deposit" as such there was no violation of the provision of Section 269SS of the Act. 6. The Ld. CIT(A) considered the contentions of the assessee, and rejected the same by dismissing appeal filed by the assessee, by holding as under: "7. I have considered the facts & circumstances of the case. I have considered the finding of the JCIT in the penalty order and the submissions of the appellant made during appellate proceedings. It is to noted that the assessee had accepted cash loan of Rs. 1,10,02,000/- from Shri Hemant Kumar Sindhi in contravention of section 269SS of the Act, details of which are as under:- Amount Date Nature of receipt 10,00,000/- 26.09.2011 In Cash 50,00,000/- 04.10.2011 In ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reply of the assessee is not acceptable & the matter will be separately referred to JCIT, Central Range, Varanasi for initiation of penal action as per Act. 11. Considering the above, I find that the AO has recorded the satisfaction for initiation of penal action u/s 271D of the Act. Hence appellant's contention in this regard that no satisfaction has been recorded by the AO is devoid of any merit and found to be unacceptable. 12. It is relevant to examine the provisions of section 269SS of the Act, which are extracted as below: 269SS of the Act. [Mode of taking or accepting certain loans, deposits and specified sum. 269SS. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum,otherwise than by an account payee cheque or account payee bank draft oruse of electronic clearing system through a bank account, if- (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or (b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the assessment year 2012-13. It was submitted by ld. Counsel for the assessee that transaction between the assessee company and the Director namely Mr. Hemant Kumar Sindhi to the tune of Rs. 1,10,02,000/- were made in cash. Our attention was drawn to the penalty order passed by ld. JCIT, as well appellate order passed by ld. CIT(A). It was submitted that following are the cash loans granted by Mr. Hemant Kumar Sindhi, Director to the assessee during the year under consideration, as detailed hereunder: Amount Date Nature of receipt 10,00,000/- 26.09.2011 In Cash 50,00,000/- 04.10.2011 In Cash 50,00,000/- 04.11.2011 In Cash 2,000/- In Cash Total 1,10,02,000/- It was submitted that provisions of Section 269SS read with Section 271D were invoked by Revenue, to levy penalty of Rs. 1,10,02,000/-. It was submitted that Rs. 60,00,000/- was deposited by Director of the assessee company namely Mr. Hemant Kumar Sindhi in the assessee's bank account on 26.09.2011(Rs. 10 lacs) and 4.10.2011 (Rs. 50 lacs), while Rs. 50,00,000/- and Rs. 2000 were paid in cash by Mr. Hemant Kumar Sindhi, Director on 04.11.2011 for purchase of stamp paper fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed by Hon'ble Supreme Court in the case of CIT v. Jai Laxmi Rice Mills, reported in (2015) 379 ITR 521(SC). f) Appellate Order dated 29.02.2016 passed by ITAT, Chandigarh Bench SMC, in the case of Chawla Chemtech Private Limited v. JCIT, reported in (2016) 158 ITD 48(Chd.-trib.) g) Appellate Order dated 09.01.2019 passed by ITAT, Jaipur B Bench DB, in the case of Sunil Kumar v. Addl. CIT, in ITA no. 203 & 204/JP/2018, reported in (2019) 33 NYPTTJ 26(JP) h) Judgment and Order passed by Hon'ble Punjab and Haryana High Court in the case of CIT v. Speedways Rubber Private Limited, reported in (2010) 326 ITR 31(P&H HC). i) Appellate Order dated 21.10.2021 passed by ITAT, Jaipur A Bench DB, in the case of Smt. Meera Devi Kumawat v. JCIT, in ITA no. 1201(JP) of 2019, reported in (2022) 193 ITD 250(JP-trib.) j) Appellate Order dated 05.12.2019 passed by ITAT, Mumbai G Bench DB, in the case of Surendra Engineering Corporation v. JCIT, in ITA no. 2386(Mum) of 2017, reported in (2020) 180 ITD 708(Mum-trib.) k) Appellate Order dated 01.07.2015 passed by ITAT, Hyderabad Bench SMC, in the case of ITO v. Sunder Synthetics Private Limited, repo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed that total transaction of Rs. 1,10,00,000/- in cash being received by assessee company from Mr. Hemant Kumar Sindhi who was Director of the assessee company, was confirmed by the assessee to have been paid in cash to the company. Out of total as above, cash of Rs. 60 lacs received by way of deposit in the bank account of the assessee company was not found recorded in the cash book. The ld. CIT-DR would argue that addition of Rs. 60 lacs was made by AO in quantum assessment. Our attention was drawn to assessment order dated 28.03.2016 passed by AO u/s 153A read with Section 143(3) of the 1961 Act, for assessment year 2012-13 in the case of the assessee. It was submitted that satisfaction was recorded by AO in the assessment order, recording contravention of Section 269SS with respect to cash loan to the tune of Rs. 1.10 crores taken by assessee from Mr. Hemant Kumar Sindhi, which stood recorded in para 4(i) of the assessment order. The AO also considered reply of the assessee, but the explanation submitted by assessee stood rejected by the AO, and it is stated in assessment order by AO that the matter will be separately referred to the JCIT, Central Range, Varanasi, for initiatio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e to show real urgency in receiving cash loans of Rs. 1,10,02,000/- from Mr. Hemant Kumar Sindhi, and hence penalty u/s 271D read with Section 269SS was rightly levied/confirmed by ld. CIT(A). The ld. CIT-DR also relied upon following judicial pronouncements : a) Judgment and Order passed by Hon'ble Allahabad High Court in the case of Chaubey Overseas Corporation v. CIT, reported in (2008) 303 ITR 9(All. HC). b) Judgment and Order passed by Hon'ble Punjab and Haryana High Court in the case of CIT v. Sunil Goyal, reported in (2005) 274 ITR 53(P&H HC). c) Appellate order passed by Delhi-tribunal in the case of Ajay Goel v. ACIT, reported in (2010) 126 ITD 89(Del-trib.) d) Appellate order passed by Pune-tribunal in the case of ITO v. Sunil M Kasliwal, reported in (2005) 94 ITD 281(Pune-trib.(TM)) e) Appellate order passed by Delhi-tribunal in the case of Mehak Singh v.ITO, reported in (2010) 127 ITD 1(Del-trib.) f) Judgment and Order passed by Hon'ble Jharkhand High Court in the case of Bhalotia Engineering Works Private Limited v. CIT, reported in (2005) 275 ITR 399(Jharkhand- HC). The ld. CIT DR distinguished the decisio....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y ld. CIT-DR on the Judgment and order passed by Hon'ble High Court of Gauhati in Associated Engineering Enterprise v. CIT, reported in (1995) 216 ITR 366(Gauhati),Appellate order passed by ITAT, Delhi Bench in the case of Prabhavshali Chit Fund Company Private Limited v. CIT, reported in (1994) 49 ITD 566(Del-trib.)and Appellate order passed by ITAT, Pune Bench in the case of Balaji Traders v. DCIT, reported in (2001)78 ITD 368(Pune-trib.). 8.We have considered rival contentions and perused the material on record including cited case laws. We have observed from assessment order passed in quantum that there was search and seizure operations carried on by Revenue u/s 132 of the 1961 Act on 05.12.2013 in the case of Mr. Hemant Kumar Sindhi, Dinesh Kumar Pahuja Group, residential premises of partners, directors and proprietors of the group. The assessee was also searched on 05.12.2013 wherein warrant of authorization was executed at the office premises of the assessee. Thereafter, the case of the assessee was centralized with Assistant Commissioner of Income Tax, Central Circle, Allahabad vide orders dated 08.05.2014 passed u/s 127 of the Commissioner of Income Tax, Allahabad. The ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....to the office of the Joint Commissioner of Income Tax, Central Range, Varanasi vide Letter No. ACIT/CC/Alld/2017-18/581 dated 20.09.2017 for initiation of penalty proceedings against the assessee under the provisions of Section 271D of the 1961 Act for contravention of provisions of Section 269SS of the 1961 Act. The Ld. JCIT, Varanasi initiated penalty proceedings against the assessee u/s 271D of the 1961 Act and a show cause notice was issued to the assessee on 21.09.2017 to explain the case and to show cause as to why penalty under Section 271D may not be imposed upon the assessee. On non compliance by assessee, ld. JCIT issued further notices, which are duly recorded in penalty order dated 12.12.2017. The assessee claimed before ld. JCIT that no cash loan was taken by assessee company from Shri Hemant Sindhi, Director and the amount was actually deposited by the aforesaid Director in cash in the bank account of the assessee to the tune of Rs. 60,00,000/-, while remaining amount of Rs. 50,00,000/- was paid by Director in cash for purchase of stamp papers. The assessee claimed that no cash was increased in the cash book of the company on account of these transactions, and hence p....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ved that there is further entry of cash receipt of Rs. 2,000/- dated 4.11.2011, on which also penalty is leviable u/s 271D, and hence the assessee is liable to penalty u/s 271D of Rs. 1,10,02,000/-, which was imposed by ld. JCIT vide penalty order dated 12.12.2017 passed u/s 271D of the 1961 Act for contravention of provisions of Section 269SS of the 1961 Act. The assessee being aggrieved filed first appeal before ld. CIT(A). Before ld. CIT(A), the assessee made submissions that the transactions between the Company and the Director does not fall under the category of 'loan or deposit' and there is no element of any interest. It was also submitted that the urgency about the business necessity or commercial exigencies are solely within the domiman of the trade and hence the transaction of cash directly deposited by the Director in company's bank account cannot be called "loan or deposit" as such there was no violation of the provision of Section 269SS of the Act. The assessee also referred to provision of Rule 2(b) (ix) of the company (acceptance of deposit) Rule 1975 provides that "Deposit" does not include any amount received from a Director or Share holder of a Private Limited Com....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s State of UP (118 ITR 326)(SC), and further the appellant is assisted by professional C.A. on tax matters. 16. Considering the facts & circumstances of the case I find the assessee has accepted cash loan of Rs. 1,10,02,000/- from Shri Hemant Kumar Sindhi, Allahabad on various dates, which is in contravention of the provisions of section 269SS of the Act. Accordingly penalty imposed by the AO equal to the amount of cash loan of Rs. 1,10,02,000/- is held to be justified and is hereby upheld. Ground No.5 is routine and general in nature hence not adjudicated. 17.. In the result, the appeal is dismissed." Now, the assessee being aggrieved by appellate order passed by ld. CIT(A) dismissing its appeal has filed second appeal with tribunal. Proceeding further, the admitted position is that the assessee received Rs. 1,10,02,000/- in cash from Mr. Hemant Kumar Sindhi, Director during the impugned assessment year, as detailed hereunder: Amount Date Nature of receipt 10,00,000/- 26.09.2011 In Cash 50,00,000/- 04.10.2011 In Cash 50,00,000/- 04.11.2011 In Cash 2,000/- 04.11.2011 In Cash Total 1,10,02,000/- T....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,28,92,000/- (circle rate), duly recorded in the registered sale deed dated 04.11.2011. The additions to the income of the assessee to the tune of Rs. 6,12,022,50/- was made by AO for the year under consideration towards unexplained expenditure while framing assessment order dated 28.03.2016, being undisclosed cash paid for purchase of aforesaid property. The ld. CIT(A) has confirmed the aforesaid addition of Rs. 6,12,022,50/- made by AO in quantum assessment, vide appellate order dated 26.03.2018. However, it will not be appropriate on our part at this stage to comment on merits of this addition, as the second appeal is filed by assessee with Allahabad-tribunal against the said addition, vide Appeal in IT(SS) A 172/Alld/2018 for ay: 2012-13, which is pending before Allahabad-tribunal, but the proven and relevant factum of huge differential between the circle rate and the purchase consideration itself is glaring and raises eyebrows. The aforesaid seized document Annexure LP-5 Page 124, is reproduced hereunder: It is also pertinent to mention that Mr. Hemant Kumar Sindhi surrendered Rs. 12.01 crores during search. It is also pertinent to mention that the assessment u/s 153A read ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....SS, 271D and 273,as were in force at the relevant times, which reads as under: "CHAPTER XX-B REQUIREMENT AS TO MODE OF [ACCEPTANCE, PAYMENT OR] REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX [Mode of taking or accepting certain loans and deposits. 269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,- (a) the amount of such loan or deposit or the aggregate amount of such loan and deposit; or (b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is [twenty] thousand rupees or more : Provided that the provisions of this section shall not apply to any loan or deposit taken or accep....
X X X X Extracts X X X X
X X X X Extracts X X X X
....BBB or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.]" The intention behind brining the provisions of Section 269SS in the statute is explained by CBDT in Circular No. 387 dated 06.07.1984, as under : "Prohibition against taking or accepting certain loans and deposits in cash 32.1 Unaccounted cash found in the course of searches carried out by the Income-tax Department is often explained by taxpayers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of account in the form of such loans and deposits and taxpayers are also able to get confirmatory letters from such persons in support of their explanation. 32.2 With a view to countering this device, which enables taxpayers to explain away unaccounted cash or unaccounted deposits, the Finance Act has inserted a new section 269SS in the Income-tax Act debarring persons from taking or accept....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he exclusion, as in the instant case, the assessee who is a private limited company has received loan/deposit of Rs. 1,10,02,000/- in cash during the year under consideration from Mr. Hemant Kumar Sindhi who is admittedly Director of the assessee company. Section 2(31) of the 1961 Act, defines persons to include, inter-alia, individual and company. Thus, both company and its directors are distinct persons u/s 2(31). CBDT circular no. 387 of 1984 stipulates prohibition against taking or accepting certain loans and deposits in cash. It is stated in the circular that unaccounted cash found in the course of searches carried out by the Income-tax Department is often explained by taxpayers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of account in the form of such loans and deposits and taxpayers are also able to get confirmatory letters from such persons in support of their explanation. Thus, with a view to countering this device, which enables taxpayers to explain away unaccounted cash or unaccounted deposits, the Finance Act has inserted a new section 269SS in the Income-tax Act debarring persons from taking or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ublic. The issue of an advertisement in such form and in such manner as may be prescribed including therein a statement showing the financial position of the company seeking deposits from the public is being made obligatory. Provision has also been made for the Central Government to make rules in consultation with the Reserve Bank of India. Penal provisions have also been included . There is also a provision for the refund of the amount of deposits received by a company in violation of the requirement of the law. The provisions of the Act relating to a prospectus are also made applicable to the issue of such advertisement as contemplated in this clause. The clause will be applicable to all companies other than banking companies and those specified by the Government in consultation with the Reserve Bank of India." It is true that Rule 2(b)(ix) of Companies (Acceptance of Deposits) Rules,1975 provides that any deposits received by a private limited company from its Directors shall not be considered as deposits, which provides as hereunder: "2. Definitions.- In these Rules, unless the context otherwise requires,- *** (b) "deposit" means any deposit of mon....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Thus, both the legislation operates in altogether different fields, and merely because acceptance of deposits from Directors by private limited company are exempted under Companies(Acceptance of Deposits) Rules, 1975, will not exempt cash deposits by Director under the provisions of Section 269SS, otherwise the whole purpose of introducing Section 269SS as anti tax evasion device will be defeated. Further Explanation to Section 269SS itself provides that 'loan or deposit' means loan of deposit of money. The language used to define loan or deposit in Section 269SS is of the widest amplitude, and even exemptions are provided in first and second proviso to Section 269SS, which, incidentally does not cover Director of Private Limited Company and hence Director of the private limited company will be covered within the strict rigours of Section 269SS and for violation thereof penalty consequences as stipulated u/s 271D shall be applicable . If the language used in the taxing statute is plain, simple and unambiguous, then there is no scope for intendment and literal meaning is to be followed. Thus, this contention of the assessee is rejected. The assessee has raised another contention th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....payer will claim urgency in every business transaction and then Section 269SS will become otiose. Moreover, it is on four different occasion, the assessee received cash loan/deposits from Mr. Hemant Kumar Sindhi, Director, and it is not an isolated transaction where the assessee can take shelter of urgency. Thus, this contention of the assessee is also rejected, and we hold that the assessee is not able to show reasonable cause as is contemplated u/s 273B. The assessee has also claimed that the amount received by it aggregating to Rs. 1,10,02,000/- is not a loan or deposit to fall u/s 269SS. We are afraid that this contention of the assessee is again not tenable. Reference is drawn to decision of Hon'ble Madras High Court in the case of Abdul Hamid Sahib v. Rahmat Bi (AIR 1965 Mad 427), wherein the Hon'ble Court held as under: "The terms 'loan' and 'deposit' are not mutually exclusive terms. There are number of common features between the two. In a sense, a deposit is also a loan with something more. Both are debts payable. But when the repayment is to be, in our opinion, furnished the real point of distinction between the two concepts. A loan is repayable the minute it is....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r, is engaged in the business as Civil Contractor for last several years, and has surrendered income of Rs. 12.01 crores during search conducted by Revenue u/s 132(1), and the said surrender pertains to following years, as is emerging from assessment order dated 28.03.2016 passed by AO while framing his assessment (page 44-67/paper book), as under: Assessment Year Surrendered amount 2008-09 Rs. 83,30,360/- 2009-10 Rs. 2,33,92,364/- 2010-11 Rs. 2,46,65,756/- 2011-12 Rs. 74,09,729/- 2012-13 Rs. 1,34,17,605/- 2013-14 Rs. 99,74,384/- 2014-15 Rs. 3,29,15,800/- Total 12,01,00,000/- Thus, this contention of the assessee that it is not aware of the provisions of Section 269SS is rejected. At this stage, it is pertinent to refer to judgment and order of Hon'ble Supreme Court in the case of Assistant Director of Inspection v. Kum. A B Shanthi, reported in (2002) 122 Taxman 574(SC), wherein Hon'ble Supreme Court observed as under: "8. The contention of the appellant's counsel has no force. The object of introducing section 269SS is to ensure that a taxpayer is not allowed to give false explanation for his unaccounted mon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....flaged in such a way as to appear to be within its competence when it knows it is not, then alone it can be said that the legislation so enacted is a colourable legislation and that there is no legislative competence. The law relating to taxation can very well be enacted under Entry 82 in List I of the Seventh Schedule. If any legislation which intended to achieve the collection of income-tax and to make it easier and systematic is enacted, such legislation would certainly be within the competence of the Legislature. *** *** 19. It is important to note that another provision, namely, section 273B of the Act was also incorporated which provides that notwithstanding anything contained in the provisions of section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause for such failure and if the assessee proves that there was reasonable cause for failure to take a loan otherwise than by account payee cheque or account payee demand draft, then the penalty may not be levied. Therefore, undue hardship is very much mitigated by the inclu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e. It was further held that the main object of Section 269SS was to curb the menace of unaccounted money upon being unearthed giving explanation of borrowal and so-called lender also manipulates his records later to suit a plea of the taxpayer. In the said decision, the Hon'ble Supreme Court noticed Section 273B of the Act, which provides that notwithstanding anything contained in the provisions of Section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision, if he proves that there was reasonable cause for such failure and if the assessee proves that there was reasonable cause for failure to take a loan otherwise than by account payee cheque or account payee demand draft, then the penalty may not be levied. It was further held that undue hardship is very much mitigated by the inclusion of Section 273B and if there was a genuine or bona fide transaction and if for any reason the taxpayer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power. With these observations, the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... ours is further strengthened from the factual matrix of the case admitted by the assessee. The Director of the assessee has borrowed huge cash loans from Mr. J.D., who is stated to be a Financier. His quantum assessments are also now pending before the Tribunal for the assessment years 2012-13 to 2015-16. The said Mr. J.D., is shown to have extended huge cash loans to the Director. Accepting a loan in contravention to the provisions of Section 269SS automatically attracts Section 271D of the Act. Therefore, the Director having accepted cash loan in contravention to Section 269SS has become exposed to penalty proceedings under Section 271D. The Director is shown to have deposited the cash loans so obtained by him in his individual capacity into the current account/bank account of the assessee-company. The assessee-company having accepted the same in cash remittance, in contravention to Section 269SS, has also exposed themselves to levy of penalty under Section 271D. Therefore, there can be no mix up of these two individual transactions and the theory of multiplicity deserves to be out rightly rejected. 26. Our observation is further strengthened, if we examine the language....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... cash from the assessee's current bank account and repay the same to the Financier, Mr. J.D. It was the further submission of the assessee that they, being a company, cannot take a loan directly from the Financier, Mr. J.D., as taking of loan from individual was specifically barred. This admitted case of the assessee clearly reveals total lack of bona fides. Any amount of pleadings or statement of accounts can be of no assistance to the case of the assessee. The assessees, being Private Limited Companies, were clearly aware of the fact that no borrowal can be done by them from individuals. Thus, the Director of the company became the conduit. The Director received huge cash loan from Mr. J.D. The loans so obtained were deposited by him in cash in the bank account of the company. Thus, the Director acted as a shield to the transaction to give it a colour, as if it is the money given by the Director to the company. Furthermore, the same Director withdrew money from the running account of the company to pay back to the Financier, Mr. J.D. These facts will clearly show that the decision in the case of Idhayam Publications Ltd. (supra) can have no application to the case of the asse....
X X X X Extracts X X X X
X X X X Extracts X X X X
....aph 12. After going through the cash flow statement, the Tribunal expressed that the same is questionable. Further, the assessment seems to have been made on the basis of reworked notional balance sheet and statement of accounts prepared from the seized records. This factual finding also deters us from showing any indulgence to the assessee. Nevertheless, we examine as to whether the cause shown by the assessee was a reasonable cause. In support of such contention, Mr. A.S. Sriraman referred to the decisions in Kailash Triple Sterlized Water (Chennai) (P.) Ltd. (supra); Lakshmi Trust Co. (supra); Deccan Designs (India) (P.) Ltd. (supra); Balaji Traders (supra); and CIT v. Ratna Agencies [2006] 284 ITR 609 (Mad.). Before we examine as to whether these decisions would apply to the assessees' case, we need to point out one crucial aspect. 33. The Hon'ble Supreme Court in Kum. A.B. Shanthi (supra) while upholding the validity of Sections 269SS and 271D, held that if there was a genuine and bona fide transaction and if for any reason, the taxpayer could not get loan or deposit by account payee cheque or demand draft for some bona fide reasons, the authority vested with ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 43. What is most disturbing is that it is not a solitary instance, as the same type of transactions have been carried on by the assessee and the Director from the assessment year 2012-13. Most of the cases, which were relied on by the assessee are of either individual or rare transactions of the assessee. Therefore, we are of the clear view that there is absolutely no genuinity or bonafideness in the transaction done by the assessee and it will not amount to reasonable cause for the purpose of exercise or discretion by the Assessing Officer under Section 273B of the Act. 44. With regard to alternate plea raised by Mr. A.S. Sriraman stating that the penalty should be restricted to the peak of the cash deposits, we find that such a plea did not find favour with the Tribunal and in the light of the reasons assigned by us in the preceding paragraphs, we reject such a plea raised by the assessee. 45. The Tribunal while considering the correctness of levy of penalty under Section 271E of the Act found that it has been admitted that cash has been deposited into the bank account of the assessee, the funds having been routed through the bank accounts, why the same wa....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... assessee. No costs. Consequently, the connected miscellaneous petitions are closed." In this case also, the Director deposited the money in the bank account of the assessee, and the Hon'ble High Court held that no genuine or bonafide reason for not accepting the loan/deposit through account payee cheque or account payee bank draft and rather accepting the same in cash was shown by the tax-payer. Hon'ble Supreme Court dismissed the SLP filed by the assessee. The assessee has relied upon the judgment and order of Hon'ble Allahabad High Court in the case of CIT v. Dimple Yadav, reported in (2015) 280 CTR 309(Alld.), in the instant case keeping in view the facts and circumstances of the case, the Hon'ble Court held that the tax-payer was able to demonstrate the bonafide and reasonable cause. But, in the instant case before us, we have already held that no reasonable cause or urgency is shown by the assessee for having accepted cash aggregating to Rs. 1,10,02,000/- on different occasions from Mr. Hemant Kumar Sindhi. It could not be shown as to why the transactions could not be undertaken in compliance with the prescribed modes u/s 269SS. Similar is the case of CIT v. Panchshe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut, in the instant case before us, we have already held that no reasonable cause or urgency is shown by the assessee for having accepted cash aggregating to Rs. 1,10,02,000/- on different occasions from Mr. Hemant Kumar Sindhi. It could not be shown as to why the transactions could not be undertaken in compliance with the prescribed modes u/s 269SS. In the case of CIT v. Speedways Rubber Private Limited(supra) relied upon by the assessee, the tax-payer accepted share application money of Rs. 20,000/- in cash, which was accepted by Hon'ble Court as it was merely a technical breach. But, in the instant case before us, we have already held that no reasonable cause or urgency is shown by the assessee for having accepted cash aggregating to Rs. 1,10,02,000/- on different occasions from Mr. Hemant Kumar Sindhi. It could not be shown as to why the transactions could not be undertaken in compliance with the prescribed modes u/s 269SS. In the case of Smt. Meera Devi Kumawat(supra) relied upon by the assessee, the cash transaction were between husband and wife, the tribunal accepted the explanation of the assessee. But, in the instant case before us, we have already held that no reason....
X X X X Extracts X X X X
X X X X Extracts X X X X
....त कही जा रही है वह गलत है कà¥à¤¯à¥‹à¤‚कि मामले के तथà¥à¤¯à¥‹à¤‚ की सतà¥à¤¯à¤¤à¤¾ के आलोक में वैसा कोई जà¥à¤°à¥à¤®à¤¾à¤¨à¤¾ लगाने का कानूनः कोई औचितà¥à¤¯ ही नहीं है कà¥à¤¯à¥‹à¤‚कि शà¥à¤°à¥€ हेमंत कà¥à¤®à¤¾à¤° सिंधी ने कमà¥à¤ªà¤¨à¥€ को रà¥à¤ªà¤¯à¥‡ साठलाख नगद में नहीं दिये हैं बलà¥à¤•à¤¿ उकà¥à¤¤ राशि का à....
X X X X Extracts X X X X
X X X X Extracts X X X X
....¤‚बंध में यह कहना कि कंपनी रà¥à¤ªà¤¯à¥‡ à¤à¤• करोड़ दस लाख नगद का लोन लिया है पूरà¥à¤£à¤¤à¤ƒ गलत है कà¥à¤¯à¥‹à¤‚कि उकà¥à¤¤ राशि बैंक खाते व सरकार के कोष में दरà¥à¤œ है जो विà¤à¤¾à¤— के रिकारà¥à¤¡ पर à¤à¥€ मौजूद है। इस संबंध में विà¤à¤¿à¤¨à¥à¤¨ नà¥à¤¯à¤¾à¤¯à¤¾à¤²à¤¯à¥‹à¤‚ के निरà¥à¤£à¤¯ à¤à¥€ है कि जहाठनगद ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....F ICICI BANK NAINI ALLO Receipt 16-10-2011 9,00,000.00 Dr 0,00,000.00 10-2011 By ING VYSYA BANK LIMITED Cheque.DO Receipt 40,00,000.00 16-10-2011 40,00,000 00 Dr Bang Ch Roce vea from 3 Hemant Kr andhi and deported Receipt 9 11-2011 By Cash 2.000.00 Berg Cash Received Receipt 10 Cash 11-2011 By Cash Being Cash Receve for Stamp Papar Purchase 50,00,000,00 reader 023059 Cheque -11-2011 To ING VYSYA BANK LIMITED Ch No 823053 Past Via RTGS UTR NO VYSA1325704538 By ING VYSYA BANK LIMITED Cheque/DD Being RTGS Max Cancelan 823000 11-2011 To ING VYSYA BANK LIMITED Cheque Cn No 823000 and LITR Ne VYSAH! 1326731018 1-2012 By ING VYSYA BANK LIMITED To Receipt 13 30-3-2012 1.00 000 00 Dr CraquWDD Being Amount Received a FT TH O n120900085200 Closing Balance Payment 13 10,00,000.00 21-11-2011 10,00,000.00 Cr brola Recapt 12 21-11-2011 10.00.000 00 Dr 10,00,000.00 Payment 14 10,00,000 00 22-11-2011 10.00 000 00 C 1.00.000.00 2000000 06 2.24.02.000.00 2,04,02 000 00 2.24.02,000.00 2,24.02.0....