2011 (12) TMI 802

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....d by the Addl. CIT on the basis of the information received from the AO that the assessee has accepted the deposits in cash. Before Addl. CIT, it was submitted that AO has added an amount to the income of the assessee u/s 68 of the Act. Hence, penalty should not be initiated u/s 271D of the Act, The Addl. CIT issued further show cause notice in which the assessee was pointed out that the addition made by the AO u/s 68 has been challenged by the assessee before the ld. CIT(A). The Addl. CIT was of the opinion that in case the appeal is withdrawn then the penalty cannot be imposed. Therefore, the Addl. CIT provide the opportunity to the assessee to file the reply. The reply was filed vide letter dated 18-06-2008. It was stated by the assessee....

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....s of account and deposited in the bank are verifiable from the respective copies of bilities. On receipt of the amount from the respective driver/parties, the appellant is handing over the amount to the truck owners/drivers, which is also verifiable from the books of account. Further the appellant also produced Shri Amarjeet Singh during the assessment proceedings for examination and who accepted the fact. Further the appellant has also furnished confirmations of the respective drivers regarding the transaction between the appellant before the AO. A copy of which are submitted in this, proceedings also. Further the AO considered the fact of deposit in bank account only but not considered the withdrawal made from the account for payments. As....

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.... penalty u/s 271D and 271E of the Act if there has been bonafide reasons with the assessee for accepting the loans/ deposits in cash or the assessee may be under bonafide belief that the amount so received is not a loan or deposit but as security. The Hon'ble Apex Court in the case of Asstt. Director of Inspection (Investigation) vs Kum. A.B. Shanthi, 255 ITR 258 has held that the authority vested with the power to impose penalty has a discretionary power. If there is a genuine and bonafide transactions and if for any reasons the taxpayer could not get the loan or deposit by account payee cheque or demand draft then for the same bonafide reasons the penalty should not be imposed. The ITAT Jodhpur bench in the case of Chouhary & Co. Bhuj....