TaxTMI 
TaxTMI 
2026 (9) TMI 1245
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....nces of the case and in law, the Ld. CIT(A) erred in deleting the penalty of Rs. 72,89,500/- imposed under Section 271D, without appreciating that the assessee failed to provide a cogent and verifiable explanation regarding the source and genuineness of the cash deposited during the demonetization period, thereby failing to satisfy the requirements of Section 273B of the Income-tax Act, 1961. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) was not justified in accepting the assessee's contention that the deposited cash was out of opening cash-in-hand' (reported at Rs. 50,83,467/-) without directing a proper verification of the cash book and the availability of such liquidity, especially when the total deposit exceeded the purported opening balance. 3. The Ld. CIT(A) erred in holding that the Assessing Officer's findings were based on surmises and conjectures, while ignoring the fact that the assessee failed to discharge its primary onus of proving that the cash transactions did not fall within the ambit of 'specified sums' or 'deposits' as contemplated under the provisions of Section 269SS. 4. Th....
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....ilable and lying at various shops and with the Director was submitted to the Assessing Officer during the course of assessment proceedings. It was further submitted that the director, Shri Rahul Leekha, also appeared in response to summons under section 131 and explained that all the cash deposited during the demonetization period was out of cash in hand available in the books and copy of the cash account was also submitted. It was accordingly submitted that out of the total sum of Rs. 72,82,000/- deposited in the bank account Rs. 52,33,974/- was from the opening cash in hand and the necessary explanation as well as documentation were duly submitted before the Assessing Officer and in spite of that, the Assessing Officer has proceeded and made the addition. It was further submitted that the penalty has been initiated for violation of Section 269SS of the Act and the Assessing Officer has held that the assessee has failed to explain the source of the cash deposits, whereas the assessee has given complete explanation of cash deposits during the course of assessment proceedings as well as in response to summons under section 131 of the Act. 6. The submissions so filed by the assess....
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....f proving that the cash transaction did not fall within the ambit of specified sums or deposits as contemplated under the provisions of Section 269SS of the Act. It was accordingly submitted that the order so passed by the ld. CIT(A) be set aside and that of the Assessing Officer be sustained. 8. We have heard the rival contentions and perused the material available on record. There cannot be any manner of dispute that the penalty provisions have to be strictly construed and no penalty can be imposed on the assessee unless the conditions stated therein are duly satisfied. Also, there cannot be any manner of dispute that unlike in the context of quantum proceedings, where the assessee is required to provide the requisite explanation (and substantiation through appropriate documentation) regarding the nature and source of cash deposits; in the context of penalty proceedings, it is for the Competent authority levying the penalty to record specific findings as to how the charge for levy of penalty is satisfied in the instance case. In other words, in the penalty proceedings u/s 271D in the instant case, the initial onus is on the Competent authority to specify as to how the conditio....
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....is section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act: Provided also that the provisions of this section shall have effect, as if for the words "twenty thousand rupees", the words "two lakh rupees" had been substituted in the case of any deposit or loan where -- (a) such deposit is accepted by a primary agricultural credit society or a primary co-operative agricultural and rural development bank from its member; or (b) such loan is taken from a primary agricultural credit society or a primary co-operative agricultural and rural development bank by its member. Explanation.-For the purposes of this section,- (i) banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; (ii) "co-operative bank", "primary agricultur....
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....t. 12. The said findings have thereafter been followed and summarily applied by the JCIT while levying the penalty u/s 271D of the Act holding that since the assessee has failed to explain the source of cash deposits, it has contravened the provisions of section 269SS of the Act. 13. The question that arises for consideration is to how the JCIT has reached the conclusion that the assessee has contravened the provisions of section 269SS without even discussing the satisfaction of the conditions so specified u/s 269SS as we have noted earlier. Mere deposit of cash in the bank account without bringing on record as to how the conditions of section 269SS are satisfied which talks about transaction or series of transaction with a particular individual or individuals and satisfying the test of transaction being in the nature of loan or deposit or other specified sum and threshold thereof cannot automatically lead to satisfaction of charge for violation of provisions of section 269SS of the Act. 14. Where the assessee claims that money belongs to it and arising out of cash-in-hand and the Revenue rejects the said explanation as not found acceptable and bring the amount to tax as u....