TaxTMI 
TaxTMI 
TaxTMI 
1999 (6) TMI 52
X X X X Extracts X X X X
X X X X Extracts X X X X
....t has contravened the provisions of s. 269SS without any reasonable cause. 4. That the learned CIT(A) has erred in upholding the levy of penalty under s. 271D amounting to Rs. 23,000. 5. That the learned CIT(A) has erred in ignoring the well-settled principles of law that penalty proceedings are quasi-criminal in nature, the concept of mens rea or guilty mind must be established by the Department and the assessee is not to be penalised unless necessary mental element could be spelt out from the material on record." 3. The Revenue has filed cross-appeal on the following effective grounds: "1. The learned CIT(A) has erred both in law and on facts in reducing penalty of Rs. 89,650 to Rs. 23,000 with the observations that amount of cash deposit in violation of s. 269SS other than interest credited at the end of the year comes to Rs. 23,000 only. 2. The learned CIT(A) has erred in not appreciating the facts that the firm had certain cash deposits of Rs. 15,000 each from S/Shri Swaran Dass, Satpal and Rs. 23,000 from Smt. Promila Kumari, besides Rs. 15,400 from Sh. Kulwant Rai which come to Rs. 68,400 which are in violation of the provisions of s. 269SS even if the amount of in....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ayable after notice, or (2) repayable after a period (time or call deposits or Hundi loans) and these are only covered under s. 269SS of the IT Act; if the deposits are of any other kind, no contravention under s. 269SS is made out. In the instant case, these deposits are not covered under s. 269SS because neither these deposits are (1) payable after notice (2) repayable after a fixed period and hence in the case of the assessee, since provisions of s. 269SS have not been contravened by the assessee, the deposits are found to be genuine; there is no motive of the assessee for conversion of black money into white money, so no penalty could be imposed upon him. However, the AO did not agree with the contention of the assessee's counsel and he came to the conclusion that the provisions of s. 269SS have been violated by the assessee, so he imposed a penalty of Rs. 89,650 under s. 271D of the IT Act. 7. In appeal, the CIT(A) partly allowed the appeal of the assessee and reduced the penalty to Rs. 23,000 by passing a detailed order wherein he also allowed a relief of Rs. 66,650 to the assessee. 8. Against this order, now the assessee is in appeal before us for deleting the reduced pe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....reafter come to the conclusion that whether these amounts fall within the meaning of deposit of loan as used in s. 269SS of the Act. Hence, we again mention that the cited case of the Cochin Bench is of no help to the assessee in his own case. 12. The other judgment referred by the assessee in this case is CIT vs. Kalani Asbestos (P) Ltd. (1996) 134 CTR (MP) 428 : (1997) 224 ITR 338 (MP), wherein according to the assessee, it has been held by the Hon'ble Judges of the Madhya Pradesh High Court that amounts received from the directors and shareholders of private limited company did not represent the deposits but such amounts, were kept by the company only in the nature of running current accounts, allowing the directors and shareholders to withdraw the same as and when required and, hence, provisions of s. 40A(8) were not attracted. The assessee's counsel has emphasised that similarly in the assessee's own case also these are not the deposits or loans within the meaning of s. 269SS as these were current accounts of the depositors with the assessee and hence are not loans or deposits. 13. Even this citation referred by the assessee is not applicable to the facts of the case of th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the amount so received. In the case of a deposit which is payable on demand, the deposit would become payable when a demand is made. In the case of a loan, however, the obligation to repay the amount arises immediately on receipt of the loan. It is possible that in case of deposits which are for a fixed period or loans which are for a fixed period, the point of repayment may arise in a different manner. But, by and large, the transaction of a loan and the transaction of making a deposit are not always considered identical. 15. 'Loan' and 'deposit' are not identical in meaning and cannot be inter-changed. Some loans may be deposits and some deposits may be loans but all loans are not deposits and vice versa. 16. Here in the present case, the assessee without stating any complete particulars of the deposit and without giving any particulars as to why he was accepting these depositors and as to why these depositors were making these deposits with the assessee and how these deposits were to be returned/repaid by the assessee to the depositors, he had called these deposits in the nature of current accounts with the assessee. We are afraid that unless the assessee had given/supplie....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... fully exigible in the case of the assessee and in support thereof he has placed on record the photocopy of the order of this very Bench delivered in ITA No. 1398/Asr/1992, dt. 25th Feb., 1999, for the asst. yr. 1990-91 in the case of ITO vs. Surinder Kumar Ramesh Lal. 19. In reply to the show-cause notice issued by the AO, the assessee filed a reply, photocopy of which has been placed on record in the paper book at pp. 1 to 4 by the assessee, wherein he has stated that since no black money has been introduced and no tax evaded either by the assessee or by the depositors nor did they defraud the IT Department as all the depositors are existing income-tax assessees and their identities are also known to the Department. If the intention of the assessee or the depositors had been to convert black money into white money or to defraud the IT Department, they were at liberty not to disclose such deposits. No revenue loss has been caused to the Department by the conduct of the assessee. So it has been asserted by him that no penalty is exigible in his case. 20. The assessee has also relied upon the decision of Tribunal, Ahmedabad Bench, Ahmedabad, in the case of Vir Sales Corporation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e the acceptance of deposits as genuine by the assessee is not relevant, so far as provisions of s. 269SS are concerned, because s. 269SS simply prohibits the accepting/receiving of loans/deposits in cash aggregating to Rs. 20,000 or more. This is evident from the plain reading of this section. We have also pointed out that the provisions of s. 269SS r/w s. 271D are mandatory in nature and if default is committed, nothing further is to be proved and the default committed itself attracted penalty. Hence, keeping in view the explanation given by the assessee to the AO and other relevant material facts, we hold that the assessee has not been able to show any reasonable cause on the basis of which this Bench could say that the penalty was not exigible in the case of the assessee. On the contrary, the facts clearly show that the assessee has committed default for which the penalty is exigible under s. 271D of the Act; the lower authorities have rightly done so by passing a detailed order. Hence, this second point is also decided against the assessee. 21. Now, after deciding the first and second points against the assessee, we come to the third point, i.e., regarding the quantification....