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Issues:
1. Justification of penalty under section 271D of the Income-tax Act, 1961 for not accepting plea of reasonable cause and bona fide belief. 2. Acceptance of plea that amounts were 'Amanat' and not 'loan' or 'deposit' under section 269SS of the Income-tax Act, 1961. 3. Justification of penalty upheld by the Income-tax Appellate Tribunal in a specific case. Analysis: Issue 1: The assessee, mainly deriving income as commission agents, faced penalty under section 271D of the Income-tax Act, 1961 for accepting deposits in cash exceeding Rs. 20,000, violating section 269SS of the Act. The Deputy Commissioner imposed a penalty of Rs. 1,82,000, equivalent to the amount of deposits, as the assessee failed to prove a reasonable cause for not accepting deposits through account payee cheques or drafts. The Commissioner of Income-tax confirmed the penalty, leading to an appeal by the assessee. Issue 2: During the penalty proceedings, the assessee contended that the deposits were received from agriculturists on the sale of their produce and were in the nature of "Amanats," not falling under the purview of section 269SS. The assessee argued a bona fide belief that the section was inapplicable to deposits from agriculturists. However, the Deputy Commissioner disagreed, resulting in the imposition of the penalty. The Tribunal partially accepted the appeal, reducing the penalty to Rs. 40,000 for specific deposits from individuals other than agriculturists. Issue 3: The Tribunal directed to refer a modified question to the court regarding the non-leviability of penalty under section 271D for amounts received from specific individuals as 'Amanats' and not loans or deposits under section 269SS. The court emphasized the need to examine the nature of the controversy and the Tribunal's decision in allowing the Department's application. The assessee's petition was considered in light of the remaining penalty amount to address the entire controversy comprehensively. This judgment highlights the significance of complying with the provisions of the Income-tax Act, particularly regarding the acceptance of deposits and loans through prescribed modes of payment. It underscores the importance of establishing a reasonable cause and bona fide belief to justify deviations from statutory requirements, emphasizing the need for thorough documentation and legal arguments to support such claims.
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