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Issues Involved:
The appeal against the order of the Commissioner (Appeals) under section 271-D read with section 269-SS of the Income-tax Act, 1961 regarding imposition of penalty on loans taken by the assessee. Summary: Issue 1: Imposition of Penalty under Section 271-D The assessee, an individual and a dentist, took loans for business purposes and investments. The Assessing Officer imposed a penalty of Rs. 83,000 under section 271-D, which was upheld by the Commissioner (Appeals). The Tribunal considered the genuineness of the loans and the applicability of section 271-D. It was noted that the loans were genuinely taken for business needs without any objection raised during assessment. The Tribunal held that as the loans were bona fide and accepted by the Assessing Officer, there was no justification for imposing a penalty under section 271-D. The decision was supported by the Supreme Court's ruling in Hindustan Steels Ltd. vs. State of Orissa (1972) 83 ITR 26 (SC). Issue 2: Ignorance of Law The Tribunal also considered the claim of ignorance of law by the assessee, a dentist by profession. Referring to the Supreme Court's decision in Motilal Padampat Sugar Mills Co. Ltd. vs. State of Uttar Pradesh (1979) 118 ITR 326 (SC), it was highlighted that there is no presumption that every person knows the law. The Tribunal concluded that any ignorance of law resulting in a technical violation, without tax avoidance or evasion, does not warrant a penalty. Therefore, the penalty under section 271-D was canceled, and the appeal was allowed.
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