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Appeal against cancellation of penalty under section 271D of the Income Tax Act for violation of section 269SS. Analysis: The appeal was filed by the Revenue against the order of the CIT(A) canceling the penalty of Rs. 1,01,000 imposed under section 271D of the Income Tax Act for violating the provisions of section 269SS. The Revenue contended that the CIT(A) erred in canceling the penalty. The Dy. CIT concluded that the loans/deposits were accepted in cash without any reasonable cause, leading to the imposition of the penalty. The CIT(A) considered the reasons and case laws presented by the assessee but opined that no penalty can be imposed for a mere technical violation. The Departmental Representative argued that the penalty should not have been deleted without proper consideration of the reasons for accepting cash loans. The Departmental Representative relied on judgments from the Hon'ble Supreme Court and the Hon'ble Rajasthan High Court to support the contention that the penalty can only be canceled for a reasonable cause. The Authorised Representative of the assessee argued that section 269SS regulates the mode of accepting loans and deposits to prevent tax evasion. Referring to case law, the Representative contended that if the deposit was not taken to evade income tax, penal action should be dropped. It was argued that in cases of technical breaches, the harsh provision of section 271D should not be invoked. The Representative also pointed out that no deposit exceeding Rs. 20,000 was accepted, indicating no guilty intention on the part of the assessee. The ignorance of the law was cited as the reason for accepting loans in cash. The Tribunal noted that none of the cash transactions exceeded Rs. 20,000. Citing previous judgments, the Tribunal agreed that the case involved technical violation and venial breach, leading to the cancellation of the penalty by the CIT(A). The Tribunal declined to interfere with the CIT(A)'s order, ultimately dismissing the appeal of the Department. In conclusion, the Tribunal upheld the CIT(A)'s decision to cancel the penalty under section 271D for the violation of section 269SS, emphasizing the technical nature of the breach and the absence of any substantial violation.
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