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TMI Blog2006 (7) TMI 264X X X X Extracts X X X X X X X X Extracts X X X X ..... Vira 24,241 Smt. Dayalaxmi 23,233 Shri Abhay Kankane 22,350 Miss Ann Marya Thomas 20,000 Shri Ashish Dhirwani 20,000 Shri Jitendra Shrivastava 22,380 -------- 1,32,204 -------- 3. The AO while observing that as per provision of s. 269SS of IT Act, if any person takes or accepts from any other person any loan or deposit after 30th of June, 1984, otherwise than by an account payee cheque or draft, if the amount of such loan or deposit or the aggregate amount of such loan or deposit is Rs. 20,000 or more he becomes liable for penalty under s. 271D. Since the assessee-company had accepted loans/deposits in cash for Rs. 20,000 and more from the above persons in contravention of the provisions of s. 269SS of the IT Act, the proceedings under s. 271D were initiated and show-cause notice was issued to the assessee accordingly. 4. In reply to the show-cause notice the assessee submitted vide letter dt. 30th Nov., 1995 and 5th Dec., 1995 that deposit from the following persons had been accepted during the year 1991 as under: Rs. Miss AM. Thomas 1.8.1991 20,000 Shri Jitendra Shrivastava 3.8.1991 20,000 Shri Abhay Kankena 6.8.1991 20,000 Shri Hemchand Veera 1.5.1991 5,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... D. As such penalty of Rs. 1,20,700 was imposed under s. 271D for the above default vide order dt. 12th Dec., 1995. 8. The assessee filed appeal before the first appellate authority against the order of learned Dy. CIT (Asst.) Spl. Range, Jabalpur and while reiterating the submissions as made before the lower authorities, it was pleaded for deletion of the penalty imposed by AO as there was reasonable cause for not complying with the provisions as contained in s. 269SS because the assessee raised loans during the course of construction of the hospital when it was in urgent need of the money to make the payment of labourers and various dealers who supplied materials. As the bank was not releasing the instalments of term loan, the difficulty arose. The assessee is stated to have filed the copy of correspondence made with the bank before the AO. It was also contended before the AO that the assessee-company was prevented by sufficient cause for accepting cash loans but the AO did not accept the contention of the assessee by holding it to be not a reasonable cause, so, for violating the provisions of s. 269SS, has imposed the penalty. It was contended before the first appellate authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of learned CIT(A) and restoring that of AO. It was submitted that since the assessee has accepted cash loans/deposits or aggregate of which is of Rs. 20,000 and more from various parties during the year under consideration and no reasonable cause has been shown, the AO has rightly imposed the penalty and CIT(A) is not justified in deleting the same. It was further submitted that amount required for construction cannot be held to be of urgent nature and moreover no details with dates and other relevant data has been filed by the assessee to establish that there was actual need of funds on the dates when loans are accepted in violation of provision as contained under s. 269SS and in case such loans were not received on these particular dates, the assessee would have been put to inconvenience as well as had suffered irreparable loss and the assessee could not wait for the cheques or draft to be en cashed and that apart, assessee did not come forward to show as to how such loans or deposits were utilized by filing necessary details and documents in this regard, therefore, there is a clear violation of the provision as the assessee has not been able to establish any reasonable cause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gative. 12. In order to counter the submission of the learned counsel for the assessee, learned Departmental Representative submitted that the Hon'ble High Court has not granted stay against either penalty proceedings before AO or against the proceedings before other higher authorities. Therefore, the plea of the assessee in this regard should not be accepted. Further the assessee has violated the provisions of law without establishing any reasonable cause, therefore, the order imposing penalty in this regard passed by the AO should be restored. 13. We have heard both sides, considered materials on record as well as documentary evidence furnished before the lower authorities and copies placed in the paper book to which our attention was drawn as well as the case laws cited. Before adverting to the facts of the present case, it would be appropriate to reproduce the relevant portion of s. 269SS which reads as under- 269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,- (a) the amount of su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly mitigated by the inclusion of s. 273B providing that if there was a genuine and bona fide transaction and the taxpayer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reason, the authority vested with the power to impose penalty has a discretionary power not to levy the penalty. It is settled law that the heads of legislation given in the lists in the Seventh Schedule to the Constitution should not be construed in a narrow or pedantic way. If any legislature makes an ancillary or subsidiary provision which incidentally transgresses its jurisdiction for achieving the object of such legislation, it would be a valid piece of legislation. The entries in a legislative list should be given their fullest meaning and widest amplitude and be held to extend to all ancillary and subsidiary matters which can fairly and reasonably be said to be comprehended in them. It is only when a legislature which has no power to legislate, or the legislation is camouflaged in such a way as to appear to be within its competence when it knows that it is not, that it can be said that the legislation so enacted is a colourable legislation and that there is no legi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power. In that view of the matter, we do not think that s. 269SS or 271D or the earlier s. 276DD is unconstitutional on the ground that it was draconian or expropriatory in nature". 17. Now adverting to the facts of the case, it is found to be an uncontroverted fact that the assessee has accepted the cash loans/deposits or the aggregate of such loans or deposits of Rs. 20,000 and more from various persons as detailed in earlier paragraphs, otherwise than by crossed account payee cheques or drafts. Since there is violation of provision of s. 269SS, penalty proceedings were initiated and after considering the reply of the assessee the AO imposed penalty of Rs. 1,20,700 under s. 271D of the IT Act by holding that the assessee has failed to establish any reasonable cause for violation of the specific provision of law in this regard and said penalty came to be deleted by learned CIT(A) on the ground of reasonable cause. 18. In the light of abovenoted authoritative pronouncements and the facts as found and mentioned as above, it is observed that the assessee may be exonerated from t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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