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TMI Blog2001 (5) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... se by explaining the urgency of funds required to meet the exigencies of payments and also by stating that the genuineness of all the transactions have been accepted by the Department. This plea of the assessee, however, was not accepted by Jt. CIT and he proceeded to impose a penalty under s. 271D holding that the assessee has clearly violated the provisions of s. 269SS without any reasonable cause. The assessee carried this matter before the learned CIT(A), Udaipur, who confirmed the said penalty observing that neither the reasonable cause nor the bona fide belief on the part of the assessee stands established in the facts and circumstances of the case. Aggrieved by the same, the assessee is in appeal before us. 3. The learned counsel f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mitted by the assessee. He, therefore, contended that the assessee being ignorant of the relevant provisions of the law, the urgent need of funds having been established, the genuineness of the deposits as well as the identity and capacity of the depositors having been accepted by the Department, there was a reasonable cause for accepting the cash deposits in contravention of provisions of s. 269SS and, therefore, the levy/sustenance of penalty under s. 271D was not justified in view of s. 273B. In support he placed reliance on the following decisions: (1) CIT vs. Harsiddh Construction (P) Ltd. (2000) 159 CTR (Guj) 364 : (2000) 244 ITR 417 (Guj) (2) Bank of Rajasthan vs. ITO 23 Tax World 248 (Jd) (3) ITO vs. Babulal Singhvi 23 Tax Wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee cannot seek any relief for the reason that the default is of technical or venial nature. He further submitted that the assessee comes from a business family and being an old taxpayer, the assessee should have been aware of the provisions of s. 269SS introduced in the Act in April, 1989, whereas the default has been committed by the assessee in the previous year relevant to the asst. yr. 1994-95. He, therefore, contended that there was no mistaken belief on the part of the assessee and it acted deliberately in defiance of law while accepting the deposits/loans in cash in contravention of the provisions of s. 269SS. 5. In rejoinder, the learned counsel for the assessee submitted that the year under consideration was the first year of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessee tried to explain the urgent need of funds for construction expenses under exigencies before the authorities below but its plea was brushed aside merely on the basis of assumptions and presumptions without going into further details to ascertain the exact factual position. The learned counsel for the assessee has contended that the year under consideration was the first year of assessee s business operations and at that time the assessee was ignorant about the relevant provisions of the Act. The learned Departmental Representative, on the other hand, has contended that ignorance of law cannot be an excuse. In our opinion, this aspect has to be looked into in the light of the exact fact situation of the case and if there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e belief. The other cases cited by the learned counsel for the assessee also support the assessee s case. 8. As such, considering all the facts and circumstances of the case and the legal position emanating from various judicial pronouncements cited by the learned counsel for the assessee, we hold that the default in contravention of provisions of s. 269SS flowed from the bona fide belief and the same coupled with the fact that all the transactions have been accepted by the Department as genuine constitute a reasonable cause rendering the said default on the part of the assessee as merely of a technical or venial nature and no penalty in such case can be levied under s. 271D in view of s. 273B. We, therefore, cancel the penalty imposed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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