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TMI Blog2006 (4) TMI 236X X X X Extracts X X X X X X X X Extracts X X X X ..... e said provisions if he proves that there was reasonable cause for the said failure , will have its full operation. Under section 273B a judicial discretion is left with the assessing authority not to levy a penalty u/s 271D if the authority is satisfied that there was a reasonable cause for not complying with the provisions of section 269SS. We found that the undisclosed income as declared in the Block Return remained the assessed income. Revenue did not doubt the veracity of the creditors. Assessing Officer did accept the credits as genuine. Most of the creditors were agriculturists, residing in remote villages and many of them were not having any bank account. Assessee-firm was not professionally managed. From this it can be concluded th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer finalized the block assessment proceedings on 29-7-2000 determining the total undisclosed income at Rs. 99,58,020/- as under: "Total investments Rs. 3,07,29,064 Add: Difference in value of cost of Construction as per Valuation Cell (later rectified as Rs. 47,66,000) 34,44,736 Interest paid to loan creditors 5,07,888 Bank balance as on date of search 17,832 Cash found at the time of search 2,38,000 Rs. 42,08,456 Rs. 3,49,37,520 Less: Admissible loan creditors 1,29,10,000 Advances received from Clients 1,14,00,000 Opening capital assessed in individual assessment of Shri D. Virudhachalam is allowed since it is explained. 5,00,000 Rs. 2,48,06,000 Rs. 1,01,31,520 Less: Income already disclosed and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and confirmed the credits to the extent of Rs. 1,09,00,000/-. Assessment was based on investment as per entries up to the date of search. As per the diary entries up to the date of search loan creditors were to the extent of Rs. 1,29,10,000/-. 6. Assessing Officer had accepted the entire claim relating to loan transactions as genuine. He referred the matter under section 271D of the Act to the Addl. CIT as the assessee had accepted loans/deposits in cash exceeding Rs. 20,000/- in violation of the provisions of section 269SS of the Act. The Addl. CIT initiated proceedings under section 271D by issuing show-cause notice under section 274 read with section 271D on 29-3-2001 requiring the assessee to show cause as to why penalty thereunder s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 276DD constituting the failure to comply with the provisions of section 269SS into an offence, is substantially mitigated by the inclusion of section 273B providing that if there was a genuine and bona fide transaction and if for any reason the taxpayer could not get a loan or deposit by account payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty as a discretionary power not to levy the penalty." 10. When section 271D is read with section 273B, which begins with the non obstante clause 'Notwithstanding anything contained in the provisions of inter alia section 271D', it is clear that in spite of the provisions of section 271D, the enactment following, namely, ' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ur or prejudice, but clear to see which way lies the truth and the less dust there is about the better. We made attempt to examine the truth. We found that the undisclosed income as declared in the Block Return remained the assessed income. Revenue did not doubt the veracity of the creditors. Assessing Officer did accept the credits as genuine. Most of the creditors were agriculturists, residing in remote villages and many of them were not having any bank account. Assessee-firm was not professionally managed. From this it can be concluded that breach flowed from a bona fide belief. Ex facie it is a venial breach. Cash appears to be accepted because of the business exigencies. As such there exists a reasonable cause in accepting cash loans f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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