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TMI Blog2000 (6) TMI 157X X X X Extracts X X X X X X X X Extracts X X X X ..... 8-7-1991 20,000 20-11-1991 10,000 L.Jongaonkar 27-12-1991 8,000 28-11-1991 9,000 20-01-1992 15,000 12-12-1991 9,000 ---------- --------- 43,000 24-3-1992 15,000 ---------- --------- 43,000 ---------- 2. Shri Shriram 8-7-1991 10,000 20-11-1991 10,000 L.Jongaonkar 9-7-1991 9,000 28-11-1991 10,000 15-10-1991 10,000 12-12-1991 7,000 20-1-1992 10,000 27-12-1991 2,000 24-03-1992 10,000 ---------- --------- 39,000 39,000 ---------- --------- -------------------------------------------------------------------------- It is also to be noted that there were outstanding opening balance to the credit of these two persons i.e., Rs. 19,500 in the case of Shri Shriram and Rs. 16,500 in the case of Shri Ganesh. The Assessing Officer was of the view that the provisions of Section 269SS and Section 269T were violated by the assessee. Accordingly, the penalty notices under sections 271D and 271E were issued. In response to notice under section 271-D, the following explanation was tendered by the assessee before the Assessing Officer. (i) that the assessee has taken handloan in cash during the year from Shri G.L. Jongaonkar and Shri S.L. Jongaonkar for Rs. 20,000 and Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee namely (1) that in view of CBDT circular No. 387 dated 6-7-1984, the intention of the Legislature was to counter the tax evasion and therefore, genuine transactions are outside the ambit of these sections, (2) section 271E is applicable where re-payment is against deposits and not against loans. Since these payments were against the amounts received as loans, no penalty could be levied under section 271E, (3) the assessee was not aware of such drastic provision and, therefore, in view of the Supreme Court decision in the case of Motilal Padampat Sugar Mills Co. Ltd v. State of Uttar Pradesh [1979] 118 ITR 326, no penalty could be levied, (4) fault, if any, was technical and therefore, no penalty could be levied in view of Supreme Court decision in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, (5) that assessee was required to pay the money to its vendor M/s. Nagpur Distillery Ltd., immediately by Draft on receipt of the consignment of the material sold by distillery and the assessee had to arrange hand loans on account of business urgency. Further, since the lenders were agriculturists, having no Bank A/c. had to give the money in cash which constitute ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eposits and the word 'deposit' has been defined in the Explanation to Section 269T as any deposit of money which is re-payable after notice or re-payable after a period and includes the deposit of any nature. The Legislature has made distinction between loan and deposit as is apparent from the provision of Sections 269-SS and 269T. Admittedly, the notice issued under section 271D appearing at page 141 of the paper-book, refers to the charge of re-payment of loan without reasonable cause otherwise than an Account Payee Cheque or Draft. Since Section 269T does not apply to re-payment of loan, the question of levying penalty under section 271E does not arise. Therefore, in our considered opinion, the CIT(A) was justified in deleting the penalty under section 271E. The order of CIT(A) to that extent, is therefore, upheld. 6. Regarding penalty under section 27 ID, the first contention on behalf of assessee is that provisions of Section 269SS were brought on statute to counter the tax evasion and therefore, the genuine transaction do not fall within the ambit of Section 269SS. We are unable to accept such proposition of law. It is the cardinal rule of interpretation that where the langu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... penalty under section 271D. 7. The second contention of the assessee is that no penalty should be levied in view of the Supreme Court decision in the case of Motilal Padampat Sugar Mills Co. Ltd., inasmuch as the assessee was not aware of the drastic provisions of sections 269SS and 271D. We are also unable to accept this contention. Such contention cannot be heard from an assessee who is regularly assessed to tax and assisted by the tax experts. Moreover, whether a person is unaware of the provision of any Act is a question of fact which can be decided only on the basis of material placed on the record. No material has been brought on record to justify such contention of the assessee. 8. The third contention of the assessee is that no penalty should be levied in view of the Supreme Court decision in the case of Hindustan Steel Ltd. inasmuch as the default committed by the assessee is technical or venial. We are unable to accept this contention also. If such contention is accepted, then provision of section 269SS read with section 271D would become redundant. It is the settled position of law that the interpretation which makes the section workable should be preferred rather tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly, its business interest might have suffered in future. Considering the totality of the circumstances, we are of the view that assessee was prevented by reasonable cause. Accordingly, no penalty could be levied in respect of the cash loans except the sum of Rs. 8,000. 10. The only question that remains is whether penalty can be levied with reference to the sum of Rs. 8,000 raised on 27-12-1991. The copy of the account of Shri Ganesh shows that as on 27-12-1991, the balance in the account of Shri Ganesh was to the extent of Rs. 8,500 only. After raising the loan of Rs. 8,000, the aggregate amount came to Rs. 16,500 which was below the prescribed limit under section 269SS. Accordingly, no penalty could be levied with reference to the sum of Rs. 8,000 also. 11. In view of the above, it is held that there was reasonable cause for raising the loan in cash and on this account, the penalty could not be levied under section 271D read with section 273B except for the amount of Rs. 8,000. For the reasons mentioned above, no penalty could also be imposed with reference to the sum of Rs. 8,000. Accordingly, the order of CIT(A) is set aside and the penalty of Rs. 82,000 sustained by him is h ..... X X X X Extracts X X X X X X X X Extracts X X X X
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