9911796707
TMI Blog2008 (12) TMI 669X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case in view of the material on record." The facts of the case stated in brief are that the assessee had filed return of income declaring income of Rs. 1,75,796. The Assessing Officer from the return of income noted that the assessee had purchased agricultural lands for a sum of Rs. 7,26,020 including registration charges. The source of investment was explained from loans raised from relatives. During the course of assessment proceedings, it was further noticed by the Assessing Officer that the said loans were raised from the following persons in cash, in violation of the provisions of section 269SS of the Act : Sl. No. Name Date Amount (Rs.) 1. Shri Satya Pal Singh 15-7-2004 2,00,000 2. Shri Harden Singh 20-7-2004 2,00,000 3. Shri Raj Kumar 26-7-2004 2,00,000 4. Shri Veer Singh 30-7-2004 2,00,000 It was explained by the assessee that all the four persons were enjoying income from agriculture besides other sources of income. The Assessing Officer accepted the returned income in order passed under section 143(3) of the Income-tax Act, 1961. However, the Assessing Officer initiated penalty proceedings under section 271D for accepting loans i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000 on behalf of his brother Sh. Neeraj (both as second parties to purchase transaction) to Sh. Pawan Singh, the first party before the Deputy Registrar, Meerut on August 2, 2004. It was also noted from page 4 of the sale deed that the lands were free of loan and other encumbrances. Since the amount of Rs. 8 lakhs was taken for the purchase of agricultural land, the contention of the assessee that he had raised loans in hurry for saving land from bank attachment was found to be a cooked up story to justify the source and logic of taking loans in cash. Thereafter, the Additional Commissioner of Income-tax examined the financial status of the four lenders of money. Shri Satya Pal Singh (PAN-AIDPS6389R) had agricultural income of Rs. 70,000 besides pension income of Rs. 1,40,000. He had bank account with Bank of Baroda account No. 14121. In the case of Hardan Singh (PAN-AAMPT 1975D), he had also agricultural income of Rs. 40,000 and was earning pension income of Rs. 1,20,000. He also maintained bank account No. 8501 with UTI Bank, Meerut. In the case of Raj Kumar (PAN-AIMPK 9444K), a doctor by profession had income of Rs. 60,000 and maintained bank account with Allahabad Bank. Likew ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank had not set any deadline and that too, all of a sudden. The bank loans were pending for months and the assessee and his father knew of the arrangement to be made and the assessee had ample time to finalise the impugned loans. He also observed that in the case of emergency even where any such deadline was set by the bank, the assessee could have very well requested the bank to stay such proceedings on the ground that arrangements were being made. As regards the contention of the assessee that he was not aware of the provisions of section 271D, read with section 269SS, the learned Commissioner of Income-tax (Appeals) observed that the benefit on the ground of ignorance of law could not be extended as the assessee had taken this ground as alternative plea. He, accordingly, upheld the order passed by the Additional Commissioner of Income-tax imposing penalty under section 271D of the Act. Before us, the learned authorised representative for the assessee has reiterated the similar arguments. He has stated that under pressing circumstances, the assessee had to raise loans in cash from his relatives. The loans were taken in cash for saving the honour of family and also the life ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be available to the assessee. There was no urgency for obtaining loan in cash. Sufficient time was available with the assessee to obtain loan through banking channels. The assessee had to demonstrate the urgency of taking loan in cash which has not been done by the assessee. Therefore, the provisions of section 269SS are attracted and the levy of penalty under section 271D of the Act is justified. We have heard both parties and perused the material available on record. From the facts stated above, we find that two separate transactions are involved. The first relates to registration of agricultural land on August 2, 2004 and the second relates to repayment by his brother. The assessee took loans in cash on 15th, 20th, 26th and July 30, 2004 for getting the agricultural lands registered in his name. Thus, there was sufficient time with the assessee for obtaining of loan through banking channels. As regards the repayment of loan by his father from the material placed on records we find that M/s. A. S. Forex P. Ltd. raised a term loan account No LN-8390 of Rs. 2,00,000 in February 2003 which was repaid by the company in February 2004. Another loan account No. CC-3813 of Rs. 8,00 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sh. Pawan Singh, the first party. The Assessing Officer has further noted from the copy of the sale deed that the land was free from all encumbrances. These findings of fact have not been rebutted by the assessee neither before the learned Commissioner of Income-tax (Appeals) nor before us. Further as per the certificate issued by the bank, the lands owned by Sh. Pawan Singh given as security to the Oriental Bank of Commerce against CC (hyp) No. 3813 of Rs. 8,00,000 and term loan account No. LN-8390 of Rs. 2 lakhs were released on August 11, 2004. From these facts it is clear that the lands were transferred in the name of the assessee first and the money was paid to bank subsequently after lapse of period of almost nine days. Thus, the contention of the assessee that the assessee had to arrange funds in order to save life of his father and the respect and honour of the family in order to save the ancestral property from attachment is not borne out from records. From the facts mentioned above, it may be noted that all the four persons who have advanced loans are assessed to tax and enjoyed income from pension or profession. The assessee is also an educated person employed in State ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... questions under consideration by this court to support their reasonings." The decision in the case of Motilal Padamapat Sugar Mills Co. [1979] 118 ITR 326 (SC) was rendered in the context of promissory estoppels and, therefore, cannot be applied in the case of the assessee blindly. If the contention of the assessee is accepted, no person can be punished for any default/offence not only under civil law, but also under criminal law, on the ground that the person charged of the offence can plead ignorance of law. The hon'ble Supreme Court in the recent decision in the case of Union of India v. Dharamendra Textile Processors [2008] 306 ITR 277 (SC) has held that wilful concealment is not an essential ingredient for attracting civil liability, as is the case in the matter of prosecution under section 276C of the Act. Therefore, the plea of the assessee that there was no mens rea or mala fide intention on part of the assessee is no longer valid after the decision of the hon'ble Supreme Court. Hence, the assessee cannot plead that he was not aware of law and, therefore, the same will constitute the reasonable and sufficient cause for within the meaning of section 273B of the Act. Anot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, undue hardship is very much mitigated by the inclusion of section 273B in the Act. 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 has got discretionary power." Thus from the decision of the hon'ble Supreme Court in the case of Kumari A. B. Shanthi [2002] 255 ITR 258 (SC), it is clear that where 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 has got discretionary power. In the case before us as discussed above the urgency of loan has not been proved with the evidence. The bona fide reasons have not been demonstrated with evidence. The assessee after having been caught has taken a stand that he arranged the money in a hurry to save the honour of the family and his father, which is contrary to the facts, as stated above. In our considered view, the assessee has not proved that there existed urgency consti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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