9911796707
TMI Blog2012 (10) TMI 856X X X X Extracts X X X X X X X X Extracts X X X X ..... f the case are that the assessee acquired lease hold rights over the Nazul land bearing Khasra No. 8-C, presently known as 1-A Block, Vikramaditya Marg, Thana Hazratganj, Lucknow vide agreement cum sale deed dated 31.01.2005 from Smt. Ujjwala Ramnath w/o late Shri Kamla Nath Ram, resident of 32A, Friends Colony (East), New Delhi. The rights were acquired by the assessee in the joint name with his wife, Smt. Dimpal Yadav. The said Nazul land was got converted into free hold in favour of the assessee and his wife, Vide the deed executed on 24.06.2005 for a total cost of Rs.44,67,208/-. The said amount of Rs.44,67,208/- was deposited in cash in the joint account of the assessee and his wife, Smt. Dimpal Yadav, maintained in State Bank of India Lucknow by Samajwadi Party for and on behalf of the assessee. From the perusal of the copy of account of the assessee in the books of Samajwadi Party, it was found that 50% of the above amount, i.e., Rs. 22,33,604/- has been debited to the account of the assessee. The amount has subsequently been paid back to the Samajwadi Party on 24.08.2005. It was noted by the AO that the assessee has taken cash loan from Samajwadi Party in contravention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not, and the amount or aggregate amount remaining unpaid is Rs. 10,000/- or more. The proposed prohibition would also apply in cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on the date on which such loan or deposit is proposed to be taken, is Rs. 10,000 or more." 4.1 It was, therefore, explained before the AO that as clarified by the Board, these provisions were introduced with a view to countering various devices adopted by the tax evaders for explaining unaccounted cash found during the course of search or for introducing their unaccounted income in the form of loans and deposits and it was introduced for countering the major economic evil of proliferation of black money etc. The AO, however, did not accept the contention of the assessee and was of the view that the above provision is inserted in the Income-tax Act with a view to countering cash transactions. In the case of assessee, there is no reasonable cause. The assessee's case neither falls in any exceptional clause of se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... because the assessee has been able to explain the exigency and the compelling reasons for raising of loan in cash. The ld. CIT(A) found that cash was deposited in the account of the assessee on 23.06.2005, which is necessitated by corresponding payment to the Government Department. Therefore, in terms of section 273B, the assessee has "reasonable cause" for his failure to comply with the provisions of section 269SS of the IT Act and accordingly, deleted the penalty and allowed the appeal of the assessee. The Revenue is in appeal against cancellation of penalty. 6. The ld. Representatives of both the parties reiterated their submissions and stand as was before the ld. CIT(A). The ld. DR relied upon the order of the AO and submitted that Samajwadi Party was not authorized to advance any loan to the assessee. Samajwadi Party deposited the impugned amount in the account of the assessee on 23.06.2005 and on the same day, said amount was withdrawn for the purpose of making payment to the Government Authority for conversion of land from lease hold to free hold. No bona fide has been shown by the assessee and there is a contradiction in the submissions of the assessee. There was no urgenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was of the age of 32 years in the assessment year under appeal and was of immature age and ignorant of law. Therefore, on that reason also, penalty should be deleted. He has, however, admitted that the assessee was Member of Parliament in the assessment year under appeal. The ld. Counsel for the assessee has insisted that this submission may also be dealt with by the Tribunal for considering reasonable cause for failure to comply with provisions of law. 8. We have considered the rival submissions and the material on record. The facts noted above in the order have not been disputed by both the parties. Before proceeding further, it would be relevant to reproduce the relevant provisions of law involved in the present proceedings and case laws as under : 8.1 Section 269SS provides 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 such loan or deposit or the aggregate amount of such loan and deposit ; or (b) on the date of taking o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FB, section 271G, section 271H, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, subsection (1) of section 272AA] or section 272B or sub-section (1) for sub-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure." 8.4 The memorandum, explaining above provisions, Board's Circular and the purpose of bringing the above provision in the IT Act have been noted in 146 ITR (Statute) 162 (supra). It is clear from the above circular etc. quoted in this order, that these provisions were introduced in the Income-tax Act with a view to countering the various devices adopted by the tax evaders for explaining their unaccounted cash found during the course of search or fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction to cover up unaccounted money." 8.7 Hon'ble Delhi High Court in the case of DIT (Exemption) v. All India Deaf & Dumb Society, 283 ITR 113 held as under :- "Finding of Tribunal that there was no mala fides on the part of the assessee and no intent of violating the law in accepting and repayment of loans in cash when the need arose not being perverse, did not give rise to substantial question of law." 8.8 Hon'ble Jharkhand High Court in the case of Omec Engineers v. CIT, 294 ITR 599 held as under :- "Held, that there was no finding of the assessing authority, the appellate authority or the Tribunal that the transaction made by the assessee in breach of the provisions of section 268SS was not a genuine transaction. ON the contrary, the return filed by the assessee was accepted after scrutiny under section 143(3) of the Act. Further, there was no finding of the appellate authority that the transaction in breach of the aforesaid provisions made by the assessee was mala fide and with the sole object to conceal money. Consequently, penalty imposed under section 271D merely on technical mistake committed by the assessee, which had not resulted in any loss of revenue, was har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ish reasonable cause for failure to comply with the provisions of law. Samajwadi Party deposited the impugned amount on 23.06.2005 in the joint bank account of the assessee in cash. On the same date, the said amount was withdrawn for the purpose of making payment to Nazul Department for getting the joint property of the assessee converted from lease hold to free hold. The registered deed dated 24.06.2005 executed by the Nazul Department is filed on record along with copies of the challan depositing the cash with Nazul Department on 23.06.2005. The confirmation of Samajwadi Party is filed in the paper book to support the above contention of the assessee. The copy of the assessment order for the assessment year under appeal dated 04.07.2008 u/s. 143(3) has been filed on record, in which the AO on the same matter in issue made enquiries from the assessee regarding taking the impugned loan from Samajwadi Party for conversion of the joint property of the assessee from lease hold to free hold and repayment of loan to Samajwadi Party. The AO did not dispute the genuineness of the transaction entered into between the assessee and Samajwadi Party and no addition has been made in this regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s supported by the evidence and the amount in question is also repaid through banking channel. Therefore, the assessee has been able to establish that he has 'reasonable cause' for failure to comply with the provision of law. The decisions cited above and the Board's circular clearly support the findings of the ld. CIT(A) for canceling the penalty in the matter. It is well settled law that penalty is not automatic in each and every case and it depends upon the facts and circumstances of each case. Since in this case, the assessee has produced confirmation from Samajwadi Party alongwith relevant documents on record to show that the assessee was in dire need of cash on a particular date for making cash payment to Nazul Department for getting the property converted into free hold. Therefore, it is not a fit case for levy of penalty and the ld. CIT(A), therefore, rightly exercised his jurisdiction in the matter for canceling the penalty. Considering the facts of the case in the light of the above discussion, we are of the view that the assessee has been able to explain reasonable cause for failure to comply with the provision of law. Therefore, the ld. CIT(A) rightly deleted the penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee in view of the objection of the ld. DR submitted that the language used in his letter dated 01.08.2012 was not used with the consent of the assessee. Therefore, he sought permission to withdraw his letter dated 01.08.2012. Accordingly, the ld. Counsel for the assessee was permitted to withdraw his letter and the language contained therein dated 01.08.2012. Later on fresh copy of constitution of Samajwadi party is placed on record. In view of this matter, we are of the view that since earlier Bench of the Tribunal directed to place on record copy of Constitution of the Samajwadi Party, therefore, ld. Counsel for assessee should have followed the order of court as per law and should not have commented on the same. The ld. DR raised objection that Samajwadi Party is not authorized to give loan to the assessee, therefore, we find it appropriate to decide this issue also. The issue before the Tribunal is with regard to levy of penalty u/s. 271D of the Act for violation of provisions contained in section 269SS of the Act. The above provision did not prohibit taking of loan in cash from political party or otherwise. It simply provides mode of taking or accepting certain ..... 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