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TMI Blog2013 (8) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... al is the last forum for recording such findings - All the Income Tax authorities including the Tribunal have concurrently held that there was no reasonable cause inasmuch as the story set up by the assessee to arrange the money in hurry to save the honour of the family was not proved, the assessee would not get the benefit of Section 273B of the Act – Decided against the Assessee. - Income Tax Appeal No. - 527 of 2009 - - - Dated:- 12-8-2013 - Hon'ble Sunil Ambwani And Hon'ble Surya Prakash Kesarwani,JJ. For the Appellant : Shubham Agrawal For the Respondent : C. S. C./Income Tax ORDER 1. We have heard Shri Shubham Agrawal, learned counsel appearing for the appellant-assessee. Shri R.K. Upadhyay appears for the Income Tax department. 2. This Income Tax Appeal filed under Section 260-A of the Income Tax Act (the Act) arises out of an order of Income Tax Appellate Tribunal, Delhi Bench "D", New Delhi dated 24.12.2008, by which the appeal filed by the appellant-assessee against the penalty under Section 271-D in respect of assessment year 2005-06, has been dismissed. 3. The appeal has been preferred on the following substantial questions of law:- "i) Whether t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... situation. The younger brother of the assessee was unemployed. He was involved in the company of bad characters of the area. The family members tried to settle him out of the native place. A company was floated by the family members putting him in the position of Managing Director for the purpose of carrying on business in Delhi. The company M/s A.S. Forex Pvt. Ltd having its head office at BMS-10, Plaza Cinema building, Cannaught Place, New Delhi raised a loan of Rs. 10 lacs from Oriental Bank of Commerce. The father of the assessee stood as guarantor against the loan. The agricultural land of the family was mortgaged by the father to secure the loan. Unfortunately the business of the company failed and the company could not repay the loan leading the bank to initiate recovery and attachment proceeding against the mortgaged property. The situation led the entire family into a crises. As soon as the attachment proceedings started and the notice of the attachment proceedings were served upon the family, the father of the assessee could not bear the shock and fell ill. The assessee rushed to his native place to see the father. The father requested the assessee to save his ancestral l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s only this much that bank dues had to be repaid for repossession of the ancestral property. But, by assessee's own admission, the bank had not set any deadline and that too, all of a sudden. The bank loan was pending for months; the assessee and his father knew of the arrangement to be made and the assessee had ample time to finalise the impugned loans. Hypothetically for argument sake, even if we agree that the arrangement of fund was made few days or hours before any such deadline set by the bank; the assessee could very well have requested the bank that such and such arrangement has been made and, hence, attachment proceedings should be stayed for some days by which time loan cheques would be cleared in favour of the assessee/the bank. 4.3 Neither any such deadline was set, nor there is any evidence of any such urgency. Before I part, I should mention that the appellant has mentioned about ignorance of assessee about the provisions of Section 271D read with Section 269SS; but this mentioning is only as a passing reference. In other words, it is not assessee's case that he was unaware of the impugned provisions and, hence, should be given benefit of doubt. Had it been so, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rder to save life 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. 14. 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 Govt. Service as Junior Engineer. Second proviso to section 269SS provides that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act. The income of the assessee as well as of all the four persons is chareable to tax under IT Act, 1961. Therefore, the assessee's case does not fall under the exceptions provided in second proviso to section 269-SS of the Act. The assessee fails on this counts also. 18. Thus from the decision of Hon'ble Supreme Court in the case of Km. A.B. Shanthi, it clear that where there was a genuine and bona fide transaction and if for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and reasons for inserting Chapter XX-B by the Finance Act, 1984; Departmental Circular no.387 dated 6.7.1984 as well as the objects and reasons of the amendments regarding the modes of taking or accepting certain loans and deposits and repayment of certain deposits (The Direct Tax Laws (Amendment) Act, 1987. The object of introducing Section 269SS, which has been inserted w.e.f. 1.4.1989 and has undergone amendments by Finance Act, 1985 w.e.f. 1.4.1986 and by Direct Tax Laws (Amendment) Act, 1987 ( 4 of 1988) w.e.f. 1.4.1989, is given as below:- "(3258) Prohibition against taking or accepting certain loans and deposits in cash (The Finance Act, 1984) 32.1 Unaccounted cash found in the course of searches carried out by the Income-tax Department is often explained by taxpayers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of account in the form of such loans and deposits, and taxpayers are also able to get confirmatory letters from such persons in support of their explanation. 32.2 With a view to countering this device, which enables taxpayers to explain away unaccounted cash or unaccounted deposits, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich provides that notwithstanding anything contained in the provisions of section 271D, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provision if he proves that there was reasonable cause for such failure and if the assessee proves that there was reasonable cause for failure to take a loan otherwise than by account-payee cheque or account-payee demand draft, then the penalty may not be levied. Therefore, 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 tax payer 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 that view of the matter, we do not think that section 269SS or 271D or the earlier section 276DD is unconstitutional on the ground that it was draconian or exproprietory in nature. In view of the foregoing, Criminal Appeal No.601 of 1992 is allowed and the impugned judgment is set aside. Civil Appeal No.4478 of 2000 is without any merit and dismissed, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that imposition of penalty under section 271D against the assessee cannot be sustained in law." 10. Shri Shubham Agarwal submits that it was established by the assessee on record that he was in great hurry to arrange for money to save the honour of the family. The assessee wanted to avoid attachment and sale of the agricultural land and thus he had arranged the loans in cash. He submits that even if the first two transactions, in which there was a little time, are not accepted, at least the remaining two transactions, which were close to the payments made for releasing the property and which was also evidenced by the letter of the Manager of the Bank proving the deposits to release the property, was a reasonable cause for which the penalty could not be levied under Section 273B of the Act. 11. Shri R.K. Upadhyay, appearing for the revenue states that even if there is no dispute about the genuineness and bonafides of the transactions, the breach of Section 269SS invites penalty. There is a difference between the genuine and bonafide transactions and reasonable cause for not complying with Section 269SS. The assessee's return was accepted and the loan amount was not included in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... complying with the provisions of Section 269SS. In the present case, concurrent findings have been recorded by the AO, CIT (A) and ITAT that the assessee could not establish that he had to arrange the money in hurry to save the honour of the family. The entire story of the urgency to raise loans set up by the assessee as a reasonable cause for non-compliance of Section 269SS was not believed by the Income Tax authorities and thus even if the transaction was genuine and bonafide, the explanation for non-compliance of the provisions of Section 269SS was not found acceptable. 14. The findings, whether there was any reasonable cause for non-compliance of Section 269SS are findings of fact. The Tribunal is the last forum for recording such findings. In the present case, since all the Income Tax authorities including the Tribunal have concurrently held that there was no reasonable cause inasmuch as the story set up by the assessee to arrange the money in hurry to save the honour of the family was not proved, the assessee would not get the benefit of Section 273B of the Act. 15. We do not find that any of the questions framed by the assessee in view of the findings of fact recorded b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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