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TMI Blog2014 (7) TMI 137X X X X Extracts X X X X X X X X Extracts X X X X ..... irement of Section 273B is for the assessee to prove that there was a reasonable cause for its having failed to abide by the provisions of Section 269SS - not only the substantiating evidence like 7/12 Extracts were produced, but, also additionally, transactions were reflected in the accounts of assessee and the advancement of loan to the assessee had been reflected in the books of account of those persons from whom the loan had been received - The identity of those persons has also been well established - assessee also had given satisfactory reason for taking such loan - His bona fide belief that such transactions would not attract provision of Section 269SS on the ground that they were agriculturists and lived in remote villages also was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... following two questions for our consideration : (A) Whether in the facts and circumstances of the case, the ITAT has erred in law in rejecting the Revenue's appeal against the decision of CIT (A) in dealing the penalty levied u/s. 271D of the Income-tax Act, even though the assessee is not covered by the exception to Section 269SS of the Act provided in second proviso to the said Section 269SS, as the assessee had taxable income under the Act and accepted cash exceeding the limit provided under the said Section 269SS ? (B) Whether 'genuineness of the loan/deposit' or 'bona fide nature of the loan/deposit transaction' is the criteria for examining the contravention of the provisions of Section 269SS o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere agriculturists and are staying in remote areas, CIT [A] relying on the decision of the Apex Court in case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 held that a technical or venial breach of provision cannot lead to levy of penalty, and therefore, set-aside the order of Assessing Officer mainly holding that none of the transactions had been doubted by the Revenue. Aggrieved, Revenue preferred appeal before the Tribunal which concurred with the decision of the CIT [A], and therefore, the present appeal raising aforementioned questions of law. It is contended by the Revenue that though the genuineness of the transactions had not been doubted and assuming that these agriculturists were residing in the remote areas th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that the assessee company could not have entertained a bona fide belief that the loans accepted by it from directors and shareholders were not covered by the provisions of Section 269SS of the Act. In case of K.V George (supra), the Kerala High Court held that the burden is on the assessee to prove that there was reasonable cause for receiving cash from various persons. It was a case where the assessee had accepted loans exceeding the limit specified under the Act from certain creditors. When asked to explain the reasonable cause, the assessee had failed to explain the same and instead had stated that substantial amount was received from the creditors. Nothing was emerging as to why such amount was received by way of cash except th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore contravenes the provision of Section 269SS of the Act. For not inviting the rigour of penalty u/s. 271D of the Act as consequence, on the part of the assessee, the reasonable cause needs to be shown. What is pleaded by the respondent was that all these persons were agriculturists and that the genuineness of the transactions at no point of time had been doubted by the Revenue. They stayed in remote areas. Both the authorities, therefore, were of the opinion that reasonable cause had been sufficiently made out and when the very transactions were never doubted by the Revenue authorities, the breach is to be treated as a mere technical or venial breach. We notice that the requirement of Section 273B is for the assessee to prove tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he result of a quasi criminal proceeding, and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest, or act in conscious disregard to its obligation. Penalty will not also be imposed merely because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or whe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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