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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 ..... 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 of the Income Tax Act, 1961 for levying penalty u/s. 271D of the Income Tax Act, 1961 ?"' The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustan 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 that would not permit the respondent to make any breach of provision of Section 269SS of the Act. Any transaction above a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... areholders 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 that the assessee had to put up an industrial unit. In such factual matrix, the High Court was not convinced about the genuineness of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 that there was a reasonable cause for its having failed to abide by the provisions of Section 269SS. As emerges from the record, not only the substa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute." We find that both the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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