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TMI Blog2014 (12) TMI 923X X X X Extracts X X X X X X X X Extracts X X X X ..... iled her return of income on 02/12/2010 declaring total income of Rs. 66,98,640. A search and seizure operation was conducted in case of Pratima Educational Society as well as trustees and all related persons on 10/09/2009. Assessee being one of the related persons within the group and since certain incriminating material belonging to assessee were allegedly found and seized from the office of Pratima Educational Society, a notice u/s 153C of the Act was issued to assessee calling upon her to submit her returns of income for AY 2004-05 to 2009-10. In course of the assessment proceeding for the impugned AY, AO found that assessee had obtained unsecured loan from one Shri B. Srinivasa Rao, i.e. a sum of Rs. 5 lakh was received on 03/12/2009 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se. It was thus submitted that only for meeting business exigency and due to urgent need cash loan was taken. It was submitted that labourers doing repair and maintenance work demand their payments once their work is completed and they will usually not wait for payment. It was submitted that on completion of work, settlement of payment in these types of works like painting etc. usually takes place till late evening and by the time they complete their work, the staff in the accounts department will leave. Therefore, considering the fact that no cash was available on those dates, assessee had to take cash loans from Shri B. Srinivasa Rao for paying them to the labourers. It was submitted that TDS as applicable on payments was made and remitte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransaction and the identification of the parties will have nothing to do with the contravention u/s 269SS for which penalty is leviable. He observed that the ambit of section 269SS is wide enough to cover genuine transactions where parties are identifiable so long as there is no reasonable cause for accepting cash loan. It was observed by Addl. CIT that when there is specific provision for not accepting from any other person any loan or deposit otherwise than by way of an account payee cheque or accout payee bank draft if the amount of such loan or deposit or aggregate loan of such loan or deposit exceeds to Rs. 20,000, provision has to be interpreted strictly unless exceptions provided towards payments to certain persons as per first and s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... entries in the cash book in the subsequent dates also showed that there was no need to borrow cash from Shri B. Srinivasa Rao as cash balance on all subsequent dates was above Rs. 5 lakhs up to 03/12/2009. Therefore, assessee's plea that cash loan was availed for business exigency is not born out from record. Addl. CIT further noted that when both assessee and lender Shri B. Srinivasa Rao are having bank account and both residing in Hyderabad, there is no necessity of borrowing in cash on account business exigency. Addl. CIT finally concluded that penalty u/s 271D of the Act is leviable for the following reasons: " a) There is no dispute that the assessee had accepted the loan. b) Both the assessee and the lender have the bank accounts a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment shows only the transfer of the amount of Rs. 5 lakh in the subsequent year and not by any cheque or draft which only supports the argument of AO that when both assessee and the lender have bank account in the same bank, there is no reason to accept the loan of Rs. 5 lakh in cash. She noted that even assessee could not establish the fact that the cash loan claimed to have been received towards meeting repairs and renewals of the hospital building has been spent for the intended purpose with any documentary evidence like bills, vouchers, or confirmations from masons etc. By observing that the explanation submitted by assessee is very general in nature and her attempt to show that there was a reasonable cause in accepting cash loan in vio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transaction, penalty should not have been imposed. On plain reading of provisions contained u/s 269SS, it is clear, the issue whether the transaction is genuine or not is not at all relevant. The language employed in the section is plain and simple and there is no ambiguity in the same. When any person obtains a loan above Rs. 20,000 from another person not by way of crossed-cheque or demand draft, then, there will be a violation of the provisions of section 269SS. When the provision does not make any distinction whether a transaction is genuine or not, it cannot be read into the statutory provision. Moreover, if the transaction would not have been genuine in the opinion of AO, then, the entire loan would have been added by AO. Only becaus ..... X X X X Extracts X X X X X X X X Extracts X X X X
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