9911796707
TMI Blog2015 (1) TMI 1115X X X X Extracts X X X X X X X X Extracts X X X X ..... nt. Therefore, we hold that ignorance of law was not a proper excuse. - Decided in favour of revenue. - Income Tax Reference No.4 of 2003 - - - Dated:- 10-12-2014 - MR. KS JHAVERI AND MR. K.J.THAKER, JJ. FOR THE APPELLANT : MRS MAUNA M BHATT, ADVOCATE FOR THE RESPONDENT : MS NIYATI K SHAH, ADVOCATE JUDGEMENT Per: K S Jhaveri: 1. By way of this reference, the Tribunal has referred the following questions of law to this Court for consideration:- 1. Whether the Appellate Tribunal is right in law and on facts in deleting the penalty levied under Section 271D of the Act? 2. Whether, the Appellate Tribunal has correctly appreciated the facts on record so as to impliedly reach to a conclusion that ignorance of law was a proper excuse? 2. The facts of this case are that the Assessing Officer during the course of assessment proceedings noted that the assessee firm accepted loans/deposits of ₹ 20,000/- each from 13 parties totalling to ₹ 2,60,000/- in cash, in contravention of the provisions of Section 269SS of the Income Tax Act. The Assessing Officer, therefore, reported the matter to the Deputy Commissioner of Income Tax for init ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b), is thousand rupees or more: Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by, - (a) government; (b) any banking company, post office savings bank or co-operative bank; (c) Any Corporation established by a Central, State or Provincial Act; (d) any Government company as defined in Section 617 of the Companies Act, 1956 (1 of 1956); (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing notify in this behalf in the Official Gazettee; Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposits is taken or accepted and the persons 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. Explanation - For the purposes of this section,- (i) banking company means a company to which the Banking Regulation Act, 1949 (10 of 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the kind which was issued by the Board would be binding on all officers and persons employed in the execution of the Act under Section 5(8) of the Act. Navnit Lal (supra) was followed in Ellerman Lines Ltd. v. CIT Manu/SC/0345/1971: [1971] 821, ITR 913 (SC). In UCO Bank v. CIT Manu/SC/0389/1999 : [1999] 237, ITR 889 (SC), the law was restated and it was held that circular of CBDT are legally binding on the Revenue and this binding character attaches to the circulars even if they be found not in accordance with the correction interpretation of the section and they depart or deviate from such construction, when they are issued in exercise of the statutory powers under Section 119. It was however clarified that the Board cannot pre-empt a judicial interpretation of the scope and ambit of the provision and further could not impose a burden on the taxpayer higher than what the Act itself, on a true interpretation, envisages. It was obserged that the Board has the statutory power under Section 119 to tone down the rigour of the law for the benefit of the assessee by issuing circulars to ensure a proper administration of the fiscal statute. In CST v. Indra Industries MANU/SC/0577/2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bove circular by the Board that s. 269 was introduced with a view to counter various devices adopted by the tax evaders for explaining their unaccounted cash found during the course of search or for introducing their unaccounted income in the form of loans and deposits thereby countering major economic evil of proliferation of black money etc. it would be worthwhile to point out that a harmonious construction of the relevant provisions of ss.273B and 271D would reveal that the use of the expression shall be liable to pay in s.271D and the provisions of s.273B providing that no penalty would be leviable if the person concerned proves that there was reasonable cause for the said failure, that these provisions give discretion to the authorities to impose the penalty or not to impose the penalty and such discretion has to be exercise in a just and fair manner having regard to the facts and material existing on records. 6.3. It would be evident from the facts given that the assessee received the said loans/deposits from the various parties in cash in contravention of provisions of section 269SS. We also note that these loans/ deposits have been accepted by the Revenue as genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tter, we take that the submissions made in this behalf before the lower authorities were duly supported by the transactions recorded in the books of accounts maintained in the normal course of business. 6.4. The assessee has placed strong reliance on the Board Circular No.572 explaining various Sections of Finance Act, 1990. Para 43 of the Circular explains, that s. 271D among others which was inserted w.e.f. 1st April, 1989; by the Direct Tax Laws (Amendment) Act, 1987 provides for the levy of penalty for failure to comply with the provisions of s.269SS for taking or accepting any loan or deposit in excess of ₹ 20,000/- otherwise than by account payee cheque or bank draft. Further an advertisement dt. 26th March, 1992, appearing in the newspaper given by the Department was to the effect that loans/deposits exceeding ₹ 20,000/- should be by account payee cheques or account-payee bank drafts; otherwise the amount in excess of ₹ 20,000 loans/deposits would be considered as default in contravention of s.269SS and defaulter shall be liable to pay by way of penalty a sum equal to amount of loan/deposit as per s.271D. According to the learned counsel for the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
