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TMI Blog2015 (7) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... th law. - Decided in favour of assessee for statistical purposes. - ITA No. 1930 & 1931/Hyd/2014 - - - Dated:- 17-6-2015 - Shri B. Ramakotaiah Smt.Asha Vijayaraghavan, JJ. For the Petitioner : Smt. K. Vijayalakshmi For the Respondent : Shri Rajat Mitra, DR ORDER Per Smt. Asha Vijayaraghavan, J.M. These are the appeals preferred by the assessee against the order of the CIT (A) VI Hyderabad, dated 24.09.2014 relating to A.Y 2010-11. 2. Briefly stated, the assessee is an individual deriving income from house property and agriculture. The assessment in the case of Shri Venkata Reddy Kasireddy for A.Y 2010-11 was completed with the Income Tax Officer Ward 9(3) Hyderabad u/s 143(3) of the I.T. Act on 12.3.2013. During the course of the assessment proceedings, it was noticed that the assessee had received a loan of ₹ 30.00 lakhs in cash from Shri E. Kotaiah, R/o 16-2-751/A, Flat No.404, BDR Towers, Karanbagh, Asmanghad, Saidabad, Hyderabad on 10.05.2009 thereby violating the provisions of section 269SS of the I.T. Act. Accordingly, on a reference made in this regard by the Income Tax Officer Ward 9(3) Hyderabad, penalty notice u/s 271D of the I.T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chase of Flat No.1408 in Sree Mahalaxmi Meadows and making advance payment to the builder by no stretch of imagination can be considered to be a reasonable cause for obtaining loan in cash. 4. The Add. CIT held as follows: The assessee stated that the day 10.05.2009 happened to be a bank holiday being Sunday and the amount was required for immediate need to make payment for purchase of apartment. As the sale deed was executed on 05.02.2010 after a gap of nearly 8 months, the assessee could have very well waited for one more day to allow the banking operations to run and should have obtained the loan by means of an account payee cheque/ account payee bank draft, so as not to contravene the provisions of law. Hence, the claim of the assessee that he was prevented by sufficient reason in not complying with the provisions of section 269SS of the I.T. Act, cannot be accepted . 5. The Add. CIT relied on the decision of the Hon'ble Supreme Court in the case of Gujarat Travancore Agency vs. CIT (177 ITR 455) and the decision in the case of CIT vs. Capital Electronics (261 ITR 4). The Add. CIT also referred to the decision of the Hon'ble Karnataka High Court in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s argued that penalty u/s.271 D is governed by the provisions of section 273B and this section provides that penalty u/s.27l D cannot be levied if it is proved that the failure was occasioned by a reasonable cause. It was submitted that if the assessee is able to establish the existence of reasonable cause for failure, penalty is not exigible. With reference to the statement of the Add!. CIT that even the decision of the Hon ble Supreme Court in the case of CIT v. Capital Electronics (261 ITR 4) applied to the case of the assessee, it was pointed out by the ld Counsel that the decision in the case of Capital Electronics was in fact in favour of the assessee. The ld Counsel pointed out in the case of Capital Electronics, the Tribunal held that the explanation given by the assessee was not reasonable and yet the Tribunal deleted the penalty on the ground that it was not a case of absolute default. The ld Counsel brought to our notice that the Addl. CIT also relied upon the decision in Chamundi Granites (P) Ltd. v. DCIT (239 ITR 694). It was submitted that question before the Court in the case of Chamundi Granite was whether the provisions of section 269SS and section 271 D were const ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ld Counsel further relied on CIT v. Sri Krishna Promoters Builders (2011) 16 Taxmann.corn 138 (Kar.) the assessee received deposits in cash to meet the exigencies of the situation. In this case, the High Court held that the explanation constituted a reasonable cause and the penalty was deleted. The ld Counsel further relied on the following decisions: a) CIT v. Saini Medical Stores (2006) 150 Taxmann 246 (P H). b) Dillu Cine Enterprise (P) Ltd. v. CIT (2002) 80 ITD 484 (Hyd.Trib.) c) Hindustan Steel Ltd. v. State of Orissa (83 ITR 26), d) CIT (Addl) v. Durgapandarinath Tuljayya Co (1977) 107 ITR 850 (AP) (FB), 13. The ld Counsel relied on in the case of CIT v. Balaji Traders (2008) 303 ITR 313 (Mad.), wherein the High Court held as under: If there was a genuine and bona fide transaction and the taxpayer could not get loan or deposit by account payee cheque for some reason, the authority vested with power to impose penalty has a discretion not to levy penalty. 14. The ld Counsel further relied on in the case of CIT v. Lakshmi Trust Co. (2008) 303 ITR 99 (Mad.), the High Court upheld cancellation of penalty on finding that the transactions were genuin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the cash loan of ₹ 30.00 lakhs and repayment of loan in cash to the tune of ₹ 10.00 lakhs respectively. In the absence of reasonable cause for violation of provisions of section 269T of the I.T. Act, Add. CIT levied penalty of ₹ 10.00 lakhs as per the provisions of section 271E of the I.T. Act. 2. Assessee preferred appeal before the CIT (A) and stated that part of the loan i.e. ₹ 10.00 lakhs was repaid in cash on 9.8.2009 from Shri E. Kotaiah from whom cash loan of ₹ 30.00 lakhs was obtained, since the amount was urgently needed by Shri E. Kotaiah and the amount could not be repaid by cheque since it was a Sunday. Hence, assessee pleaded that there was a reasonable cause for delay in returning the cash. The assessee stated that the urgency of the need emphasized by Mr. Kotaiah was the reason that the cash was given on Sunday, instead of payment by cheque on subsequent day. Assessee relied on the judicial decision which laid down that the penalty can be deleted in case there appeared a reasonable cause for payment in cash. The CIT (A) held as follows: 5.2 ..In the instance, the appellant borrowed the amounts on 10.05.2009 for the purpose of p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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