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TMI Blog2015 (11) TMI 535X X X X Extracts X X X X X X X X Extracts X X X X ..... rson Date of acceptance Amount accepted Date of repayment Amount repaid M. Naveen 29.08.2003 40,000/- 09.03.2004 90,000/- M. Sindhuja 29.08.2003 35,000/- 09.03.2004 85,000/- M. Surya Prabha 29.08.2003 34,869/- 09.03.2004 84,869/- TOTAL 1,09,869/- 2,59,869/- 3. From the above, the A.O. came to a conclusion that assessee has violated the provisions of section 269SS & 269T of the Act liable for penalty u/s 271D&E referred the matter to the Addl. CIT Eluru Range and the Ld. Addl. CIT has issued a show cause notice to the assessee called an explanation from the assessee that why penalty u/s 271D&E of the Act cannot be levied. In response to that assessee has submitted that the amounts borrowed are genuine and were accepted in cash for urgent business requirements of the assessee and the same were deposited in the bank account, which constitutes a reasonable cause u/s 273B of the Act prayed that penalty proceedings may be dropped. However, the Ld. Addl. CIT not convinced with the explanation given by the assessee and he has observed that the assessee is having a bank account in Hyderabad and the lenders also having a bank account in Hyderaba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issioner and CIT(A) rightly imposed penalty u/s 271D&E of the Act. He further submitted that the assessee has failed to substantiate his case before the authorities that the borrowed funds are used for the purpose of the business. Therefore, it is a fit case to impose a penalty u/s 271D&E of the Act. He relied on the decision of the ITO Vs. Sunil M. Kasliwal in ITA No.362/Pn/1995. 6. We have heard both the parties, perused the records and gone through the orders of the authorities below. The assessee is in the business of fertilizer carrying in a remote village i.e. Jeelakarragudem. The assessee has borrowed certain funds from three persons and repaid the amounts as follows: Name of the person Date of acceptance Amount accepted Date of repayment Amount repaid M. Naveen 29.08.2003 40,000/- 09.03.2004 90,000/- M. Sindhuja 29.08.2003 35,000/- 09.03.2004 85,000/- M. Surya Prabha 29.08.2003 34,869/- 09.03.2004 84,869/- TOTAL 1,09,869/- 2,59,869/- 6. When the Addl. Commissioner issued a notice for reasons for acceptance of loans and repayment of the loans more than prescribed under the Act, it was submitted that because of business necessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. Counsel for the assessee is concerned in the case of Maa Khodiyar Construction Ltd. (supra), the Hon'ble Gujarat High Court has observed as under: "Transactions reflected in the accounts of the assessee and the advancement of loan to the assessee had been reflected in the books of accounts of those persons from whom the loans had been received, the identity of those persons has also been well established. The assessee also had given satisfactory reason for taking such a loan. His bonafide belief that such a transaction would not attract provisions of section 269SS of the Act on the ground that they were agriculturists and lived in a remote village also one of the grounds which has waited with both the authorities. No error has been committed by both the authorities below in deleting the penalty. It is therefore that the resident has income from other business and these transactions were not between the agriculturists having only agricultural income. Not liable to tax which have exempted from such regor of law and yet, the cause advanced is then found to be sufficient reasonable and no interference could be desirable. Penalty will not ordinarily be imposed unless the party ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 269SS is wholly unwarranted. Accordingly, the impugned additions were deleted. This, in our considered view, is a default of venial nature and the decisions of the apex court in the case of Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26; [1970] 25 STC 211 is squarely applicable on the facts of the present case. Therefore, in view of these facts and circumstances, we hold that penalty levied and confirmed by the Commissioner of Incometax (Appeals) was not justified. Accordingly, we delete the same." The afore-extracted portion of the Tribunal's order shows that the conclusion of the Tribunal that there was a reasonable cause in not strictly complying with the provisions of section 269SS of the Act is based on relevant factors. We find it difficult to hold that the view taken by the Tribunal is either perverse or so irrational that no reasonable person, on the given facts, would have come to the same conclusion. The findings recorded by the Tribunal are essentially factual giving rise to no question of law much less a substantial question of law. The appeal is accordingly dismissed." 10. In the case of CIT Vs. Ratna Agencies 284 ITR 609 the Hon'ble Madras H ..... X X X X Extracts X X X X X X X X Extracts X X X X
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