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TMI Blog2016 (4) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... rat City and both of them are not agriculturists. They are regularly filing their return of income. Therefore, there cannot be any reasonable cause for such failure. In these circumstances, there do not seem to be any way out for the assessee to get away from the penalty u/s 271D and therefore, we do not find any reason to interfere with the order of the learned CIT(A) - Decided against assessee Penalty u/s 271E - Held that:- From going through the above provisions of Section 269T, we find that this section is applicable only on repayment of any loan or deposit taken by the assessee and looking to the facts of the case, we find that at the time of repayment in cash there was no unsecured loan standing in the books of assessee for which repayment have been made; rather the balance of ledger account of M/s. Karmayog Commercial Corporation was already standing as debit balance and even all through the period when cash payment of ₹ 5,13,440/- was made, the account of M/s. Karmayog Commercial Corporation never came under the unsecured loan category. We are, therefore, of the view that in such situation the assessee should not be visited with penalty u/s 271E of the Act, because ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 269SS of the Act by taking loan exceeding ₹ 20,000/-, otherwise than by account payee cheque or draft. Thereafter, following the decision of learned CIT(A), the Assessing Officer went ahead to impose penalty u/s 271D of the Act. 4. Aggrieved assessee went in appeal before the learned CIT(A) which did not bring any relief to the assessee. Aggrieved assessee is now in appeal before the Tribunal. 5. First we take up Ground No.1 raised against the initiation of proceedings u/s 271D of the Act being time-barred. The learned Authorized Representative submitted that the penalty u/s 271D passed by the learned Assessing Officer is time-barred as per the provisions of Section 275(1)(c) of the Act, which says that no order imposing a penalty Chapter shall be passed after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which action for imposition of penalty is initiated, whichever period expires later. The learned Authorized Representative submitted that in the case of the assessee the order imposing penalty u/s 271D has been passed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chapter shall be passed- (a) in a case where the relevant assessment or other order is the subjectmatter of an appeal to the Commissioner (Appeals) under section 246 or section 246A or an appeal to the Appellate Tribunal under section 253, after the expiry of the financial year in which the proceedings, in the course of which action for the imposition of penalty has been initiated, are completed, or six months from the end of the month in which the order of the Commissioner (Appeals) or, as the case may be, the Appellate Tribunal is received by the [Principal Chief Commissioner or] Chief Commissioner or [Principal Commissioner or] Commissioner, whichever period expires later : Provided that in a case where the relevant assessment or other order is the subject-matter of an appeal to the Commissioner (Appeals) under section 246 or section 246A, and the Commissioner (Appeals) passes the order on or after the 1st day of June, 2003 disposing of such appeal, an order imposing penalty shall be passed before the expiry of the financial year in which the proceedings, in the course of which action for imposition of penalty has been initiated, are completed, or within one year fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rincipal Chief Commissioner or] Chief Commissioner or the [Principal Commissioner or] Commissioner or the order of revision under section 263 or section 264 is passed: Provided further that the provisions of sub-section (2) of section 274 shall apply in respect of the order imposing or enhancing or reducing penalty under this sub-section. (2) The provisions of this section as they stood immediately before their amendment by the Direct Tax Laws (Amendment) Act, 1987 (4 of 1988), shall apply to and in relation to any action initiated for the imposition of penalty on or before the 31st day of March, 1989. Explanation.-In computing the period of limitation for the purposes of this section,- (i) the time taken in giving an opportunity to the assessee to be reheard under the proviso to section 129; (ii) any period during which the immunity granted under section 245H remained in force; and (iii) any period during which a proceeding under this Chapter for the levy of penalty is stayed by an order or injunction of any court, shall be excluded. From going through the above provisions of Section 275, we find that the relevant portion which is applicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, which is a sole proprietary concern owned by the assessee s brother. The assessee has also accepted during the assessment proceedings as well as during the appellate proceedings before the learned CIT(A) that these transactions are not related to any purchase/sale of goods, rather these are petty cash loans taken on various dates in order to deposit in his bank account for clearing various EMI of personal loans taken by him. During the proceedings before the lower authorities, the assessee has requested to grant him immunity from the provision of Section 271D on the ground that there was a reasonable cause as provided in provisions of Section 273B of the Act, because the assessee has taken cash loan from his own brother. 7.2 The assessee could not get any relief before the learned CIT(A) who has confirmed the penalty u/s 271D. 8. We have heard the rival contentions and perused the material on record. We find that the learned CIT(A) has observed as under while sustaining the penalty u/s 271D of the Act:- 6.2.1 The Grounds of appeal- Ground Ho. 2 pertains to levying penalty of ₹ 7,50,000/- under the provision of section 271D of the Income Tax Act 1961 for cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive provisions contained therein. Only in case of doubt, the heading can be considered as aid for construction. 6.2.2 In the light of this legal position, it is noted that there is no ambiguity in the language of section 269SS and, therefore, the provisions of section 269SS are not only to counteract the evasion of tax but also to regulate certain transactions of money in a specified form. If the contention of the appellant that no penalty is exigible because genuineness of transaction was not doubted is accepted, it would lead to anomalous results. It is important to bear in mind that section 269SS is not to judge the genuineness or otherwise of the credit entries appearing in account books. For this purpose the provisions of section 68 have been incorporated which deal with unexplained credits appearing in appellant's books of account. The provision of section 269SS are in addition to section 68 and not substitute of it. Both sections have their own separate field to operate in. When a transaction of taking loan or deposit from a person is held to be ingenuine, obviously the issue would close at the applicability of section 68 itself. On the contrary, section 269SS do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat there was reasonable cause for such failure and if the appellant proves that there was reasonable cause for failure to take a loan otherwise than by account-payee cheque or account-payee demand draft, then the penalty may not be levied. Therefore, undue hardship is very much mitigated by the inclusion of section 273B in the Act. If there was a genuine and bona fide transaction and if for any reason the taxpayer could not get a loan or deposit by account-payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power. In that view of the matter, we do not think that section 269SS or 271D or the earlier section 276DD is unconstitutional on the ground that it was draconian or expropriatory in nature. 6.2.4 The above extract gives us a key to the understanding of section 273B of the said Act. The Supreme Court observed that (1) if there was a genuine and bona fide transaction and (2) if for any reason the taxpayer could not get a loan or deposit by account-payee cheque or demand draft for some bona fide reasons, the authority vested with the power to impose penalty has got discretionary power. The exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that provisions of Section 269SS of the Act are squarely applicable on the cash loan transactions made by the assessee by way of taking cash loans from his brother s proprietary concern M/.s Karamyog Commercial Corporation. Further, the learned Authorized Representative s contention that the assessee should be given immunity from the harsh provisions of Section 271D by covering him u/s 273B of the Act as the assessee has reasonable cause for the said failure. We cannot agree with this contention because the assessee and his brother, both are having their bank accounts in Surat City and both of them are not agriculturists. They are regularly filing their return of income. Therefore, there cannot be any reasonable cause for such failure. In these circumstances, there do not seem to be any way out for the assessee to get away from the penalty u/s 271D and therefore, we do not find any reason to interfere with the order of the learned CIT(A) and accordingly, we dismiss this ground of the assessee. 9. Ground No.3 is general in nature. 10. In the result, the appeal of the assessee is dismissed. 11. Now, we take up ITA No.2481/Ahd/2015. The Ground No.1 raised by the assessee in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dates which aggregated to ₹ 7,50,000/- and we have already decided by sustaining the penalty u/s 271D of the Act imposed by the assessing authority for cash loan taken in contravention of provisions of Section 269SS of the Act. Thereafter, when we go through the ledger account, we find that as on 30.09.2007 the assessee took a cash loan of ₹ 50,000/- and was left with a credit balance of ₹ 22,78,305.50 in the name of M/s. Karmayog Commercial Corporation and thereafter, there were series of debit entries which turned the credit balance of M/s. Karmayog Commercial Corporation into debit balance and as on 23.10.2007, the debit balance of M/s. Karmayog Commercial Corporation was standing at ₹ 42,57,194.50; which means that the category of M/s. Karmayog Commercial Corporation has changed from unsecured loans taken to the category of loans and advances given. The assessee has started paying cash from 31.12.2007 and all through the period when the cash payment of ₹ 5,13,440/- was made to M/s. Karmayog Commercial Corporation, the category of M/s. Karmayog Commercial Corporation remained persistently under the current assets category of loans and advances give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficial Gazette. 15.1 From going through the above provisions of Section 269T, we find that this section is applicable only on repayment of any loan or deposit taken by the assessee and looking to the facts of the case, we find that at the time of repayment in cash there was no unsecured loan standing in the books of assessee for which repayment have been made; rather the balance of ledger account of M/s. Karmayog Commercial Corporation was already standing as debit balance and even all through the period when cash payment of ₹ 5,13,440/- was made, the account of M/s. Karmayog Commercial Corporation never came under the unsecured loan category. We are, therefore, of the view that in such situation the assessee should not be visited with penalty u/s 271E of the Act, because the assessee has not made any contravention to the provision of Section 269T of the Act. Thus, we allow this ground of appeal of the assessee. 16. Ground No.3 is general in nature. 17. Thus, this appeal of the assessee is partly allowed. 18. In the result, the assessee s appeal bearing ITA No.2480/Ahd/2015 is dismissed, while the appeal bearing ITA No.2481/Ahd/2015 is partly allowed, as indicat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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