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TMI Blog2011 (7) TMI 1226X X X X Extracts X X X X X X X X Extracts X X X X ..... T(Appeals) is justified in quashing the impugned penalty levied by the Assessing Officer. 3. The facts of the case in brief as gathered from the records are that the assessee filed his return of income on 30-11-1998 declaring total income of ₹ 7,00,200/-. This return was processing u/s.143(1)(a) on 19-03-1999. A Survey operation u/s.133A(5) was conducted by the Department on 18-04-1998. On the basis of material facts detected during the course of survey, a notice u/s.148 was issued for reopening the assessment u/s.147. In response to the notice u/s.148, assessee filed his return of income showing the same income, which was shown in the original return. The assessment was framed u/s.143(3) r.w.s.147 on 30-3-2002 by making an additio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s no attempt to evade tax and loan was accepted in cash due to commercial expediency and the entire amount was withdrawn from NRE account No.536 with Corporation Bank. The AO was of the view that as no explanation was offered with regard to reasonable cause for failure to comply with the provisions of section 269SS, levy of penalty u/s.271D was attracted. However, the ld. CIT(Appeals) afforded an opportunity of being heard to the assessee to present his case with regard to reasonable cause. The assessee furnished a reply dated 27 6-2008 elaborating the reasons. The crux of the points are that the assessee being a PWD contractor, he had to receive contract amount from Kerala PWD to the tune of ₹ 86,80,000/- as on 31-3-1998. Since the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no other alternative but to get cash cheques from Shri Sameer Mohammed. The ld. CIT(Appeals) relying on the judgment of the Apex Court in 53 ITR 225 CIT vs. Kanpur Coal Syndicate, was of the view that his powers are coterminous with that of the Assessing Officer and in fact he can do what the ITO can do and even direct the ITO to do what he failed to do. Accordingly, the ld. CIT(Appeals) accepted the reasons adduced by the assessee as a reasonable cause. 5. Further, before the ld. CIT(Appeals) the ld. counsel relied on the decision of the Tribunal in ITA No.996/Coch/2004 for assessment year 1996-97, dated 28 1-2005 in the case of Molly John vs. DCIT, Cir.I, Alwaye and in ITA No.431/Coch/2004 dated 7-10-2005 (A.Y.1999-2000) in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddition u/s.68 and Circular No.387 dated 6 7-1984 of the CBDT, the first appellate authority held that the explanation offered by the assessee clearly establishes that commercial expediency did indeed lead the assessee to accept the cash loan and they are reasonable cause as per section 273B. 7. Lastly the ld. CIT(Appeals) found that it was not the case of the Assessing Officer that the money withdrawn from the bank account of Shri Sameer Mohammed was used for non-business purposes. Thus, considering the facts of the case, findings of the Tribunal and that of the decision of the Hon ble Gujarat High Court -301 ITR 328 in its entirety, the ld. CIT(Appeals) held that penalty cannot be imposed u/s.271D of the Act. 8. Against the above fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 326 (SC); The ld. counsel has also filed a written argument note along with copy of confirmation letter from Sameer Mohammed dated 25-10-2003, copy of remand report dated 2-7-2004 of the Assessing Officer and copy of the Tribunal in quantum appeal in ITA No.1281/Coch/2004 dated 16-2-2007. 10. We have heard rival submissions and considered the materials filed before us and the decisions relied upon before us. The casual observation In fact, the Act itself provides for action u/s.269SS r.w.s.271D in case any loan advanced is exceeding ₹ 20,000/- is not the observation or even a casual remark of the Income-tax Appellate Tribunal as claimed by the Assessing Officer or the ld. D.R. but we find that it is only an observation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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