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TMI Blog2004 (3) TMI 768X X X X Extracts X X X X X X X X Extracts X X X X ..... unts advanced by them, to the Assessing Officer on 29-03-1993: Sr no St. Date of No. Certificate Name of Vendors Amount Period of advance 1 25.12.1992 C.V. Nagaraju (nephew) ₹ 20,000 May 1990-July 1990 2. 25.12.1992 C.V. Srinivas (Nephew) ₹ 20,000 May-1990-July-1990 3. 15.12.1992 James Rodrigues ₹ 30,000 28.04.1990 to 1.07.1990 4. 12.12.1994 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a notice dated 13.4.1993 under Section 271D of the Act calling upon the assessee to give his explanation in regard to the acceptance of loans otherwise than by account payee cheques and demand drafts. As no reply was received, the assessing officer referred the matter to the Deputy Commissioner (Income Tax), Mysore Range, Mysore, on 21.07-1993 for action. Therefore, the assessee submitted a reply dated 20.04.1993 to the Assessing Officer on 27-07.1993 wherein he gave the following reasons for accepting the loan amounts otherwise than by way of crossed cheques and demands drafts. I have not violated nay of the provisions of Section 269Ss of the Act, in as much as all the transactions made while constructing my officer building have b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioner (Income Tax) passed an order dated 18.08.1993 rejecting the explanation offered and levied a penalty of ₹ 2,40,000/-, for having accepted case loans Rs,2,40,000/- in violation of Section 269SS. That order was challenged by the assessee in appeal (ITA2/Coorg/CIT(A)III/93-94) before the Commissioner of Income Tax, Appeals-III Bangalore. The appellate authority dismissed the appeal by order dated 27.01.1999. The assessee thereafter filed a further appeal before the Income Tax Appellate Tribunal, Bangalore Bench, in ITA No. 260/Bang/99 which was dismissed by order dated 31-07-2003. The Tribunal upheld levy of penalty. It was of the view that the borrowing of amounts on Saturdays and Sundays by the assessee was a pre-planned arrangem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides that if a person takes any loan in contravention of Section 269SS, he shall be liable to pay, by way of penalty a sum equal to the loan so taken. Section 273B however provides that notwithstanding anything contained in Section 271D, no penalty shall be imposable on the assessee for any failure referred to therein if the proves that there was reasonable cause for the said failure. 8. The Supreme court consider3ed the scope of the Section 269SS. 271D and 273B in ASSISTANT DIRECTOR OF INSPECTION (INVESTIGATION) -VS- A. B. SHANTHI (255 (2002)ITR258) And observed thus: It is important to note that another provision, namely Section 273B was also incorporated which provides that notwithstanding anything contained in the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bona fide reason for receiving several loans aggregating to ₹ 2,40,000/- by case. 10. The Deputy commissioner, the Appellate Authority and the Tribunal have held that there was not reasonable cause for the failure to comply with 269SS mainly on the ground that the assessee being an Income Tax practitioner was not expected to violate Section 269SS. But, what is significant is that all the three authorities have failed to note that the assessee had in fact furnished a reasonable cause. He has clearly stated that during the progress of construction he could visit his friends and relatives only on Saturday afternoons and Sunday to seek loans, as he was busy during the week days; that when he visited them on Saturday afternoons and Sun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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