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TMI Blog2016 (9) TMI 1535X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the assessee had received the following loans in violation of provisions of Section 269SS of the I.T. Act. SN. Name of the person from whom loans/ deposits taken accepted. Date Amount (Rs.) 1. M/s. Sankalp Foundation, Kota 12-05-2010 20,00,000/- 2. M/s. Sankalp Foundation, Kota 12-05-2010 11,00,000/- 3. M/s. Gopi Bai Foundation , Kota 01-07-2010 49,56,589/- 4. M/s. Gop Bai Foundation, Kota 26-06-2010 2,00,000/ Total 82,56,589 It is observed from the order of the Addl. CIT, Kota that M/s. Shakti Foundation is a sister concern of Career Point Infra Ltd., Sankalp Foundation and Gopi Bai Foundation .The main objects of the assessee trust are to acquire land, develop and use infra for the purpose of educational activity. The assessee had submitted its explanation before the Addl. CIT, Kota contending that issuance of notice u/s 271D is bad in law a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 82,56,589/- from the parties mentioned above and the assessee had not been able to prove that there was any reasonable cause for receiving the above loads in violation of the provisions of Section 269SS of the Act and accordingly it is a fit case for imposing penalty u/s 271D of the Act. Thus the Addl. CIT imposed the penalty of Rs. 82,56,589/- u/s 271D of the Act on the assessee for violation of provisions of Section 269SS of the Act. 2.2 Being aggrieved, the assessee carried the matter before the ld. CIT(A) who had deleted the penalty by observing as under:- 4.12......... I have gone through assessee's submission and AO's findings. In my opinion, Section 269SS was introduced in the statute to prevent introduction of unaccounted money by showing cash loans etc. Section 269SS does not apply on journal entries passed in the books of accounts. Therefore, the AO is directed to delete penalty of Rs. 82,56,589/- . These grounds of appeal are allowed.'' 2.3 Now the Revenue is before us against the order of the ld. CIT(A) praying that the ld. CIT(A) has erred in deleting the penalty of Rs. 82,56,589/- imposed by the AO. During the cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d from Sh. Murari Lal Agrawal through RTGS by appellant in FY 2009-10. Sh. Murari Lal Agrawal ,trustee of M/s Sankalp Foundation who intended to give loan to M/s Sankalp Foundation but due to oversight, such funds were transferred to M/S Shakti Foundation. When such mistake noticed by the trust, this loan was transferred to M/s Sankalp Foundation by book entry in A.Y.2011-12. It is not a case of acceptance of deposit but penalty levied for violation in acceptance of loan U/S 271D of the Act. The following documents are relevant for this issue. S.No Particulars PB Page No 1. Copy of ledger a/c of Shri Murari Lal Agarwal in books of accounts of Shakti Foundation for the period from 01.03.10 to 31.03.2010 (AY 2010-11). 12 2. Copy of ledger a/c of Shri Murari Lal Agarwal in books of accounts of Shakti Foundation for the period from 01.05.10 to 31.03.2011. 13 3. Copy of relevant page of Bank a/c of M/s Shakti foundation showing the entry of cheque received from Murari lal Agarwal. 14 4. Copy of ledger a/c of Career Point Infra Ltd in books of accounts of Shakti Foundation for the period from 01.04.10 to 31.03.2011. 15 to 16 5. Copy of ledger a/c of Shakti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it applies to a transaction where a deposit or a loan in money is accepted by an assessee, otherwise than by an account payee cheque or an account payee draft. The ambit of the section is clearly restricted to transaction involving acceptance of money and not intended to affect cases where a debt or a liabilities arises on account of book entries. The object of the section is to prevent transactions in currency ie. Cash. This is also clearly explicit from clause(iii) of the explanation to section 269SS of the Act which defines loan or deposit to mean "loan or deposit of money. The liability recorded in the books of accounts by way of journal entries i.e. crediting the account of a party to whom monies payable and debiting the account of a party from whom monies are receivable in the books of accounts is clearly out the ambit of provisions of section 2699 SS of the Act because passing such entries does not involve acceptance of any loan or deposit of money. In this case, admittedly no money was transacted otherwise than through banking channels. 4) Reliance is placed on the following decisions:- S.No Name of case Case Law Paper Book Pg 1. CIT-VI V/s Worldwid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,- (a) Government ; (b) any banking company, post office savings bank or co-operative bank ; (c) any corporation established by a Central, State or Provincial Act ; (d) any Government company84 as defined in section 617 of the Companies Act, 1956 (1 of 1956) ; (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify85 in this behalf in the Official Gazette : 86[Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act.] Explanation.-For the purposes of this section,- 87[(i) "banking company" means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in section 51 of that Act ;] (ii) "co-operative bank" s ..... 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