9911796707
TMI Blog2021 (2) TMI 729X X X X Extracts X X X X X X X X Extracts X X X X ..... Income of Rs. 3,65,750/- declared in the Income Tax Return filed on 01.04.2014. Case selected for scrutiny under CASS followed by serving of notices u/s 142(1) and 143(2) of the Act. Assessment u/s 143(3) of the Act was completed on 23.3.2016 assessing income at Rs. 4,89,850/-. During the course of assessment proceedings Ld. A.O observed that the assessee has taken cash loan in excess of Rs. 20,000/- from various persons totaling to Rs. 85,98,257/- thereby violating the provisions of Section 269SS of the Income Tax Act giving raise to the levy of penalty u/s 271D of the Act. 4. During the penalty proceedings u/s 271D of the Act the contention of the assessee was that she belongs to a agriculturist family. She was granted permission by Indian Oil Corporation for setting up a petrol pump. In order to do so loan was required to purchase land at Gram Pawasa, Ujjain. She approached the seller Shri Ramesh Chand who owned the agriculture land in that area. The seller put a condition to receive the sale consideration immediately in cash. In order to pay the sale consideration assessee took unsecured loans from various persons for the purpose of setting up her business of petrol pump. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and deposits and later they would obtain confirmatory letters from other persons in support of their explanation. The department was not able to unearth the source of such unaccounted cash. Therefore, in order to plug the loopholes and to put an end to the practice of giving false and spurious explanation by taxpayers, a new provision was inserted in the Act debarring persons from taking or accepting from any other person any loan or deposit otherwise than by account payee cheque or account payee bank draft, if the amount of such loan or deposit or the aggregate amount of such loan or deposit is Rs. 10,000 or more. The amount of Rs. 10,000 was later revised as Rs. 20,000 with effect from 1.4.1989. ' 3. From the above it is clear that provisions of section 269SS were inserted to identify and bring to tax the unaccounted income of the assessee. Penalty provisions u/s 271D were also introduced. 4. In the instant case nothing has been brought on record by the revenue authorities to establish if assessee has earned any unaccounted income. The very basis on which provisions of section 269SS were inserted are not attracted in the instant case. No false explanation was give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12] Reliance is placed on the following judicial precedents wherein it is held that no penalty can be imposed u/s 271D as no doubt has been raised on the genuineness of the transaction - Hon'ble Apex Court in the case of Kum. A. B. Shanthi - (2002] 255 ITR 258 - order pronounced on 03.02.2002 Hon'ble Rajasthan High Court in the case of Maheshwari Nirman Udyog - (2008) 170 taxman 502 - order pronounced on 26.07.2007 Hon'ble Ahmedabad Bench of ITAT (TM) in the case of Jitu Builders Private Limited - [2010] 124 ITD 134 - order pronounced on 16.07.2009 Hon'ble Ahmedabad Bench of ITAT in the case of Kamen Jaswantlal Shah - [2012] 19 taxmann.com 99 - order pronounced on 10.02.2012 C. No finding/doubt on the genuineness of the transaction As mentioned at Para B above, assessee explained the commercial expediency for acceptance of cash. Not even an iota of doubt has been raised on the genuineness of the transaction. In the assessment proceedings, no addition has been made on account of the unsecured loans availed by the assessee. Ld. CIT(A) held in favor of the assessee as discussed in Para 4.1.1 at Page 12 of his appellate order. Ld. CIT(A) noted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urview of section 273B. Penalty imposed u/s 271D ought to be deleted. Considering the above facts, circumstances of the case, submissions made, documents on record and judicial precedents, penalty imposed u/s 271D of Rs. 85,98,257 ought to be deleted. 9. We have heard rival contentions and perused the records placed before us and carefully gone through the decisions referred and relied by the Ld. Counsel for the assessee. Revenue's sole grievance of Ground No.1 of the instant appeal is against the finding of Ld. CIT(A) deleting the penalty u/s 271D of the Act at Rs. 85,98,257/- levied by Ld. A.O for accepting unsecured loans above Rs. 20,000/- in cash thereby making a clear violation of provisions of Section 269SS of the Act. 10. On the basis of the facts referred by the lower authorities and also apprised by the Ld. Counsel for the assessee we observe that the assessee who belongs to a agriculturist family was able to procure an approval of setting up a petrol pump by Indian Oil Corporation Ltd for which land was needed. She was able to locate a piece of land for setting up of the petrol pump. Sale consideration was agreed with both the parties which is not in dispute. The s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette. Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act Analysis This section gets applicable in following situation as per clause a, b and c 1. Where a person accepts a two cash loan and/or depositany specified sum of Rs. 10000 each from a single person 2. Where a person has taken a loan of Rs. 20,000 by cheque and he wants to take another loan from the same person, say for Rs. 3000 3. Where a person has taken a loan of Rs. 14000 by cheque and he wants to take further a loan of Rs. 6000 or 8000 The second proviso to this section shall not be applicable in case the either lender or borrower have any income other than agriculture income or any of them have income chargeable to tax. So in other words, both the lender and deposit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the penalty u/s 271D of the Act cannot be imposed in case the assessee proves that there was a reasonable cause for the said failure. In the instant case the reason given by the assessee is that for business expediency the cash loan were taken to purchase the land in order to set up the petrol pump allotted by Indian Oil Corporation. It is also contended that the genuineness of loan is not disputed. 16. We however find that Ld. Counsel for the assessee has failed to prove the business expediency to the extent to show that there was a reasonable cause, leading to failure of complying the provisions of Section 269SS of the Act. It is not the case that the place where the assessee is residing has no banking facility nor it is demonstrated that all the cash creditors are agriculturists having no banking facility in the area of their residence. The assessee in the instant case has set up a petrol pump allotted by Indian Oil Corporation (In short 'IOC'). All the transactions with IOC are to be carried out through banking channel. In the present times the bank transfers are quick through National Electronic Funds Transfer (In short 'NEFT') which hardly takes a day to transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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