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TMI Blog2022 (6) TMI 1237X X X X Extracts X X X X X X X X Extracts X X X X ..... that the receipt of the loan was in cash, which was in violation of section 269SS of the Act. Thus, the Revenue authorities imposed penalty, as if the provision of section 271D is mandatory, without considering the reasonable cause explained by the assessee both during the penalty proceedings. We find that the explanation given by the assessee cannot be disregarded, more so, when it was a onetime affair to meet business exigency and urgent financial necessity. Further, the impugned transaction was from his individual capacity to his HUF capacity. A reasonable and justifiable explanation has been rendered by the assessee for the impugned transaction, and therefore, imposition of penalty under section 271D of the Act was not warranted. See TRIUMPH INTERNATIONAL FINANCE (I) LTD. [ 2012 (6) TMI 358 - BOMBAY HIGH COURT] Thus we delete impugned penalty imposed under section 271D of the Act, and allow the ground of appeal of the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... in compelling circumstances in order to honour the posted cheques issued by him in his individual capacity. Due to shortage of time, he could not transfer Rs.10 lakhs from his bank account to settle posted cheque issued to various third parties and also to avoid rigorous criminal proceedings under the Negotiable Instrument Act. It was a onetime affair made by the assessee cash transaction exceeding Rs.20,000/-. Furthermore, the assessee in his HUF capacity is having a PAN AACHT 1050 M for more than ten years, and is regularly filing his return of income. The said cash transaction was duly recorded in the books of accounts maintained regularly by the HUF also. To prove the genuineness of the transaction, the assessee has filed confirmation letter, copy of Income-Tax Returns and contra account of the client. In fact the AO has accepted this cash transaction as genuine and no addition has been made under section 68 of the Act in the order passed under section 153A read with section 143(3)of the Act. Thus, the cash transaction was being done due to business exigency and extreme need of cash and was between family members i.e. individual to HUF. Thus, penalty under section 271D was not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above explanation offered by the assessee was not accepted and the Addl.CIT levied penalty of Rs.10.00 lakhs for the Asst.Year 2012-13 for contravention of section 269SS of the Act. Similarly for the Asst.Year 2014-15 the assessee has taken cash loan of Rs.5,31,000/- on 5.7.2013 which was required to close RBS bank account (formerly ABN Amro Bank). There also the ld.AO imposed penalty of Rs.5,31,000/- u/s.271D of the Act. 6. Against the order of the AO, the assessee preferred appeals before the ld.CIT(A). Before the ld.CIT(A), the assessee has reiterated his submissions as made before the AO. He further submitted that it was out of business exigency and extreme need of money, the assessee has taken cash loan from HUF, due to insufficient fund in his individual bank accounts, some cheques already issued to third parties could not be honoured, and therefore, in order to escape from the criminal proceedings under the Negotiable Instrument Act, the assessee had to immediately arrange urgent fund for depositing in the bank. Therefore, there were sufficient reasons for the assessee to take cash loan, and no violation of section 269SS of the Act. However, the ld.CIT(A) also not satisfied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evied the penalty under section 271D read with section 269SS of the Act on the ground that the assessee has accepted cash loans and the reasons for accepting loan in cash were also not reasonable and sufficient to drop the proceedings. The intention of this provision is to bring down non-genuineness transactions. Section 271D stipulates that if a person takes or accepts any loan or deposit or specified sum in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposits or specified sum so taken or accepted. Provisions of section 269SS for imposition of penalty under section 271D are applicable only in case of loans and deposits received by the assessee in cash exceeding limits prescribed therein. But such imposition of the penalty shall be subject to section 273B of the Act, which stipulates that no penalty shall be imposable on the person or the assessee, for any failure referred to in the said provision, if he proves that there was 'reasonable cause' for the said failure. 10. The case of the assessee was that the loan in cash was taken from his HUF on account of extreme business exigency and nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business urgency was established by the assessee, and therefore, the Hon'ble Court confirmed levy of penalty. In the case of CIT Vs. Chandra Cement Ltd. (supra) business exigency in respect of cash loan was not being established, and therefore, levy of penalty was confirmed by the Hon'ble Court. 12. Thus, we are not inclined to support the view taken by the Revenue authorities. We delete impugned penalty imposed under section 271D of the Act, and allow the ground of appeal of the assessee. 13. Similarly, for the reasons stated hereinabove, we also allow identical ground raised by the same assessee in other appeal as well in ITA No.1025/Ahd/2019 for the Asst.Year 2014-15. 14. In ITA No.1026/Ahd/2019 and 1027/Ahd/2019 are the cases of Son of Shri Mohanlal Savjibhai Tilva where cash loan of Rs.3 lakh each has been availed from his wife on 14.4.2012 and 21.7.2012, and a sum of Rs.1.00 lakh was received from his father Mohan S. Tilva on 4.11.2012 for business exigency in honouring payment of post-dated cheques. The ld.counsel for the assessee further stated that Smt.Vidhi V. Tilva is assessed to tax and her PAN ALKPT 0243 M and she is filing return of income regularly for more than t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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