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TMI Blog2011 (8) TMI 1380X X X X Extracts X X X X X X X X Extracts X X X X ..... -2005 by the assessee, trading in cotton besides being commission agent, after being processed on 8.3.2006 u/s 143(1)) of the Income-tax Act, 1961 [hereinafter referred to as the Act ], was selected for scrutiny with the service of a notice u/s 143(2) of the Act on 17-10-2006. During the course of assessment proceedings ,the Assessing Officer [ AO in short] noticed that the assessee made repayment of loan to Smt. Meenaben P Shah to the extent of Rs. 1,00,000/- otherwise than by account payee cheque/bank draft. Accordingly, the Additional Commissioner of Income-tax, Bhavnagar Range-2 issued a show cause notice dated 03-09-2009 u/s 271E of the Act. In response, the assessee replied that there was reasonable cause to make repayment by social pressure and under bonafide belief that the assessee could pay below Rs. 20,000/-. However, the Addl. CIT did not accept the submissions of the assessee and levied penalty of Rs. 1,00,000/- u/s. 271E of the Act for violation of provisions of sec. 269T of the Act on the ground that the assessee did not satisfactorily explain as to why such huge deposits were repaid in cash. 3. On appeal, before the learned CIT(A), the ld. AR of the assessee filed w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive at the meaning of the words. Section 269T is clearly applicable whenever loan or deposit in excess of Rs. 20,000/- is repaid by any means other than by account payee cheque. 4.1 It has been held in the case of ITO V. Narsingh Ram Ashok Kumar reported in [1985] 47 ITD 38 [Pat.Trib) that penalty under section 271D was leviable even if the loan was genuine but no satisfactory explanation was given as to why the loan had been obtained in cash. 4.2 In view of the above it is clear that penalty under section 271E of the IT Act, 1961 can be levied even if the loan or deposit is genuine but has been taken by any means other than by account payee check or draft and the assessee does not have any satisfactory explanation for doing so. 4.3 The AR has further argued that Meenaben P. Shah is a housewife and also relative of the appellant. The peculiar circumstances of the depositor being a lady, and in that emergency was very insistent that the deposit be repaid to her. The AR has not been able to elaborate or substantiate with any evidence what such emergency was and why the appellant had to repay the deposit in cash. In the absence of any evidence, it is clear that no compelling situation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eady been discussed earlier in this order that there was no reasonable cause for the assessee to have made the repayment in cash. In view of the above the ratio of the above decision does not apply to the instant case. 4.9 In view of the above, the levy of penalty in the instant case is justified. The same is hence confirmed. 4. The assessee is now in appeal before us against the aforesaid findings of the learned CIT(A). The learned AR on behalf of the assessee while reiterating their submissions before the learned CIT (A) relied upon the decision in CIT vs. Sunil Kumar Goel [2009] 315 ITR 163 (P H) and contended that transactions being genuine, no penalty can be imposed. The learned DR, on the other hand, supported the impugned order and added that there being no reasonable cause at all in making repayment of loan in cash, the findings of the ld. CIT (A) be upheld. 5. We have heard both the parties and gone through the facts of the case as also the a forecited decision relied upon by the ld. AR. Indisputably, the amount of Rs. 1 lacs accepted as loan by the assessee ,has been repaid to Mrs. Meenaben P Shah in cash, in instalments below Rs. 20,000/- each. The relevant dates of repa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated with any evidence his said assertion that Mrs. Meenaben P. Shah insisted on repayment in cash. Accordingly, the ld. CIT (A) while distinguishing the decisions relied upon on behalf of the assessee ,upheld the levy of penalty ,especially when there was nothing to suggest that transactions were between two sister entities and there was no other reasonable cause for the assessee to make repayment of loan in cash. Thus, reliance by the ld. AR on the aforesaid decision in Sunil Kumar Goel(supra) is also misplaced. The ld. CIT(A),inter alia, relied upon decision in Madanlal Mahaveer Prasad v/s. Income-tax Appellate Tribunal Others, 296 ITR 377, wherein the Hon'ble Rajasthan High Court held that when there was violation of section 269T and no reasonable cause was shown by the assessee, the penalty u/s. 271E was leviable. The ld. AR appearing before us did not even attempt to distinguish the said decision relied upon by the ld. CIT (A) and merely reiterated their submissions before the ld. CIT(A). In these circumstances, especially when there is no material before us so as to enable us to take a different view in the matter, we are not inclined to interfere with the findings of th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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