Mrs. Roopwanti Pandey, Lucknow V. Joint Commissioner of Income Tax, Range-6, Lucknow

ITA 126/LKW/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8555 (ITAT-LUCKNOW)
• Duration Of Justice: 1 year(s) 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 10-02-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Search and seizure; Question of law; Reasonable cause
• Section: 273B; 271D

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH SMC, LUCKNOW [THROUGH VIRTUAL HEARING] BEFORE SHRI T.S. KAPOOR, ACCOUNTANT MEMBER ITA NO. 126/LKW/2020 ASSESSMENT YEAR 2012-13 ITO -VI(3), LUCKNOW VS. MRS. ROOPWANTI PANDEY, 566/85, JAI PRAKASH NAGAR, ALAMBAGH, LUCKNOW 226005 PAN BHJPP 5725L (RESPONDENT) (APPELLANT) SHRI DHARMENDRA KUMAR, CA APPELLANT BY SHRI AJAY KUMAR, DR RESPONDENT BY 08/07/2021 DATE OF HEARING 11/08/2021 DATE OF PRONOUNCEMENT O R D E R THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), LUCKNOW-2 DATED 16.12.2019 PERTAINING TO ASSESSMENT YEAR 2012-13. THE ASSESSEE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: 1. THAT PENALTY IMPOSED UNDER SECTION 271D OF THE INCOME TAX ACT, 1961 WAS ILLEGAL AND WITHOUT JURISDICTION. 2. THAT APPELLANT OBTAINED CASH-LOANS OF RS.3,95,000/- FROM CLOSE FAMILY MEMBERS; SUCH LOAN FROM CLOSE FAMILY MEMBERS WOULD FALL OUTSIDE THE SCOPE OF SECTION 269SS OF INCOME TAX ACT, 1961. 3. THAT APPELLANT HAD URGENT NEED OF CASH TO PURCHASE THE PROPERTY; HENCE SHE OBTAINED LOAN UNDER QUESTION, ACCORDINGLY, 2 THERE WAS REASONABLE CAUSE FOR MAKING PAYMENTS OTHER THAN ACCOUNT PAYEE CHEQUE, THEREFORE, NO PENALTY UNDER SECTION 271D SHOULD HAVE BEEN IMPOSED. 4. THAT LOANS TRANSACTIONS WAS GENUINE, WHICH WERE DULY CONFIRMED BY RESPECTIVE LENDERS AND APPELLANT HAD URGENCY TO COMPLETE THE PURCHASE TRANSACTION OF PROPERTY, ACCORDINGLY SECTION 273B OF THE ACT WAS APPLICABLE, HENCE, NO PENALTY COULD BE IMPOSED UNDER SECTION 271D OF THE ACT. 5. THAT WHEN AO HAD NOT RECORDED HIS SATISFACTION IN ASSESSMENT ORDER TO INITIATE PENALTY UNDER SECTION 271D OF THE ACT; HENCE NO PENALTY UNDER SUCH SECTION CAN BE IMPOSED LATER ON. 6. THAT LD. JOINT COMMISSIONER OF INCOME TAX FAILED TO APPLY DECISION OF JURISDICTIONAL HIGH COURT, WHICH WAS DIRECTLY APPLICABLE ON APPELLANT'S CASE. 7. THAT THE APPELLANT SEEKS PERMISSION TO MODIFY AND/OR ADD ANY OTHER GROUND OR GROUNDS OF APPEAL AS THE CIRCUMSTANCES OF THE CASE MIGHT REQUIRE OR JUSTIFY. 8. THAT THE ASSESSMENT, MADE BY THE LEARNED ASSESSING OFFICER ARE ARBITRARY, BAD IN LAW AND AGAINST EQUITY, JUSTICE AND GOOD CONSCIOUS AND DESERVE TO BE CANCELLED. 2. THE LD. AR AT THE OUTSET SUBMITTED THAT THE ASSESSEE HAD PURCHASED A PROPERTY DURING THE YEAR UNDER CONSIDERATION WHICH WAS SOLD DURING THE YEAR ITSELF AND IN THIS RESPECT OUR ATTENTION WAS INVITED TO COPY OF PURCHASE DEED AND SALE DEED PLACED AT P.B. PGS. 63 TO 81 AND 38 TO 62 RESPECTIVELY. IT WAS SUBMITTED THAT TO MAKE PAYMENT FOR SUCH PURCHASE OF PROPERTY THE ASSESSEE WAS SHORT OF FUND AND THEREFORE SHE RAISED TEMPORARY LOANS FROM HUSBAND, SON AND ONE CLOSE FRIEND WHICH WERE REPAID DURING THE YEAR ITSELF. IT WAS SUBMITTED THAT ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ACCEPTED THE UNSECURED LOAN AS GENUINE AND DID NOT MAKE ANY ADDITIONS. HOWEVER, THE ASSESSING OFFICER IMPOSED A PENALTY U/S. 271D OF THE ACT FOR VIOLATION OF PROVISIONS OF SECTION 3 269SS OF THE ACT AS THE ASSESSEE HAD ACCEPTED CASH UNSECURED LOANS. 3. IT WAS SUBMITTED THAT BEFORE THE LD. CIT(A) IT WAS SUBMITTED THAT THE ASSESSEE HAD TO RAISE FUNDS IMMEDIATELY AND THE FUNDS WERE RAISED FROM CLOSE RELATIVES AND THEREFORE THERE WAS A REASONABLE CAUSE FOR ACCEPTING LOANS IN CASH AND THEREFORE PENALTY WAS NOT IMPOSABLE. RELIANCE IN THIS RESPECT WAS ALSO PLACED ON THE CASE LAW OF HON'BLE ALLAHABAD HIGH COURT IN THE CASE OF CIT VS. DIMPLE YADAV. IT WAS SUBMITTED THAT THE FACTS AND CIRCUMSTANCES OF THE CASE LAWS RELIED ON BY THE ASSESSEE ARE SIMILAR HOWEVER LD. CIT(A) DID NOT ACCEPT THE CONTENTIONS OF THE ASSESSEE BY HOLDING THAT THE FACTS WERE NOT SIMILAR WHEREAS THE FACTS ARE EXACTLY SIMILAR AS IN THAT CASE ALSO THE ASSESSEE REQUIRED FUNDS ON URGENT BASIS FOR CONVERSION OF LEASE RIGHTS TO THE FREEHOLD RIGHTS AND THEREFORE IT WAS PRAYED THAT THE APPEAL FILED BY THE ASSESSEE MAY BE ALLOWED. 4. THE LD. DR, ON THE OTHER HAND, HEAVILY PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT LD. CIT(A) HAS ALREADY CONSIDERED THIS ARGUMENT OF THE ASSESSEE AND HAS DISTINGUISHED THE CASE LAW ON FACTS AND THEREFORE, THE APPEAL FILED BY THE ASSESSEE MAY BE DISMISSED. 5. I HAVE HEARD THE RIVAL PARTIES AND HAVE GONE THROUGH THE MATERIAL PLACED ON RECORD. I FIND THAT IT IS UNDISPUTED FACT THAT ASSESSEE HAD RAISED UNSECURED LOANS FROM HER HUSBAND AND FROM HER SON AND A SMALL PART OF THE LOAN WAS ALSO RAISED FROM A FRIEND. THE MAJOR PART OF THE UNSECURED LOAN WS TAKEN FROM HUSBAND AND SON OF THE ASSESSEE. IT IS ALSO UNDISPUTED FACT THAT ASSESSEE 4 REQUIRED THE FUNDS FOR PURCHASE OF A PROPERTY WHICH SHE PURCHASED AND COPY OF PURCHASE DEED IS PLACED AT P.B. PGS. 63 TO 81. IT IS ALSO UNDISPUTED FACT THAT THE SAID PROPERTY WS SOLD DURING THE YEAR ITSELF A COPY OF SALE DEED IS PLACED AT P.B. PGS. 38 TO 62. THE ARGUMENT OF THE ASSESSEE IS THAT SINCE THERE WAS CLOSE RELATIONS BETWEEN THE ASSESSEE AND LENDERS AND THE ASSESSEE REQUIRED THE FUNDS IMMEDIATELY THEREFORE THERE WAS A REASONABLE CAUSE FOR ACCEPTING THE LOAN IN CASH AND THEREFORE THE PENALTY WAS NOT IMPOSABLE AND IN THIS RESPECT THE ASSESSEE HAD RELIED ON THE CASE LAW OF HON'BLE JURISDICTIONAL HIGH COURT OF ALLAHABAD IN THE CASE OF CIT VS. DIMPLE YADAV AND AKHILSEH KUMAR YADAV. THE LD. CIT(A) HAS HELD THAT THE FACTS IN THAT CASE WAS DISTINGUISHABLE FROM THE FACTS OF THE CASE OF ASSESSEE BY HOLDING AS UNDER: II. THE JUDGEMENT IN THE CASE OF CIT VS. DIMPLE YADAV AND AKHILESH KUMAR YADAV IS ALSO DISTINGUISHABLE DUE TO THE FOLLOWING FACTS: THE ASSESSEE ESTABLISHED A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH PROVISIONS OF SECTION 269SS. LOAN GIVEN BY SAMAJWADI PARTY WAS A GENUINE LOAN AND REFLECTED IN THE BOOKS OF ACCOUNTS OF SAMAJWADI PARTY AND BOOKS OF ACCOUNTS OF THE ASSESSEE. CASH GIVEN BY PARRY WAS DIRECTLY DEPOSITED IN BANK ACCOUNT OF ASSESSEE AND THEREAFTER USED FOR CONVERTING NAZUL LAND TO FREE HOLD. CASH WAS DEPOSITED IN BANK ACCOUNT OF THE ASSESSEE AND THEN ROUTED THROUGH BANKING CHANNEL FOR PAYMENT TO GOVERNMENT FOR CONVERTING LAND INTO FREE HOLD PROPERTY. HOWEVER IN THE PRESENT CASE, THE FACTS ARE AS UNDER: APPELLANT COULD NOT PROVE THAT THE LOANS GIVEN ARE DULY REFLECTED IN BOOKS OF ACCOUNTS OF THREE PARTIES WHO GAVE THESE CASH LOANS. APPELLANT COULD NOT PROVE THAT CASH WAS DEPOSITED IN HIS BANK ACCOUNT AND THEN ROUTED THROUGH BANKING CHANNEL FOR PAYMENT FOR PURCHASE OF PROPERTY. APPELLANT COULD NOT ESTABLISH REASONABLE CAUSE FOR FAILURE TO COMPLY WITH PROVISIONS OF SECTION 269SS OF THE ACT. 5 D. IN VIEW OF THESE FACTS, THE FACTS IN THE CASE OF APPELLANT IS DISTINGUISHABLE FROM THE FACTS OF THE CASES RELIED UPON. 6. ONE OF THE REASONS FOR DISTINGUISHING THE FACTS OF THIS CASE WITH THE CASE OF DIMPLE YADAV (SUPRA) IS THAT APPELLANT COULD NOT PROVE THAT LOANS GIVEN WERE DULY REFLECTED IN THE BOOKS OF ACCOUNT OF THREE PERSONS WHO GAVE THESE CASH LOANS. IN THIS RESPECT I FIND THAT THE LENDERS TO THE ASSESSEE ARE INDIVIDUALS AND THEY MAY NOT BE MAINTAINING BOOKS OF ACCOUNTS. HOWEVER, THEY HAVE FILED CONFIRMATIONS OF HAVING ADVANCED THE MONEYS TO THE ASSESSEE AND IN THE CONFIRMATIONS THEY HAVE ALSO CONFIRMED THAT SUCH LOANS WERE RECEIVED BACK DURING THE YEAR ITSELF. THE ASSESSEE HAS REFLECTED THE RECEIPT OF SUCH LOANS AND REPAYMENT THERETO IN RECEIPT AND PAYMENT ACCOUNT A COPY OF RECEIPT AND PAYMENT ACCOUNT IS PLACED AT P.B. PAGE 36. THEREFORE THE FIRST REASON FOR REJECTING THE APPEAL OF THE ASSESSEE IS NOT A VALID REASON. THE SECOND REASON CITED BY LD. CIT(A) IS THAT IN THAT CASE THE ASSESSEE HAD DEPOSITED SUCH CASH IN THE BANK ACCOUNT AND THROUGH THAT BANK ACCOUNT THE PAYMENT WAS MADE WHEREAS IN THE PRESENT CASE THE ASSESSEE DID NOT DEPOSIT THE SAME IN THE BANK ACCOUNT. IN THIS RESPECT, I FIND THAT IN THE PRESENT CASE, THE PURCHASE OF PROPERTY WAS DONE IN CASH WHICH IS APPARENT FROM THE COPY OF PURCHASE DEED PLACED AT P.B. PGS. 63 TO 81 AND WHEREAS IN THAT CASE THE ASSESSEE HAD MADE PAYMENTS THROUGH BANKING CHANNELS THEREFORE THIS REASON IS ALSO NOT SUSTAINABLE AS THERE IS NO POINT IN FIRST DEPOSITING THE CASH IN THE BANK ACCOUNT AND THEN WITHDRAWING IT FOR MAKING CASH PAYMENT FOR PURCHASE OF PROPERTY. THE THIRD REASON FOR DISMISSING THE APPEAL OF THE ASSESSEE IS THAT ASSESSEE COULD NOT ESTABLISH REASONABLE CAUSE FOR VIOLATING THE PROVISIONS OF SECTION 269SS OF THE ACT. IN 6 THIS RESPECT, I FIND THAT IN THAT CASE ALSO THE ASSESSEE HAD BORROWED FUNDS IN CASH FOR CONVERSION OF LEASEHOLD RIGHT IN TO FREEHOLD RIGHTS AND IN THE PRESENT CASE ALSO THE ASSESSEE HAD BORROWED FUNDS FOR PURCHASE OF AN IMMOVABLE PROPERTY. THEREFORE, THE THIRD REASON IS ALSO NOT SUSTAINABLE. 7. THE HON'BLE JURISDICTIONAL HIGH COURT OF ALLAHABAD IN THE CASE OF DIMPLE YADAV HAS CLEARLY HELD THAT PENALTY UNDER THESE CIRCUMSTANCES IS NOT LEVIABLE. FOR THE SAKE OF COMPLETENESS THE FINDINGS OF THE HON'BLE HIGH COURT ARE REPRODUCED BELOW: THE SHORT QUESTION THAT ARISES FOR CONSIDERATION IS, WHETHER ANY PENALTY COULD BE IMPOSED UNDER SECTION 271D OF THE ACT? THE LEARNED COUNSEL FOR THE DEPARTMENT CONTENDED THAT THE UNSECURED LOAN, WHICH WAS MORE THAN RS.20,000/- TAKEN BY THE ASSESSEE FROM A POLITICAL PARTY SHOULD HAVE BEEN TAKEN BY A CHEQUE OR A DEMAND DRAFT THROUGH BANKING CHANNELS, WHICH HAD NOT BEEN DONE. THE TAKING OF THE LOAN IN CASH, WHICH WAS MORE THAN RS.20,000/- WAS IN GROSS VIOLATION OF SECTION 269SS OF THE ACT AND, CONSEQUENTLY, BY OPERATION OF LAW, THE PENALTY WAS RIGHTLY IMPOSED, WHICH HAD WRONGLY BEEN DELETED BY THE APPELLATE AUTHORITIES. THE LEARNED COUNSEL CONTENDED THAT THERE WAS NO URGENCY FOR THE ASSESSEE TO RECEIVE THE ENTIRE AMOUNT IN CASH NOR ANY DIRE NEED WAS SHOWN FOR TAKING SUCH HUGE AMOUNT IN CASH. IN SUPPORT OF HIS SUBMISSION, THE LEARNED COUNSEL HAS PLACED RELIANCE UPON A DECISION OF THE PUNJAB AND HARYANA HIGH COURT, CHARAN DASS ASHOK KUMAR VS. COMMISSIONER OF INCOME TAX, 365 ITR 367 AND AUTO PISTON MFG. CO. P. LTD. VS. COMMISSIONER OF INCOME TAX, 355 ITR 414 AS WELL AS THE DECISION OF THE MADRAS HIGH COURT P. BASKAR VS. COMMISSIONER OF INCOME TAX, 340 ITR 560. ON THE OTHER HAND, SRI VIJAY BAHADUR SINGH, THE LEARNED SENIOR COUNSEL CONTENDED THAT THE TRANSACTION OF LOAN FOUND PLACE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE AS WELL AS BY THE LENDER, NAMELY, THE SAMAJWADI PARTY AND THAT THE ASSESSING AUTHORITY WHILE COMPLETING THE ASSESSMENT ORDER HAD FOUND THAT THE TRANSACTION OF LOAN WAS GENUINE. THE LEARNED COUNSEL SUBMITTED THAT IN THE ABSENCE OF ANY FINDING THAT THE TRANSACTION OF LOAN WAS NOT GENUINE OR IT WAS A SHAM TRANSACTION TO COVER UNACCOUNTED MONEY, NO PENALTY COULD BE IMPOSED. IN SUPPORT OF HIS SUBMISSION, THE LEARNED SENIOR COUNSEL RELIED UPON A DECISION OF GAUHATI HIGH COURT IN COMMISSIONER OF INCOME TAX VS. BHAGWATI PRASAD BAJORIA (HUF), 263 ITR 487 , CHAMUNDI GRANITES PVT. LTD. VS. 7 DEPUTY COMMISSIONER OF INCOME TAX, 255 ITR 258 AND M. JANARDHANA RAO VS. JOINT COMMISSIONER OF INCOME TAX, 2005 (2) SCC 324. IN ORDER TO APPRECIATE THE SUBMISSION OF THE LEARNED COUNSEL FOR THE PARTIES, IT WOULD BE APPROPRIATE TO REFER TO A FEW PROVISIONS WHICH WILL HAVE A BEARING TO THE ISSUE INVOLVED IN THE PRESENT CASE, NAMELY, SECTIONS 269SS, 271D AND SECTION 273B OF THE ACT. FOR FACILITY, THE SAID PROVISIONS ARE EXTRACTED HEREUNDER: 269SS . NO PERSON SHALL TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREIN REFERRED TO AS THE DEPOSITOR), ANY LOAN OR DEPOSIT OR ANY SPECIFIED SUM, OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT OR USE OF ELECTRONIC CLEARING SYSTEM THROUGH A BANK ACCOUNT, IF (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR SPECIFIED SUM OR THE AGGREGATE AMOUNT OF SUCH LOAN, DEPOSIT AND SPECIFIED SUM; OR (B) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN OR DEPOSIT OR SPECIFIED SUM, ANY LOAN OR DEPOSIT OR SPECIFIED SUM TAKEN OR ACCEPTED EARLIER BY SUCH PERSON FROM THE DEPOSITOR IS REMAINING UNPAID (WHETHER REPAYMENT HAS FALLEN DUE OR NOT), THE AMOUNT OR THE AGGREGATE AMOUNT REMAINING UNPAID; OR (C) THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (B), IS TWENTY THOUSAND RUPEES OR MORE: PROVIDED THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY LOAN OR DEPOSIT OR SPECIFIED SUM TAKEN OR ACCEPTED FROM, OR ANY LOAN OR DEPOSIT OR SPECIFIED SUM TAKEN OR ACCEPTED BY, (A) THE 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 COMPANY AS DEFINED IN CLAUSE (45) OF SECTION 2 OF THE COMPANIES ACT, 2013 (18 OF 2013); (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, 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, 8 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. EXPLANATION. FOR THE PURPOSES OF THIS SECTION, (I) BANKING COMPANY MEANS A COMPANY TO WHICH THE PROVISIONS OF 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 SHALL HAVE THE SAME MEANING AS ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1949); (III) LOAN OR DEPOSIT MEANS LOAN OR DEPOSIT OF MONEY; (IV) SPECIFIED SUM MEANS ANY SUM OF MONEY RECEIVABLE, WHETHER AS ADVANCE OR OTHERWISE, IN RELATION TO TRANSFER OF AN IMMOVABLE PROPERTY WHETHER OR NOT THE TRANSFER TAKES PLACE. 271D. (1) 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 DEPOSIT OR SPECIFIED SUM SO TAKEN OR ACCEPTED. (2) ANY PENALTY IMPOSABLE UNDER SUB-SECTION (1) SHALL BE IMPOSED BY THE JOINT COMMISSIONER. 273B. NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF CLAUSE (B) OF SECTION 271, SECTION 271A, SECTION 271AA, SECTION 271B, SECTION 271BA, SECTION 271BB, SECTION 271C, SECTION 271CA, SECTION 271D, SECTION 271E, SECTION 271F, SECTION 271FA, SECTION 271FAB, SECTION 271FB, SECTION 271G, SECTION 271GA, SECTION 271H, SECTION 271-I, CLAUSE (C) OR CLAUSE (D) OF SUB-SECTION (1) OR SUB-SECTION (2) OF SECTION 272A, SUB-SECTION (1) OF SECTION 272AA, OR SECTION 272B OR SUB-SECTION (1) OR SUB-SECTION (1A) OF SECTION 272BB OR CLAUSE (B) OF SUB- SECTION (1) OF SECTION OR CLAUSE (B) OR CLAUSE (C) OF SUB-SECTION (2) OF SECTION 273, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. THE OBJECT OF INTRODUCING SECTION 269SS OF THE ACT WAS TO ENSURE THAT A TAX PAYER WAS NOT ALLOWED TO GIVE FALSE EXPLANATION FOR HIS UNACCOUNTED MONEY OR IF THE TAX PAYER MADE SOME FALSE ENTRIES, HE WOULD NOT ESCAPE BY GIVING FALSE EXPLANATION FOR THE SAME. IT WAS FOUND THAT DURING THE SEARCH AND SEIZURE, UNACCOUNTED MONEY WAS FOUND AND THE TAX PAYER USUALLY GAVE AN EXPLANATION 9 THAT HE HAD BORROWED OR RECEIVED DEPOSITS FROM HIS RELATIVES OR FRIENDS AND, CONSEQUENTLY, IT BECAME EASY FOR THE SO CALLED LENDER TO MANIPULATE HIS RECORD TO SUIT THE PLEA OF THE TAX PAYER. IN ORDER TO CURB THIS MENACE, SECTION269SS OF THE ACT WAS INTRODUCED TO DO AWAY WITH THE MENACE OF MAKING FALSE ENTRIES IN THE ACCOUNT BOOKS AND LATER GIVE AN EXPLANATION FOR THE SAME. SECTION 269SS OF THE ACT CONSEQUENTLY, REQUIRED THAT NO PERSON SHALL TAKE OR ACCEPT ANY LOAN OR DEPOSIT, IF IT EXCEEDS MORE THAN RS.20,000/- IN CASH. SECTION 271D OF THE ACT PROVIDED THAT A PERSON WHO TAKES OR ACCEPTS ANY LOAN OR DEPOSIT IN CONTRAVENTION OF THE PROVISION OF SECTION 269SS OF THE ACT, HE WOULD BE LIABLE TO PAY BY WAY OF PENALTY A SUM EQUAL TO THE AMOUNT OF THE LOAN OR DEPOSIT SO TAKEN OR ACCEPTED. SECTION 271D OF THE ACT CAUSED UNDUE HARDSHIP TO THE TAX PAYERS WHERE THEY TOOK A LOAN OR DEPOSIT IN CASH EXCEEDING RS.20,000/- EVEN WHERE THERE WAS A GENUINE OR BONAFIDE TRANSACTION. THE LEGISLATURE ACCORDINGLY, INTRODUCED SECTION 273B OF THE ACT, WHICH PROVIDED THAT IF THERE WAS A GENUINE AND BONAFIDE TRANSACTION AND THE TAX PAYER COULD NOT GET A LOAN OR DEPOSIT BY AN ACCOUNT PAYEE CHEQUE OR DEMAND TRANSACTION FOR SOME BONAFIDE REASON, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY HAD A DISCRETION NOT TO LEVY THE PENALTY. IN CHAMUNDI GRANITES (SUPRA) THE SUPREME COURT CONSIDERED THE PROVISION OF SECTION 271D AND 273B OF THE ACT AND HELD:- IT IS IMPORTANT TO NOTE THAT ANOTHER PROVISION, NAMELY SECTION 273B WAS ALSO INCORPORATED WHICH PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF SECTION 271D, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISION IS HE PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAILURE AND IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR FAILURE TO TAKE A LOAN OTHERWISE THAN BY ACCOUNT-PAYEE CHEQUE OR ACCOUNT-PAYEE DEMAND DRAFT, THEN THE PENALTY MAY NOT BE LEVIED. THEREFORE, UNDUE HARDSHIP IS VERY MUCH MITIGATED BY THE INCLUSION OF SECTION 273B IN THE ACT. IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND IF FOR ANY REASON THE TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT- PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONA FIDE REASONS, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY HAS GOT DISCRETIONARY POWER. IN BHAGWATI PRASAD BAJORIA'S (SUPRA) THE GAUHATI HIGH COURT HELD: ....... THE TRANSACTION OF LOAN HAS FOUND PLACE IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AS WELL AS THE LENDER OF THE LOAN. NONE OF THE AUTHORITIES HAVE REACHED THE CONCLUSION THAT THE TRANSACTION OF THE LOAN WAS NOT 10 GENUINE AND IT WAS A SHAM TRANSACTION TO COVER UP THE UNACCOUNTED MONEY. IT APPEARS TO US THAT THE ASSESSEE FELT NEED OF MONEY AND THUS HE APPROACHED THE MONEY-LENDER FOR ADVANCEMENT OF THE MONEY, THE TRANSACTION IS REFLECTED IN THE PROMISSORY NOTES EXECUTED BY THE ASSESSEE IN FAVOUR OF THE LENDER. WHEN THERE IS AN IMMEDIATE NEED OF MONEY THE PERSON CANNOT GET SUCH MONEY FROM THE NATIONALISED BANK TO SATISFY THE IMMEDIATE REQUIREMENT IN THE INSTANT CASE, WE FIND THAT THE TRIBUNAL HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSEE HAD ESTABLISHED A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISION OF SECTION 269SS OF THE ACT. THE TRIBUNAL FURTHER FOUND THAT THE LOAN GIVEN BY THE SAMAJWADI PARTY WAS A GENUINE LOAN, WHICH WAS REFLECTED IN THE BOOKS OF ACCOUNTS ON ACCOUNT OF THE SAMAJWADI PARTY AS WELL AS IN THE BOOKS OF ACCOUNT OF THE ASSESSEE AND THAT THE CASH GIVEN BY THE PARTY WAS DEPOSITED IN THE BANK OF THE ASSESSEE AND, THEREAFTER, USED FOR THE PURPOSE OF CONVERTING THE NAZUL LAND INTO FREE HOLD. THE TRIBUNAL FOUND THAT THE GENUINENESS OF THE TRANSACTION WAS ALSO NOT DISPUTED BY THE ASSESSING OFFICER. IN THE LIGHT OF THE AFORESAID, WE FIND THAT EVEN THOUGH THE ASSESSEE HAD TAKEN A LOAN IN CASH, NONETHELESS, THE LOAN TRANSACTION WAS A GENUINE TRANSACTION AND WAS ROUTED THROUGH THE BANK ACCOUNT OF THE ASSESSEE WHICH CLEARLY SHOWS THE BONAFIDES OF THE ASSESSEE. THE CASH GIVEN BY THE LENDER WAS NOT UNACCOUNTED MONEY BUT WAS DULY REFLECTED IN THEIR BOOKS OF ACCOUNT. THE ASSESSING OFFICER ALSO ACCEPTED THE EXPLANATION AND FOUND THE TRANSACTION TO BE GENUINE. THE CONTENTION OF THE LEARNED COUNSEL FOR THE APPELLANT THAT SINCE THERE WAS NO URGENCY, THE ASSESSEE COULD HAVE TAKEN THE LOAN THROUGH CHEQUE AND SHOULD HAVE PROCESSED THE MATTER THROUGH REGULAR BANKING CHANNELS IS IMMATERIAL, INASMUCH AS THE GENUINENESS OF THE TRANSACTION HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. FURTHER, WE FIND THAT THE CASH WAS DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE AND THE MONEY WAS THEREAFTER, ROUTED THROUGH THE BANKING CHANNEL FOR PAYMENT TO THE GOVERNMENT FOR CONVERTING THE LAND INTO FREE HOLD PROPERTY. IN THE LIGHT OF THE AFORESAID, WE ARE OF THE VIEW THAT REASONABLE CAUSE HAD BEEN SHOWN BY THE ASSESSEE AND THE PROVISIONS OF SECTION 273B OF THE ACT WAS APPLICABLE. THE APPELLATE AUTHORITIES WERE JUSTIFIED IN HOLDING THAT NO PENALTY COULD BE IMPOSED SINCE A REASONABLE CAUSE WAS SHOWN BY THE ASSESSEE IN VIEW OF THE AFORESAID, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION. BOTH THE APPEALS FAIL AND ARE DISMISSED. 11 8. IN VIEW OF THESE FACTS AND CIRCUMSTANCES AND JUDICIAL PRECEDENTS, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. (ORDER PRONOUNCED IN THE OPEN COURT ON 11/08/2021) SD/- (T.S. KAPOOR) ACCOUNTANT MEMBER AKS DTD. 11/08/2021 COPY OF ORDER FORWARDED TO: (1) THE APPELLANT (2) THE RESPONDENT (3) COMMISSIONER (4) CIT(A) (5) DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER ASSISTANT REGISTRAR