Shri B.Venkateswarlu, Hyderabad V. Addl.CIT,Range-9, Hyderabad

ITA 1697/HYD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 6059 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-11-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 06-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: K V CHALAMAIAH
• Keywords: Business income; Additional evidence; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B', HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI B.RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1697/HYD/13 : ASSESSMENT YEAR 2007 -08 SHRI B.VENKATESWARLU, HYDERABAD ( PAN - AKXPB 3429 P) V/S. ADDL. COMMISSIONER OF INCOME - TAX RANGE 9, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : S HRI K.V.CHALAMAIAH RESPONDENT BY : SHRI B.KURMI NAIDU DATE OF HEARING 18.11.2015 DATE OF PRONOUNCEMENT 27.1.20 16 O R D E R PER B.RAMAKOTAIAH, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APPEALS) VI, HYDE RABAD DATED 5.8.2013 CONFIRMING THE PENALTY OF RS.10,10,000 IMP OSED BY THE ASSESSING OFFICER UNDER S.271D OF THE INCOME TAX A CT,1961. 2. FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSE E, AN INDIVIDUAL, ENGAGED IN THE BUSINESS OF TRADING IN CONSTRUCTION MATERIALS, FILED HIS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2007-08 AD MITTING TOTAL INCOME OF RS.1,04,895. THE ASSESSING OFFICER COMPLETED TH E ASSESSMENT UNDER S.143(3) OF THE ACT ON 15.12.2009 ON A TOTAL INCOME OF RS.3,83,834. DURING THE COURSE OF THE SAID ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER NOTICED THE DEPOSITS INTO THE BANK ACCOUNT OF THE ASSESSEE TO AN EXTENT OF RS 33,33,450. ASSESSEE EXPLAINED THAT AN AMOUNT OF RS 9,60,000 WAS BORROWED FOR PURCHASE OF HOUSE PROPERTY ALONG W ITH HIS BROTHER AND BALANCE WAS HIS BUSINESS TURNOVER. AO ACCEPTED THE EXPLANATION AND ESTIMATED INCOME ON THE TURNOVER SO STATED, BUT, HE TREATED THE LOANS RECEIVED IN CASH IN VIOLATION OF THE PROVISIONS OF S.269SS OF THE ACT. HE ITA NO.1697/HYD/2013 SHRI B.VENKATESWARLU. HYDERABAD 2 ACCORDINGLY INITIATED PENALTY PROCEEDINGS UNDER S.2 71D OF THE ACT, WHICH ULTIMATELY CULMINATED IN IMPOSITION OF PENALTY OF R S.10,10,000 VIDE ORDER OF THE ADDITIONAL COMMISSIONER OF INCOME TAX DATED 29.10.2010 PASSED UNDER S.271D READ WITH S.274 OF THE ACT. ON APPEAL BEFORE THE CIT(A), ASSESSEE FILED CERTAIN EVIDENCE TO EXPLAIN THE CIRC UMSTANCES UNDER WHICH THE AMOUNTS IN QUESTION WERE RECEIVED IN CASH IN VI OLATION OF PROVISION OF S.269SS OF THE ACT, AND PLEADED FOR THE CANCELLATIO N OF THE PENALTY AS THERE WAS REASONABLE CAUSE JUSTIFYING THE RECEIPT O F THE AMOUNTS IN CASH. THE CIT(A), HOWEVER, DID NOT ADMIT THE SAID EVIDENC E ON THE GROUND THAT IT CONSTITUTED ADDITIONAL EVIDENCE, WHICH WAS FILED FO R THE FIRST TIME BEFORE HIM, AND CONFIRMING THE PENALTY IMPOSED BY THE ASSE SSING OFFICER DISMISSED THE APPEAL OF THE ASSESSEE. ON FURTHER A PPEAL, THIS TRIBUNAL SET ASIDE THE ORDER OF THE CIT(A) AND RESTORED THE MATT ER TO THE FILE OF THE CIT(A), WITH A DIRECTION TO ADMIT THE ADDITIONAL EV IDENCE IN QUESTION AND DISPOSE OF THE APPEAL AFRESH IN ACCORDANCE WITH LAW . 3. IN THE SECOND ROUND OF PROCEEDINGS BEFORE HIM, THE CIT(A) NOTED IN THE FIRST PLACE REASONABLE CAUSES SHOWN BY THE ASSESSEE BEFORE THE ASSESSING OFFICER, FOR VIOLATION OF THE PROVISI ONS OF S.269SS IN THE FOLLOWING MANNER- I) APPELLANT MADE CASH BORROWINGS FROM NEAR RELATI VES WHO ARE STAYING IN VILLAGE, HAVING AGRICULTURAL INCOMES AND NOT HAVING BANK ACCOUNTS; II) APPELLANT PURCHASED A HOUSE PROPERTY, JOINTLY WITH HIS BROTHER FOR A TOTAL CONSIDERATION OF RS.10,01,000 FOR WHICH CASH LOANS WERE OBTAINED UNDER PRESSURE FROM THE VENDOR TO COM PLETE THE REGISTRATION IN TIME, FAILING WHICH THE ADVANCE OF RS.1,50,000 WOULD BE FORFEITED. THE CIT(A) NOTED THAT THE PLEA OF THE ASSESSEE FOR NOT FILING THE EVIDENCE/INFORMATION IN RELATION TO THE ABOVE REASO NABLE CAUSES BEFORE THE ITA NO.1697/HYD/2013 SHRI B.VENKATESWARLU. HYDERABAD 3 ASSESSING OFFICER WAS THAT THE AGREEMENT FOR SALE W AS NOT AVAILABLE WITH HIM AT THAT TIME. CONSIDERING THE DIRECTIONS OF THE TRIBUNAL FOR ADMITTING THE ADDITIONAL EVIDENCE, THE CIT(A) REFERRED THE A DDITIONAL EVIDENCE, FURNISHED BY THE ASSESSEE, TO THE ASSESSING OFFICER UNDER S.46A FOR HIS COMMENTS. THE ASSESSING OFFICER, IN RESPONSE, AS NO TED BY THE ASSESSING OFFICER, OBSERVED THAT THE EXPLANATIONS OFFERED BY THE ASSESSEE FOR OBTAINING ASH LOANS IN EXCESS OF RS.20,000 IN VIOLA TION OFS.269SS ARE NOT ACCEPTABLE. THE REASONS OF THE ASSESSING OFFICER F OR SUCH CONCLUSION, AS RECORDED BY THE CIT(A) IN PARA 4.2 OF THE IMPUGNED ORDER, ARE AS FOLLOWS- I. THE AGREEMENT FOR SALE IS BETWEEN THE VENDOR AND TH E APPELLANT AND HIS BROTHER, WHERE AS THE ENTIRE LOAN WAS OBTAINED IN THE NAME OF THE APPELLANT ALONE. AGREEM ENT FOR SALE WAS NOT SIGNED BY THE VENDEES. II. THE ASSESSEES CASE IS NOT COVERED UNDER ANY EXCEPT IONS GIVEN IN PROVISIONS OF SEC.269SS. IT WAS ELABORATED THAT THE APPELLANT HIMSELF IS NOT AN AGRICULTURIST TO OBTAIN LOANS FROM AGRICULTURISTS TO CLAIM EXEMPTION. III. THE STIPULATED TIME OF 45 DAYS TO PAY THE BALANCE O F THE CONSIDERATION FOR PURCHASE OF THE PROPERTY (RS.10,0 1,000- 1,50,000, EXPIRED ON 15.07.2006, WHERE AS ALL CASH LOANS WERE OBTAINED BETWEEN THE PERIOD 08.08.2006 TO 17.08.200 6. THE CIT(A) CONFRONTED THE ASSESSEE WITH THE ABOVE C OMMENTS OF THE ASSESSING OFFICER, AND AFTER CONSIDERING THE OBJECT IONS OF THE ASSESSEE IN RESPONSE THERETO PROCEEDED TO DISPOSE OF THE APPEAL BEFORE HIM BY THE IMPUGNED ORDER, CONFIRMING THE PENALTY IMPOSED BY THE ASSESSING OFFICER UNDER S.271D, FOR THE REASONS DISCUSSED IN PARAS 4. 3 ONWARDS, ON PAGES 6 TO 9 OF THE IMPUGNED ORDER, WHICH READ AS UNDER - ITA NO.1697/HYD/2013 SHRI B.VENKATESWARLU. HYDERABAD 4 4.3 PERUSED THE OB SER VATIONS OF THE A.O IN THE ASSESSMENT ORDER AS WELL AS THE REMAND REPORT AS REGARD TO THE ADDIT IONAL INFORMAT I ON BROUGHT ON RECORD, FOR EXPLAINING THE REASONABLE CA USE INVOLVED IN THIS CASE, FOR BORROWING THE AMOUNTS IN CASH, ALONG WITH THE SUBMISSIONS OF THE APPELLANT. AS COULD BE SEEN FROM THE FACTS OF THE CASE, THE APPELLANT BORROWED AN AMOUNT OF RS. 10,10,000/- FROM 3 PARTIES NAMELY, MR.K.NAGESWARA RAO (RS. 3,60,000), SRI M.V. KONDAIAH(RS. 3,50,000) AND MRS. B . VENKATA SUBBAMMA (RS. 3,00,000). AS FAR AS THE FIRST REASONABLE CAUSE, I . E . OBTAINING THE CASH LOANS F ROM AGRICULTURISTS, WHO DO NOT HAVE BANK ACCOUNTS OR HAVING ONLY AGRICULTURAL INCO MES, WHICH IS AN EXCEPTION TO SEC. 269 SS, IS CONCERNED, THE NATURE OF ACTIVITIES CARRIED AND THE ONLY SOURCE OF INCOME TO MR.M.V.KONDAIAH AN D MRS.B.VENKATA SUBBAMMA, ARE PROVED TO BE AGRICULTURE AND IT WAS N OT THE CASE OF THE A.O. TO PROVE THAT THEY HAVE TAXABLE INCOME FRO M OTHER SOURCES AND ARE HAVING BANK ACCOUNTS. THERE IS NO DISPUTE O N THIS ISSUE. AS REGARD TO THE LOAN OF RS.3,60,000 OBTAINED FROM MR .K.NAGESWARA RAO, THERE IS NO PROOF THAT THE LENDER IS HAVING ONLY AGRICULTURAL INCOME, SINCE HE IS A TEACHER. THERE I S N O DISPUTE ON TH I S I ' : ; SIJ ' = AS WELL. AS SUCH THE SUBMISSION OF THE APPELLANT THAT LENDER S A RE A G R ICULTURISTS ; IS ONLY AN HA L F TRUTH. REGAR D IN G THE APPELLANT HIMSELF BE I NG AN AGRICULTURIST, IT WAS NOT EXPLAINED BEFORE THE A.O THAT HE POSSESSED AGRICULTURAL LANDS, AND I T IS NOT AN ACCEPTABLE FACT THAT AGRICULTURAL LAND BELONGED TO APPELLANT, BUT AGRICULTURAL INCOME TO HIS FAMILY. EVEN OTHERWISE, THE APPELLANT CANNOT FIT INTO THE SCHEME OF EXCEPTION TO SEC. 269 55, SINCE THE APPELLANT HIMSELF HAS KNOWN SOURCES OF TAXABLE INCO ME IN THE FORM OF BUSINESS INCOME, FOR WHICH THE RETURN OF INCOME WAS FILED FOR THE YEAR UNDER REFERENCE. FURT HER, ONE OF THE LENDER PROVED TO BE NON-AGRICULTURIST. THUS, THE EX CEPTION GIVEN TO A SITUATION WHERE BOTH THE LOAN/DEPOSIT LENDER AND LENDEE ARE AGRICULTURIST AND NEITHER OF THEM HAVE ANY INCOME T HAT IS CHARGEABLE TO TAX, IS NOT APPLICABLE TO THE FACTS O F THIS CASE. THE APPELLANT FAILS TO EXPLAIN THAT THE EXCEPTION IS AVAILABLE TO HIM, FOR THE APPLICATION OF SEC. 269SS I N THIS REGARD. IN THIS CONTEXT, IT IS RELEVANT TO REF ER TO THE PROVISO TO SEC. 269SS, WHICH DEAL WITH THE SUBJECT/ISSUE UNDER REFERENCE. PROVISO TO SEC. 269SS - 'PROVIDED FURTHER THAT THE PROVISIONS OF THIS SECTION SHALL NOT APPLY TO ANY L OAN OR DEPOSIT WHERE THE PERSON FROM WHOM THE LOAN OR DEPO SIT IS TAKEN OR ACCEPTED AND THE PERSON BY WHOM THE LOAN O R DEPOSIT IS TAKEN OR ACCEPTED ARE BOTH HAVING AGRICULTURAL INCOME AND NEITHER OF THEM HAS ANY INCOME CHARGEABLE TO TAX UNDER THIS ACT.' ITA NO.1697/HYD/2013 SHRI B.VENKATESWARLU. HYDERABAD 5 AS PER THE BARE READING OF THE PROVISIONS, THE APPE LLANT IS COVERED BY THE PROVISO TO SEC. 269SS AND ACCORDINGL Y LIABLE TO PENALTY U/S. 271D. 4.4 REGARDING THE OTHER REASONABLE CAUSE OF BORROWI NG IN CASH FOR THE PURPOSE OF PURCHASE OF HOUSE PROPERTY, DUE TO THE PRESSURE OF THE VENDOR, IT MAY BE REASONABLE TO HOL D THAT, WHERE THE APPELLANT GOT AN EXTRA TIME FOR REGISTRATION OF PROPERTY ON MUTUAL UNDERSTANDING OF BOTH VENDOR AND VENDEE, WHE RE THE LIMIT OF 45 DAYS FOR PAYING THE BALANCE OF SALE CONSIDERA TION AS PER AGREEMENT OF SALE DATED 1.6.2006, EXPIRED ON 15.07. 2006, BUT REGISTRATION HAS TAKEN PLACE ON 19.08.2006, IT WAS NOT DIFFICULT FOR THE APPELLANT TO TAKE MORE TIME AND COMPLETE THE BO RROWALS THROUGH BANKING CHANNEL, MORE SO IN CASE WHERE APPELLANT HAS BORROWED CERTAIN AMOUNTS FROM MR,NAGESWARA RAO, H IS FATHER-IN- LAW, OR EARLIER OCCASIONS AND THE LENDER AS WELL AS LENDEE HAVING TAXABLE INCOMES. IT MAY ALSO BE NOT OUT OF CONTEXT TO OBSERVE THAT AN AMOUNT OF LOAN OF RS.10,10,000/- WAS BORROWED F OR THE PURPOSE OF ACQUIRING A PROPERTY WORTH RS. 10,01,000/- WITHO UT MUCH OF INVESTMENT OF APPELLANT APPLIED IN THE PROCESS AND THIS ITSELF SHOWS THE TRUTH BEHIND THE TRANSACTIONS OF CASH LOANS AND THE EXPLANATIONS OFFERED BY APPELLAN T WITH THE HELP OF CERTAIN PIECEMEAL INFORMATION DURING THE ASSESSM ENT PROCEEDINGS, AS WELL AS THE APPELLATE PROCEEDINGS A ND IT SURELY INDICATE THE AFTERTHOUGHT ON THE PART OF THE APPELLANT, TO ESCAPE FROM THE PANGS OF THE P ROVISIONS OF SEC. 269SS AND 271D OF IT. ACT. THUS, BASED ON THE FACTS OF THE CASE, THERE IS NO MERIT IN THE ARGUMENT OF THE APPELLANT, TO FALL ON THE THEORY OF REASONABLE CAUSE AS PROVIDED IN SEC. 273B AND AS PRONOUNCED BY THE JUDICIAL DECISIONS, RELIED UPON B Y THE APPELLANT. FURTHER, THE DECISION OF HON'BLE HIGH COURT OF KAR NATAKA IN THE CASE OF CHAMUNDI GRANITE PVT. LTD. VS. DCIT (239 IT R 694), IS DIRECTLY ON THE SUBJECT MATTER AND SUPPORT THE VIEW TAKEN BY THE A.O, WHEREIN IT WAS HELD THAT 'THE LOAN MAY BE GENUINE AND IN A PARTICULAR CASE REASONABLE HARDSHIP MIGHT BE CREATED TO THE BORROWER BY SUCH PROVISION, BUT THE ULTIMATE AIM OF THE SECTION IS TO PREVENT EVASION OF TAX... FURTHER, IN THIS CASE, AS EMANATED THROUGH THE FACTS AS ILLUSTRATED IN THIS ORDER, THE RE IS NO REASONABLE CAUSE FOR THE APPELLANT TO EXPLAIN THAT, THE PROVISIONS OF SEC. 269SS ARE NOT APPLICABLE TO APPE LLANT FOR THE FOLLOWING REASONS: I) THE APPELLANT FAILED TO PROVE THAT ALL THE LENDERS ARE PURE AGRICULTURISTS AND DO NOT HAVE ANY TAXABLE INCOMES. II) IT HAS BEEN PROVED THAT THE APPELLANT HAS TAX ABLE INCOMES AND AS SUCH THE LOANS OBTAINED FROM OTHER AGRICULTURISTS WILL NOT HELP HIM FOR EXEMPTING HIMSELF FROM THE APPLICA TION OF PROVISIONS OF SEC. 269SS, BY VIRTUE OF THE PROVISO THERETO. III) APPELLANT FAILED TO PROVE THAT OBTAINING CASH LOANS FOR PAYING THE BALANCE OF CONSIDERATION FOR HOUSE PROPERTY PUR CHASED ITA NO.1697/HYD/2013 SHRI B.VENKATESWARLU. HYDERABAD 6 THAT TOO WITHIN THE TIME AS STIPULATED IN THE AGREE MENT FOR SALE, WAS GENUINE AND COMPELLING. UNDER THE CIRCUMSTANCES, I AM OF THE CONSIDERED OPI NION THAT THERE IS VIOLATION OF PROVISIONS OF S.269SS, BY THE APPEL LANT IN BORROWING THE AMOUNTS OF RS.10,10,000/- IN CASH, WITHOUT ESTA BLISHING THE REASONABLE CAUSE, AS SUCH THE PENALTY U/S.271D FOR RS.10,10,000/- LEVIED BY THE A.O. STANDS SUSTAINED. 4. AGGRIEVED, ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE PARTIES AND PERUSED THE MATER IAL ON RECORD, INCLUDING THE WRITTEN SUBMISSIONS FILED BY THE LEAR NED COUNSEL FOR THE ASSESSEE BEFORE US. WE FIND THE LOANS IN QUESTION H AVE BEEN OBTAINED BY THE ASSESSEE FROM THE FOLLOWING PERSONS, WHO ARE ST ATED TO BE AGRICULTURISTS AND CLOSE RELATIVES OF THE ASSESSEE. (A) SHRI K.NAGEESWSARA RAO (MATERNAL UNCLE) RS.3,6 0,000 (B) LATE SHRI M.V.KONDAIAH (FATHERS FRIEND) RS.3, 50,000 (C) SMT. B.VENKATA SUBBAMMA (MOTHER) RS.3,00,000 THE AMOUNTS SHOWN AGAINST THREE INDIVIDUALS HAVE AL SO BEEN RECEIVED IN PIECEMEAL ON DIFFERENT DATES BETWEEN 9.8.2006 AND 1 7.8.2006, WHEREAS REGISTRATION OF THE RELEVANT PROPERTY IN FAVOUR OF THE ASSESSEE HAS TAKEN PLACE ON 19.8.2006. OUT OF THE ABOVE, AS NOTED THE CIT(A) IN THE IMPUGNED ORDER, AS FAR AS SHRI KONDAIAH AND SMT. VE NKATA SUBBAMMA ARE CONCERNED, THE ACTIVITIES CARRIED ON BY THEM AND TH E INCOME EARNED BY THEM ARE PROVED TO BE AGRICULTURE AND THE ASSESSIN G OFFICER HAS NOT BROUGHT ANYTHING ON RECORD TO PROVE THAT THEY HAVE TAXABLE INCOME FROM OTHER SOURCES OR THAT THEY ARE HAVING BANK ACCOUNTS , AND THERE IS NO DISPUTE ON THOSE ASPECTS. AS FAR AS SHRI NAGESWARA RAO IS CONCERNED, BEING A TEACHER, BY PROFESSION, IT WAS NOTED THAT H E CANNOT BE SAID TO BE HAVING AGRICULTURE AS THE ONLY SOURCE OF INCOME. S INCE THE ASSESSEE HIMSELF IS HAVING TAXABLE INCOME, INCLUDING FROM BU SINESS, THE CIT(A) HELD THAT THE CASE OF THE ASSESSEE IS NOT COVERED BY THE EXCEPTIONS ENVISAGED ITA NO.1697/HYD/2013 SHRI B.VENKATESWARLU. HYDERABAD 7 IN S.269SS, BEING THAT AN AGRICULTURIST BORROWING F ROM OTHERS HAVING ONLY AGRICULTURE AS SOURCE OF INCOME. WE ARE NOT CONVIN CED WITH THE APPROACH OF THE REVENUE AUTHORITIES, WHILE REJECTING THE EXP LANATION OFFERED BY THE ASSESSEE AND JUSTIFYING THE IMPUGNED PENALTY. ASSES SEE HAS SHOWN A CAUSE FOR ACCEPTANCE OF THE LOANS IN CASH, VIZ. TO COMPLETE THE TRANSACTION OF PURCHASE OF PROPERTY IN TIME, SO AS TO SAVE THE ADVANCE OF RS.1,50,000 PAID EARLIER WHICH WOULD STAND FORFEITED IN TERMS O F THE SALE AGREEMENT IF THE BALANCE AMOUNT IS NOT PAID IN TIME. THIS, BEING A PLAUSIBLE EXPLANATION, EVIDENCING ONLY THE URGENT NEED OF THE ASSESSEE FOR MONEY, WHICH HE HAD TO RAISE BY RESORTING TO BORROWALS, IT HAS TO BE AC CEPTED AS REASONABLE. NOW TURNING TO THE CIRCUMSTANCES UNDER WHICH LOANS HAD TO BE OBTAINED IN CASH, WE FIND THAT AS FAR AS SHRI KONDIAH AND SMT.V ENKATA SUBBAMMA ARE CONCERNED, IN THE ABSENCE OF ANY EVIDENCE BROUGHT O N RECORD TO CONTROVERT THE CLAIM OF THE ASSESSEE THAT THEY ARE AGRICULTURI STS LIVING IN A VILLAGE, HAVING NO BANKING FACILITIES, THE CAUSE SHOWN BY TH E ASSESSEE FOR MAKING THE BORROWALS IN QUESTION FROM THEM IN CASH, HAS TO BE ACCEPTED AS REASONABLE. SIMILARLY, MERELY BECAUSE THE THIRD LE NDER, SHRI NAGESWARA RAO IS ALSO A TEACHER, THE FACTUM OF HE, BEING ALSO AN AGRICULTURIST AND LIVING IN A VILLAGE, CANNOT BE IGNORED. IT MAY BE NOTED, AT THIS JUNCTURE, THAT WE ARE NOT CONCERNED HERE WITH ANY ADDITION MA DE IN THE QUANTUM PROCEEDINGS ON ACCOUNT OF VIOLATION OF PROVISIONS OF S.269SS OF THE ACT, BUT PENALTY LEVIABLE UNDER S.271D OF THE ACT, IN RE LATION TO THE LOANS/DEPOSITS ACCEPTED BY THE ASSESSEE IN VIOLATIO N OF THE PROVISIONS OF S.269SS OF THE ACT. PENALTY, BEING PUNITIVE IN NATU RE, WARRANTS A LIBERAL APPROACH, WHILE EXAMINING THE EXISTENCE OR OTHERWIS E OF A REASONABLE CAUSE FOR THE BORROWALS MADE IN CASH. MOREOVER AS S EEN FROM THE ASSESSMENT ORDER AO ACCEPTED BORROWAL AT RS. 9,60,0 00 ONLY. THE BALANCE OF THE AMOUNT WAS CONSIDERED FOR ESTIMATION OF INCO ME. HOW THE AMOUNT COULD BE TAKEN AT RS. 10.10,000 WAS NOT EXPLAINED. PART OF THE AMOUNT WAS ALREADY BEEN TAXED SEPARATELY. IN ADDITION ASSE SSEE HAS PURCHASED PROPERTY ALONG WITH HIS BROTHER THE FACT OF WHICH W AS ACCEPTED IN ASSESSMENT ITSELF. IT WAS THE EXPLANATION THAT THE FAMILY TRANSACTIONS ITA NO.1697/HYD/2013 SHRI B.VENKATESWARLU. HYDERABAD 8 (HUF) WERE ACCOUNTED IN ASSESSEE BANK ACCOUNT AS HE DID NOT HAVE ANY OTHER BANK ACCOUNT. THIS EXPLANATION WAS REASONABLE CONSIDERING THE FACT THAT PROPERTY FOR WHICH MONIES WERE BORROWED WAS RE GISTERED IN JOINT NAMES. AT BEST, ASSESSEE LIABILITY CAN ONLY BE HALF THE AMOUNT. THIS ASPECT WAS ALSO IGNORED BY REVENUE. CONSIDERING THE TOTALI TY OF FACTS AND CIRCUMSTANCES OF THE CASE, AND ALSO THE FACT THAT T HE ISSUE INVOLVED IN THESE PROCEEDINGS IS NOT OF A QUANTUM BUT OF A PENA LTY, WE ARE OF THE CONSIDERED OPINION THAT IT IS NOT A FIT CASE FOR TH E IMPOSITION OF PENALTY UNDER S.271D. WE ACCORDINGLY CANCEL THE SAME. 6. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D ORDER PRONOUNCED IN THE COURT ON 27.1.2016 SD/- SD/- ( D.MANMOHAN ) ( B.RAMAKOTAIAH ) VICE PRESIDENT ACCOUNTANT MEMBER DT/- 27 TH JANUARY, 2016 COPY FORWARDED TO: 1. SHRI B.V.VENKATESWARLU, H.NO.5 - 6 - 682, SKD NAGAR, BN REDDY NAGAR, VANASTHALIPURAM, HYDERABAD 2 . 3 ADDL. COMMISSIONER OF INCOME - TAX, RANGE 9, HYDERABAD COMMISSIONER OF INCOME-TAX(APPEALS) VI, HYDERABAD 4. COMMISSIONER OF INCOME - TAX VI, HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD. B.V.S