Income Tax Officer Ward-1(3), RAIPUR V. SHRI Keshav Singh, RAIPUR

ITA 38/BIL/2011

• Counselvise Citation: 3824714 RSA 2011
• Duration Of Justice: 3 year(s) 10 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 01-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MEENA
• Keywords: Income from undisclosed sources; Opportunity of being heard; Reasonable cause; Accommodation entries
• Section: 273B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR BEFORE SHRI H.L. KARWA, PRESIDENT AND SHRI REJENDRA, ACCOUNTANT MEMEBR ITA NO.38/BLPR/2011 A.Y. 2006-07 INCOME TAX OFFICER 1(3), VS. SHRI KESHAV SINGH, RAIPUR. MIG-6, MAHAVEER NAGAR, NEW PURENA, RAIPUR. (PAN: BDOPS 9618 C) (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI S.K. MEENA, SR. D.R. RESPONDENT BY : SHRI SUNIL AGRAWAL, CA DATE OF HEARING : 18.12.2014 DATE OF PRONOUNCEMENT : 18.12.2014 ORDER PER H.L. KARWA, PRESIDENT THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LD. CIT(A), RAIPUR DATED 29.10.2010 IN CANCELLING THE PENALTY OF RS.18,85,683/- LEVIED UNDER SECTION 271D OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSMENT ORDER UNDER SECTION 143(3) OF THE ACT WAS PASSED BY THE ITO-1(3), RAIPU R ON 08.12.2008. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS FOUND BY T HE A.O. THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 269SS OF THE ACT BY ACCEPTING LOAN IN CASH ABOVE 2 ITA NO .38/BLPR/2011 A.Y. 2006-07 RS.20,000/-. THE TOTAL LOAN ACCEPTED BY THE ASSESS EE WAS RS.18,85,683/- WHICH WAS DIRECTLY PAID BY THE UNSECURED LENDERS TO THE EXCIS E DEPARTMENT BY WAY OF BANK PAY ORDERS. THE A.O. TREATED THE SAME AS CASH LOAN, TH US REFERRED THE CASE TO THE ADDL. CIT, RANGE-I, RAIPUR WHO ISSUED PENALTY NOTICE UNDE R SECTION 271D OF THE ACT ON 01.01.2009. THE LD. ADDL. CIT, RANGE-I, RAIPUR (HE REINAFTER REFERRED TO A.O.) REQUIRED THE ASSESSEE TO SHOW CAUSE AS TO WHY PENAL TY UNDER SECTION 271D OF THE ACT SHOULD NOT BE IMPOSED UPON HIM FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. ON THE DATE OF HEARING, NOBODY A PPEARED ON BEHALF OF THE ASSESSEE. ANOTHER NOTICE WAS ISSUED TO THE ASSESSE E ON 18.03.2009, FIXING THE CASE FOR HEARING ON 01.04.2009, WITH A VIEW TO AFFORDING A LAST OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. DESPITE HAVING DULY SERVED THIS NOTICE ON 31.03.2009, NEITHER ANY ATTENDANCE WAS MADE ON THE PRESCRIBED DATE OF H EARING NOR WAS ANY WRITTEN COMPLIANCE WAS MADE. THE A.O. OBSERVED THAT DURING THE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS RECEIVED UNSECURED LOANS OF RS.18, 85,683/-. THE ASSESSEE HAS FILED THE LOAN CONFIRMATION OF ALL FOUR LENDERS ALONG WIT H THEIR COMPUTATION OF INCOME, BALANCE SHEET AND PROOF OF FILING OF RETURN. VERIF ICATION OF LOAN CONFIRMATION REVEALED THAT ALL SUCH LOANS HAVE BEEN EXTENDED ON 11.04.2005 AND THE LOAN AMOUNT HAS BEEN PAID DIRECTLY TO THE EXCISE DEPARTMENT BY WAY OF PAY ORDERS OF UCO BANK, RAIPUR AGAINST SECURITY DEPOSIT AND LICENSE F EES TO BE PAID BY THE ASSESSEE FOR LIFTING THE LIQUOR. THESE PAY ORDERS HAD BEEN MADE BY FOLLOWING PERSON:- 3 ITA NO .38/BLPR/2011 A.Y. 2006-07 1) SHRI SONAL RAGHAV, RAIPUR 2) SHRI S.S. RAGHAV (HUF), RAIPUR 3) SHRI D.S. RAHAV (HUF), RAIPUR 4) SMT. MAMTA RAHAV, RAIPUR 3. ACCORDING TO THE A.O., SECTION 269SS OF THE ACT PROVIDES THAT NO PERSON SHALL TAKE OR ACCEPT FROM ANY OTHER PERSON, ANY LOA N OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT IF THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGREGATE AMOUNT OF SUCH LOAN AND DE POSIT IS RS.20,000/- OR MORE. HE OBSERVED THAT IN THE INSTANT CASE, THE LOAN AMOU NT WAS NOT PAID THROUGH ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT, RATHER TH E SAME WAS PAID BY WAY OF BANK PAY ORDERS WHICH WERE EVIDENTLY NOT ROUTED THROUGH THE BANK ACCOUNTS OF THE UNSECURED LENDERS BUT THE SAME WERE DEPOSITED DIREC TLY WITH EXCISE DEPARTMENT OF STATE OF CHHATTISGARH AGAINST LICENSE FEES AND SD. ACCORDING TO A.O., THE TRANSACTION IS IN CONTRAVENTION TO THE PROVISIONS O F SECTION 269SS OF THE ACT. HE FURTHER OBSERVED THAT IN THE INSTANT CASE, ALL PAY ORDERS HAVE BEEN PREPARED IN CASH BUT LOANS HAVE BEEN REPAID TO THE LENDERS BY WAY OF CHEQUE IN SUBSEQUENT YEAR. ACCORDING TO THE A.O., THE ASSESSEE OPENED HIS BANK ACCOUNT IN THE UNITED WESTERN BANK, RAIPUR ON 03.12.2005. THUS, HE WAS WELL AWAR E OF THE IMPORTANCE OF BANK ACCOUNT, BUT FAILED TO GET THE UNSECURED LOANS BY W AY OF ACCOUNT PAY CHEQUE OR BANK DRAFT. THE A.O. OPINED THAT THERE WAS NO ANY BUSIN ESS EXIGENCY OR BUSINESS NEED. AS THE ASSESSEE WAS ALREADY ALLOTTED LICENSE FOR RU NNING OF RETAIL SHOP AT VILLAGE SANDI IN THE MONTH OF MARCH 2005. ACCORDING TO THE A.O., THE ASSESSEE WAS HAVING SUFFICIENT TIME AND OPPORTUNITY TO MAKE HIS LICENSE FEES IN LEGITIMATE MANNER. THE 4 ITA NO .38/BLPR/2011 A.Y. 2006-07 A.O. CONCLUDED THAT HE WAS SATISFIED THAT THE ASSES SEE HAS VIOLATED THE PROVISIONS OF SECTION 299SS OF THE ACT AND, THEREFORE, HE IMPOSED PENALTY OF RS.18,85,683/-, A SUM EQUAL TO THE AMOUNT OF LOAN SO TAKEN IN CASH. 4. ON APPEAL, THE LD. CIT(A) CANCELLED THE PENALTY, HENCE THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 5. BEFORE US, SHRI S.K. MEENA, SR. DEPARTMENTAL REP RESENTATIVE SUBMITTED THAT IN THE STATE OF CHHATTISGARH THE LICENSE FOR RUNNIN G RETAIL SHOP OF LIQUOR TRADE IS ALLOTTED BY LOTTERY SYSTEM AND ALLOTMENT IS DONE IN THE FIRST WEEK OF MARCH FOR THE NEXT F.Y. THE PRACTICE FOLLOWED IN THE LOTTERY SYS TEM IS THAT APPLICATION FEES OF RS.4,000/- HAS TO BE DEPOSITED ALONG WITH THE APPLI CATION FORM. A PERSON CAN APPLY FOR MANY SHOPS AT A TIME. HE FURTHER SUBMITTED THA T IN THE STATE OF CHHATTISGARH ONLY 5 6 LIQUOR CONTRACTORS PARTICIPATED IN THE L OTTERY IN THE NAMES OF VARIOUS INDIVIDUAL PERSONS WHO ARE ONLY BENAMIDARS OF THESE LIQUOR CONTRACTORS. SO THE APPLICATION FEES AS WELL AS THE LICENSE FEES ARE PA ID AFTER ALLOTMENT AND SECURITY DEPOSIT ARE ALSO ACCEPTED BY WAY OF PAY ORDERS. TH E PAY ORDER IS MADE FROM CASH PAYMENTS DEPOSITED AT THE COUNTER OF THE BANK BY TH E PERSON OF THE LIQUOR CONTRACTOR. IN THE INSTANT CASE, PAY ORDER MADE FOR PAYMENT OF LICENSE FEES AND SECURITY DEPOSIT WAS DEPOSITED ON 11.04.2005 THROUGH PAY ORDER. HE FURTHER STATED THAT THE MAIN PURPOSE BEHIND THIS PAY ORDERS WAS TO LAUNDER UNACC OUNTED CASH. ACCORDING TO THE LD. DEPARTMENTAL REPRESENTATIVE, THE PROVISIONS OF SECTION 269SS HAVE BEEN 5 ITA NO .38/BLPR/2011 A.Y. 2006-07 VIOLATED AND, THEREFORE, PENALTY UNDER SECTION 271D OF THE ACT WAS CORRECTLY IMPOSED BY THE A.O. THE LD. DEPARTMENTAL REPRESENT ATIVE SUBMITTED THAT THE ASSESSEE HAS FAILED TO SHOW ANY REASONABLE CAUSE WI THIN THE MEANING OF SECTION 273B OF THE ACT AND HE, THEREFORE, SUBMITTED THAT T HE LD. CIT(A) WAS NOT JUSTIFIED IN CANCELLING THE PENALTY. 6. ON THE OTHER HAND, SHRI SUNIL AGRAWAL, C.A., LD. COUNSEL FOR THE ASSESSEE STOUTLY DEFENDED THE ORDER OF THE LD. CIT(A) AND SU BMITTED THAT THE LD. CIT(A) WAS FULLY JUSTIFIED IN CANCELLING THE PENALTY. HE FURT HER SUBMITTED THAT THE TRANSACTION IN QUESTION WAS BONAFIDE AND GENUINE AND WAS MADE ON A CCOUNT OF BUSINESS URGENCY AND, THEREFORE, THE CASE OF THE ASSESSEE IS FULLY C OVERED BY THE PROVISIONS OF SECTION 273B OF THE ACT. HE FURTHER SUBMITTED THAT THE ASS ESSEE PARTICIPATED IN THE LOTTERY FOR RUNNING RETAIL SHOP OF COUNTRY LIQUOR AND IMFL, CONDUCTED BY CHHATTISGARH GOVERNMENT IN THE MONTH OF FEBRUARY AND MARCH EVERY YEAR FOR ISSUE OF LICENSE FOR RUNNING OF RETAIL SHOP FOR NEXT F.Y. THE SHOPS WER E ALLOTTED BY GOVERNMENT THROUGH LOTTERY. THE LICENSE FOR RUNNING OF RETAIL SHOP OF SANDI GROUP HAD BEEN ALLOTTED TO THE ASSESSEE BY LOTTERY IN MARCH 2005. THE MAJOR SHOPS HAD BEEN ALLOTTED TO A PARTICULAR GROUP BY WAY OF LOTTERY AN D AGGRIEVED WITH THE ALLOTMENT, FEW OF THE APPLICANTS FILED WRIT PETITION BEFORE TH E HONBLE HIGH COURT OF CHHATTISGARH AGAINST THE ABOVE ALLOTMENT. IT IS S TATED THAT THE WRIT WAS DECIDED IN FAVOUR OF THE APPLICANTS. AGAINST THIS, THE STATE GOVERNMENT HAD MADE AN APPEAL TO THE HONBLE SUPREME COURT. FROM 01.04.2005 TO 10.0 4.2005 ALL THE SHOPS HAD BEEN 6 ITA NO .38/BLPR/2011 A.Y. 2006-07 RUN BY CHHATTISGARH GOVERNMENT AS THE LICENSE EXPIR ES EVERY YEAR ON 31 ST MARCH. IT IS STATED THAT THE HONBLE SUPREME COURT MADE AN IN TERIM ARRANGEMENT ON 10.04.2005 TO RUN THE SHOPS BY THE ENTIRE LICENSEE (ALLOTTED EARLIER) TEMPORARILY FROM 11.04.2005 TO THE DATE OF FINAL DECISION. AS PER THE PROVISIONS OF STATE EXCISE ACT, THE LICENSEE WAS REQUIRED TO DEPOSIT SECURITY DEPOS IT AND LICENSE FEES BEFORE STARTING THE BUSINESS FROM THESE SHOPS. ACCORDINGLY, THE AS SESSEE HAS DEPOSITED LICENSE FEE/SECURITY DEPOSIT ON 11.04.2005. THE ASSESSEE D ID NOT HAVE SUFFICIENT CAPITAL ON THE SAID DATE AND HE WAS ALSO NOT PREPARED FOR THE INTERIM DECISION OF THE HONBLE SUPREME COURT WITHIN A SHORT TIME. IN THOSE CIRCUM STANCES, THE ASSESSEE CONTACTED VARIOUS PARTIES FOR RAISING FUND TO DEPOSIT THE LIC ENSE FEES AND SECURITY DEPOSIT. AFTER SOME FOLLOW UP, S/SHRI SONAL RAGHAV, S.S. RA GHAV (HUF), D.S. RAGHAV (HUF) AND SMT. MAMTA RAGHAV, RAIPUR AGREED TO LEND MONEY TO THE ASSESSEE FOR THE ABOVE PURPOSE. THE ASSESSEE ALSO SUBMITTED BEF ORE THE AUTHORITIES BELOW THAT THE LICENSE FEE AND SECURITY DEPOSIT WAS REQUIRED T O BE PAID THROUGH PAY ORDER OR DEMAND DRAFT OF NATIONALIZED BANK ONLY. AS THE ASSE SSEE WAS NOT HAVING ANY BANK ACCOUNT AND IF THE PARTIES LENT HIM MONEY BY ACCOUN T PAYEE CHEQUE/DD FAVOURING HIM, IT WAS NOT PRACTICALLY POSSIBLE TO OPEN THE BA NK ACCOUNT AND DEPOSIT THE CHEQUE/ DD AND MAKE AGAIN PAY ORDER/DD IN FAVOUR OF THE DEO, RAIPUR ON THE SAME DAY. IF THE LICENSE FEES AND SECURITY DEPOSIT WERE NOT DEPOSITED ON 11.04.2005, THEN THE LICENSE MIGHT HAVE BEEN CANCEL LED AND ALLOTTED TO OTHER PERSON. CONSIDERING THE BUSINESS EXIGENCY, THE ASSESSEE ASK ED THE ABOVE PARTIES TO LEND HIM MONEY THROUGH PAY ORDER FAVOURING DEO, RAIPUR. ACC ORDINGLY, IT WAS SUBMITTED 7 ITA NO .38/BLPR/2011 A.Y. 2006-07 BY THE ASSESSEE BEFORE THE LD. CIT(A) THAT THERE WA S NO VIOLATION OF SECTION 269SS OF THE ACT. 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND HAVE ALS O PERUSED THE MATERIALS AVAILABLE ON RECORD. THE ADMITTED FACTS ARE THAT T HE GENUINENESS OF THE TRANSACTIONS IN QUESTION WERE NOT DISPUTED BY THE A.O. WE ALSO OBSERVED THAT THE LENDERS ARE EXISTING INCOME TAX ASSESSEES. THEY MADE THE PAYME NT IN QUESTION THROUGH BANKING CHANNELS DIRECTLY TO THE DEO, RAIPUR, A GOV ERNMENT DEPARTMENT. THE ASSESSEE HAS EXPLAINED CIRCUMSTANCES WARRANTING THE URGENCY FOR MAKING PAYMENTS IN THE MANNER STATED HEREINABOVE. WE FULLY AGREE W ITH THESE OBSERVATIONS OF THE LD. CIT(A) THAT THE GENUINE TRANSACTION COULD NOT BE RO PED WITHIN THE AMBIT OF SECTION 269SS/271D OF THE ACT WHICH ARE BASICALLY MEANT FOR COUNTERING TAX EVASION TACTICS AND ACCOMMODATION ENTRIES FOUND DURING THE SEARCH. IN OUR OPINION, THE LD. CIT(A) HAS CORRECTLY OBSERVED THAT WHEN THE SOURCES OF THE DEPOSITS HAVE BEEN ESTABLISHED AND THE PERSONS WERE IDENTIFIED AND WHEN THERE WAS NO ATTEMPT TO CAMOUFLAGE OR SIPHON ANY AMOUNT, THE ASSESSEE CANNOT BE HELD TO B E LIABLE FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. FURTHERMOR E, THE FINDING GIVEN BY THE LD. CIT(A) IN PARAGRAPH NOS. 6.1 TO 6.4 ARE AS UNDER :- 6.1. ADMITTEDLY, THE SOURCE OF THE IMPUGNED LOANS WERE SATISFACTORILY EXPLAINED BY THE APPELLANT AND IT IS UNDISPUTED THAT THE LOANS OBTAINED WERE USED FOR BUSINESS PURPOSES AND DULY ACCOUNTED FOR IN THE BOOKS OF ACCOUNT. THE CIRCUMSTANCES UNDER WHICH THE IMPUGNED LOANS WERE TAKEN, WERE NOT DISPUTED. THE M AIN STRESS OF THE 8 ITA NO .38/BLPR/2011 A.Y. 2006-07 APPELLANTS CONTENTION THAT THE DELAY IN MAKING THE TIMELY PAYMENT MAY DEFEAT THE PURPOSE, WAS NOT PROVED AS FALSE. THE PU RPOSE WAS NOT PROVED TO HAVE BEEN THE TAX EVASION AND THAT NO EVI DENCE WHATSOEVER WAS BROUGHT AGAINST THE APPELLANT TO PROVE ANIMUS T O DEFY THE PROVISIONS OF LAW. IN CIT VS. BOMBAY CONDUCTORS & ELECTRICALS LTD. (2008) ITR 328 (GUJ), IT WAS HELD THAT UNLESS THE M OTIVE TO EVADE TAX IS PROVED BEYOND ALL SHADOWS OF DOUBT, LEVY OF PENA LTY U/S. 271D & 271E WAS NOT JUSTIFIED. THE ASSESSEE PROVED THE BONA FIDES OF THE IMPUGNED TRANSACTIONS BEYOND ALL SHADOWS OF DOUBT. ONCE THIS IS PROVED, IN MY CONSIDERED VIEW, NO PENALTY WAS LEVIA BLE FOR PROCEDURAL DEFAULT WHICH WAS VENIAL IN NATURE. THE IMPUGNED TRANSACTIONS WERE NOT IMPEACHED AS NON-GENUINE OR BOGUS. THE ASSESSMENT O RDER HAD NOT SPOKEN ABOUT THE INGENUITY OF THE TRANSACTIONS. THE REASONABLE CAUSE ASSIGNED BY THE APPELLANT FOR ARRANGING THE IMPUGN ED PAYMENTS IN THE MANNER INDICATED ABOVE, WAS NOT PROVED AS FA LSE. HENCE, THE IMPUGNED PENALTY IMPOSED U/S. 271D, IN MY CONSIDERE D VIEW, IS UNSUSTAINABLE. 6.2 CBDT CIRCULAR NO. 387 DATED 6.7.1984 CLARIFIED THAT THESE PROVISIONS WERE APPLICABLE TO COUNTERACT TAX EVASIO N IN SEARCH CASES. FOR CLARITY, THE GIST OF THIS CIRCULAR IS: UNACCOUNTED CASH FOUND IN THE COURSE OF SEARCHES CARRIED OUT BY THE IT DEPTT. IS OFTEN EXPLAINED BY TAXPAYERS AS REPRESENTING LOANS TAKEN FROM OR DE POSITS MADE BY VARIOUS PERSONS. UNACCOUNTED INCOME IS ALSO BROUGHT INTO THE BOOKS OF ACCOUNT IN THE FORM OF SUCH LOANS AND DEPOSITS A ND TAXPAYERS ARE ALSO ABLE TO GET CONFIRMATORY LETTERS FROM SUCH PER SONS IN SUPPORT OF THEIR EXPLANATION. WITH A VIEW TO COUNTERING THIS D EVICE, WHICH ENABLED TAXPAYERS TO EXPLAIN AWAY UNACCOUNTED CASH OR UNACCOUNTED DEPOSITS, THE FINANCE ACT HAS INSERTED A NEW SECTIO N 269SS IN THE IT ACT DEBARRING PERSONS FROM TAKING OR ACCEPTING, AFT ER 30.06.1984, FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT IF THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGREGATE AMOUNT OF SUC H LOAN AND DEPOSIT IS RS.10000/- OR MORE. 6.3. AS RIGHTLY SUBMITTED ON BEHALF OF THE APPELLAN T, IN ASSTT. DIRECTOR OF INSPECTION VS. KU., A.B. SHANTI (SUPRA), HEAVILY RELIED UPON BY THE AO, THE SC DECIDED THAT ENACTMENT OF THE PROVISIONS OF SECTION 269SS/271D WERE WITHIN THE COMPETENCE OF LEGISLATUR E AND THESE BEING CONSTITUTIONALLY VALID, WERE NOT VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION. THE SC NOWHERE SAID THAT EVEN THE GENUINE AND BONA FIDE TRANSACTIONS ARE TO BE MECHANICALLY ROPED WITH IN THE AMBIT OF THESE PENAL PROVISIONS PARTICULARLY WHEN THESE PROV ISIONS WERE 9 ITA NO .38/BLPR/2011 A.Y. 2006-07 ENACTED TO COUNTERACT TAX EVASION TACTICS. IN FACT, THE FINDINGS OF THE SUPREME COURT GIVEN IN PARA NO. 19 (REPRODUCED BELO W) SUPPORT THE CASE OF THE ASSESSEE : IT IS IMPORTANT TO NOTE THA T ANOTHER PROVISION VIZ. SECTION 273B OF THE ACT WAS ALSO INCORPORATED WHICH PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE PROV ISIONS OF SECTION 271D, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON O R THE ASSESSEE, AS THE CASE MAY, FOR ANY FAILURE REFERRED TO IN THE SA ID PROVISION, IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAI LURE AND IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR FAILURE TO TAKE LOAN OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCO UNT PAYEE DEMAND DRAFT, THEN THE PENALTY MAY NOT BE LEVIED. T HEREFORE, UNDUE HARDSHIP IS VERY MUCH MITIGATED BY THE INCLUSION OF SECTION 273B. IF THERE WAS A GENUINE AND BON FIDE TRANSACTION AND IF , FOR ANY REASONS, THE TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACC OUNT PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONA FIDE REASONS, THE AUT HORITY VESTED WITH THE POWER TO IMPOSE PENALTY HAS GOT DISCRETIONARY P OWER. HENCE, IN MY CONSIDERED VIEWS, THE RATIO OF THE ABO VE DECISION WAS MISCONSTRUED TO HOLD ADVERSITY AGAINST THE ASSESSEE . 6.4. AS ALREADY STATED, SINCE THE TRANSACTIONS IN Q UESTION WERE BONA FIDE AND GENUINE AND WERE MADE ON ACCOUNT OF URGENT BUS INESS NECESSITY AND NO EVIDENCE WHATSOEVER HAVING BEEN BR OUGHT ON RECORD TO PROVE THE GUILTY INTENTION OR GUILTY MIND ON THE PART OF THE ASSESSEE AT THE TIME WHEN THE TRANSACTIONS WERE MADE, THE CA SE OF THE APPELLANT IS FULLY COVERED BY SECTION 273B OF THE A CT. HENCE, IN MY CONSIDERED VIEW THE IMPUGNED PENALTY IMPOSED IS UNS USTAINABLE. ACCORDINGLY, THE SAME IS CANCELLED. 8. WE FULLY AGREE WITH THE ABOVE OBSERVATIONS OF TH E LD. CIT(A) AND HOLD THAT HE HAS TAKEN A CORRECT VIEW IN THIS MATTER. 9. SECTION 273B OF THE ACT PROVIDES THAT NOTWITHSTA NDING ANYTHING CONTAINED IN THE PROVISIONS SECTION 271D, NO PENALTY SHALL BE IM POSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFER RED TO IN THE SAID PROVISIONS IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAI LURE AND IF THE ASSESSEE PROVES 10 ITA N O.38/BLPR/2011 A.Y. 2006-07 THAT THERE WAS REASONABLE CAUSE FOR FAILURE TO TAKE LOAN OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DEMAND DRAFT, THEN TH E PENALTY MAY NOT BE LEVIED. THEREFORE, UNDUE HARDSHIP IS VERY MUCH MITIGATED BY THE INCLUSION OF SECTION 273B OF THE ACT. IF THERE WAS A GENUINE AND BONAFIDE TR ANSACTION AND IF FOR ANY REASON THE TAX PAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUN T PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONAFIDE REASONS, THE AUTHORITY VESTED WIT H THE POWER TO IMPOSE PENALTY HAS GOT DISCRETIONARY POWER. 10. CONSIDERING THE ENTIRE FACTS AND CIRCUMSTANCES OF THE PRESENT CASE, WE HOLD THAT IT IS NOT A CASE OF THE A.O. THAT THE TRANSACT ION OF THE LOAN WAS NOT GENUINE AND IT WAS A SHAM TRANSACTION TO COVER UP THE UNA CCOUNTED MONEY. IN OUR VIEW, WHEN THERE IS AN IMMEDIATE NEED OF MONEY, THE PERSO N CANNOT GET SUCH MONEY FROM THE NATIONALISED BANK TO SATISFY THE IMMEDIATE REQU IREMENT. TO SATISFY THE IMMEDIATE REQUIREMENT OF MONEY, THE PERSON NORMALLY APPROACHES THE MONEY- LENDER OR HIS FRIENDS OR RELATIVES WHO COULD LEND M ONEY TO HIM TO SATISFY HIS IMMEDIATE REQUIREMENT. IN THIS CASE, IT CANNOT BE SAID THAT THE ASSESSEE HAD ENTERED INTO TRANSACTION TO AVOID PAYMENT OF TAX OR TO DEFR AUD THE REVENUE. THE HONBLE SUPREME COURT IN THE CASE OF ASSTT. DIRECTOR OF IN SP. (INV) VS. KUMARI A.B. SHANTI (2002) 255 ITR 258 (SC) HELD THAT IF THERE WAS A GE NUINE AND BONAFIDE TRANSACTION AND THE TAX PAYER COULD NOT GET A LOAN OR DEPOSIT B Y ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE DEMAND DRAFT FOR SOME BONAFIDE REASON , THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY HAS A DISCRETIONARY POWER N OT TO LEVY PENALTY. IN THE CASE 11 ITA N O.38/BLPR/2011 A.Y. 2006-07 OF CIT VS. SAINI MEDICAL STORE (2005) 276 ITR 79 (P &H), THE HONBLE HIGH COURT OF PUNJAB & HARYANA HELD THAT IF THERE WAS REASONA BLE CAUSE FOR NOT ADHERING SCRUPULOUSLY TO THE REQUIREMENT OF SECTION 269SS AN D WHEN THERE IS NO DOUBT WITH REGARD TO GENUINENESS OF TRANSACTION, PENALTY UND ER SECTION 271D CANNOT BE LEVIED. 11. IN VIEW OF THE ABOVE, WE UPHOLD THE ORDER OF LD . CIT(A) AND DISMISS THE APPEAL FILED BY THE REVENUE. 12. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 18.12.2014. SD/- SD/- (RAJENDRA) (H.L. KARWA) ACCOUNTANT MEMBER PRESIDENT RAIPUR, DATED: 18.12.2014 PBN/* COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. D.R. ITAT, RAIPUR BENCH, RAIPUR 6. GUARD FILE //TRUE COPY// BY ORDER ASSTT. REGISTRAR, ITAT, RAIPUR