M/s Andhra Bombay Carriers, Hyderabad V. Addl.CIT, Hyderabad

ITA 425/HYD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 9705 (ITAT-HYDERABAD)
• Duration Of Justice: 2 year(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-03-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 30-03-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K V N CHARYA
• Assessee Lawyers: S RAMA RAO
• Keywords: Search and seizure; Reasonable cause
• Section: 273B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C. GUPTA, VICE PRESIDENT & SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A. NO. 425/HYD/2009 (ASSESSMENT YEAR 2003-04) M/S. ANDHRA BOMBAY CARRIERS, HYDERABAD PAN: AACFA9908K VS. ADDL. CIT RANGE 7, HYDERABAD APPELLANT RESPONDENT APPELLANT BY: SHRI S. RAMA RAO RESPONDENT BY: SHRI K.V.N. CHARYA O R D E R PER CHANDRA POOJARI, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE CIT(A), VIJAYAWADA DATED 31.12.2008 AN D PERTAINS TO ASSESSMENT YEAR 2003-04. 2. THE GRIEVANCE OF THE ASSESSEE IN THIS APPEAL IS WIT H REGARD TO CONFIRMATION OF PENALTY OF RS. 31,56,490 BY THE CIT(A). 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PARTNERSHIP FIRM AND ENGAGED IN THE BUSINESS OF TRA NSPORT. THIS PARTNERSHIP FIRM FILED ITS RETURN OF INCOME FO R A.Y. 2003-04 ON 25.11.2003 ADMITTING TOTAL INCOME AT RS. 1,34,700. THE ASSESSEE ALSO FILED, ALONG WITH THIS RETURN, THE AUDITED PROFIT AND LOSS A/C., BALANCE SHEET AND TAX AUDIT REPORT U/S. 44AB OF THE INCOME-TAX ACT, 1961 SINCE I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 2 THE TOTAL TURNOVER WAS OF RS. 10,29,35,775. THE AS SESSING OFFICER COMPLETED THE ASSESSMENT U/S. 143(3) ON 27. 3.2006 ASSESSING THE TOTAL INCOME AT RS. 9,80,150. DURING THE YEAR, ASSESSEE TOOK TEMPORARY LOANS AMOUNTING TO RS . 39,28,236 AND ASSESSEE WAS ASKED TO FILE THEIR POST AL ADDRESSES OF THE LENDERS. THE REQUIRED INFORMATION WAS FILED IN RESPECT OF 82 PERSONS COVERING LOANS AMOUN TING TO RS. 31,56,490. THE ASSESSING OFFICER HELD BALANCE TEMPORARY LOANS AMOUNTING TO RS. 7,71,746 AS UNEXPLAINED. THE ASSESSING OFFICER ALSO INITIATED PENALTY PROCEEDINGS FOR VIOLATION OF SECTION 269SS OF THE A CT. 4. THE ASSESSING OFFICER ISSUED AND SERVED A NOTICE U/ S. 271D ON 3/5/2006 ASKING AS TO WHY THIS PENALTY FOR ACCEPTING CASH LOANS IN CONTRAVENTION OF SECTION 26 9SS SHOULD NOT BE LEVIED. THE ASSESSEE FURNISHED EXPLA NATION VIDE LETTER DT. 5.5.2006 AND IT READS AS UNDER: WE BRING TO YOUR KIND NOTICE THAT DURING THE FINANCIAL YEAR 2002-03 , OUR FIRM FACED SEVERE FINANCIAL CRISIS. MY HUSBAND SRI R. VENKATESWARA RAO, A REPUTED MAN IN THE SOCIETY USED TO ARRANGE FINANCES FOR THE FIRM BY CONTACTING CLOSELY KNOWN PEOPLE, WHENEVER OUR FIRM IS IN NEED OF FINANCE BUT UNFORTUNATELY DURING THE SAID FINANCIAL YEAR 2002-03, THE FIRM HAS NOT ONLY FINANCIAL DIFFICULTIES, BUT ALSO SRI R . VENKATESWARA RAO THE THEN DIRECTOR OF ONE OF THE CO-OPERATIVE BANKS WAS ARRESTED ALONG WITH THE OTHER DIRECTORS OF THE BANK. DUE TO THIS INCIDENT ALL OF A SUDDEN THERE WAS A RUMOUR IN THE MARKET THAT ANDHRA BOMBAY CARRIERS WILL BE CLOSED DOWN/DISSOLVED AND AT THE SAME TIME I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 3 CREDITORS WERE PRESSING FOR THEIR PAYMENTS. WE WERE IN EMBARRASSING SITUATION AND FIRMS REPUTATION WAS IN STAKE. WE TRIED FOR TEMPORARY LOANS AND DUE TO ABOVE SITUATION NOBODY IN THE MARKET WAS READY TO GIVEN LOANS TO THE FIRM. AS THERE WAS VERY LITTLE TIME, OBSERVING THE SITUATION THE EMPLOYEES AT HEAD OFFICE AS WELL AS AT OTHER BRANCHES INCLUDING HAMALIS WERE AFRAID THAT THEY WILL LOSE THEIR JOBS AND LIVELIHOOD WILL BE IN DANGER. IN THESE CIRCUMSTANCES, THEY MET AND CAME FORWARD TO GIVE PETTY LOANS FROM AVAILABLE CASH SAVINGS WITH THEM. AS THEY ARE UNEDUCATED AND NOT AWARE OF BANKING FACILITIES, WHATEVER THEY SAVED FROM THE PAST EARNINGS THEY USED TO KEEP CASH WITH THEM DUE TO ILLITERACY. OUT OF THE TOTAL LOANS OF RS. 39,28,236/- BEING GIVEN BY THEIR EMPLOYEES AND HAMALIS WHICH HELPED THE FIRM TO RUN SMOOTHLY. WE HAVE FILED ALL DETAILS AND PARTICULARS REGARDING THE LOANS TAKEN DURING THE YEAR AND EXPLAINED IN DETAIL FOR THE LOANS TAKEN. WE HAVE ALSO FURNISHED THE ADDRESS OF THE LOAN CREDITORS AND SOME CONFIRMATION LETTERS. THE ASSESSING OFFICER CONDUCTED ENQUIRY THROUGH HIS INSPECTOR IN SOME CASES ALSO, SUMMONED SOME OF THE CREDITORS AND ACQUIRED THE GENUINENESS OF THE AMOUNTS ADVANCED TO US. HOWEVER, DUE TO LACK OF TUNE AND OTHER CONSTRAINTS, WE COULD NOT PRODUCE THE DETAILS OF THE ABOVE LOAN OF RS. 7,71,746 AS SUCH WE OFFERED SOME OF THE ADDITIONS AND IN OUR OPINION IT WILL NOT BECOME CONCEALMENT OF INCOME. IN THE ABOVE SAID CIRCUMSTANCES, THEY HAVE GIVEN THE PETTY AMOUNTS AS LOANS IN CASH WHICH WAS AVAILABLE WITH THEM TO SAVE THE FIRM OUT OF FINANCIAL CRISIS. THEREFORE, WE REQUEST YOUR GOODSELF TO SEE THE CASE SYMPATHETICALLY AND DROP THE PROPOSED PENALTY PROCEEDINGS US. 271D NOT COMPLYING WITH PROVISION OF SECTION 269SS INCOME-TAX ACT, 19651. 5. THE ASSESSING OFFICER REJECTED THIS EXPLANATION ON THE GROUND THAT THE ASSESSEE WAS DOING BUSINESS IN HYDE RABAD I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 4 WHERE BANKING FACILITIES WERE AVAILABLE. SRI R. VENKATESWARA RAO, HUSBAND OF SMT. R. ANJALI (PARTNE R) WAS ARRESTED BUT OTHER 3 PARTNERS WERE THERE TO RUN THE BUSINESS. HIS ARREST WAS IN CONNECTION WITH AFFAIR S OF URBAN CO-OPERATIVE BANK WHICH DOES NOT HAVE ANY CONNECTION WITH THE BUSINESS OF THE ASSESSEE. THE ASSESSING OFFICER, THEREFORE, LEVIED A PENALTY OF R S. 31,56,490 U/S. 271D OF THE ACT. 6. ON APPEAL, THE LEARNED CIT(A) CONFIRMED THE ORDER O F THE ASSESSING OFFICER. AGAINST THIS ORDER OF THE C IT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE IS IN THE BUSINESS OF TRANSPORT AND OP ERATING FROM VARIOUS CITIES, DISTRICTS, TOWNS, ETC., AND NA TURE OF ITS BUSINESS IS SUCH THAT IT HAS TO RUN THE BUSINESS ON CASH. THE BUSINESS OF THE ASSESSEE IS TO HIRE LORRIES AND TRANSPORT GOODS FROM VARIOUS PLACES IN THE COUNTRY AND IT NEC ESSARILY INVOLVES CASH TRANSACTIONS FOR WHICH IT HAD TO BORR OW MONEY FROM ITS OWN EMPLOYEES AND OTHERS TO PAY TO I TS CREDITORS. THE ASSESSEE ESTABLISHED THE GENUINENES S OF THE CASH CREDITS AND SAME WAS ACCEPTED BY THE ASSESSING OFFICER. HOWEVER, FOR WANT OF TIME IT COULD NOT EX PLAIN THE I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 5 GENUINENESS FOR A SUM OF RS. 7,71,746 AND THEREFORE , THE SAME WAS OFFERED TO TAX TO BUY PEACE. 8. SRI R. VENKATESWARA RAO, HUSBAND OF ONE OF THE PARTNERS, USED TO ARRANGE FINANCE WHEN THE FIRM WAS IN NEED OF FINANCE BUT UNFORTUNATELY DURING THE F.Y. 2 002-03 SRI R. VENKATESWARA RAO, ONE OF THE DIRECTORS OF CO - OPERATIVE URBAN BANK WAS ARRESTED ALONG WITH OTHER DIRECTORS OF THIS BANK. ON ACCOUNT OF THIS EVENT, THERE WERE RUMOURS IN THE MARKET THAT ASSESSEE FIRM WOULD BE CLOSED DOWN/DISSOLVED AND CONSEQUENTLY THERE WAS PRESSURE FROM CREDITORS FOR PAYMENTS. EFFORTS TO R AISE TEMPORARY LOANS WERE MADE BUT WERE NOT SUCCESSFUL I N VIEW OF THIS SPECIAL SITUATION. 9. THE EMPLOYEES AT ITS HEAD OFFICE AS WELL AS OTHER BRANCHES INCLUDING HAMALIES, HAD COME FORWARD TO GI VE PETTY LOANS FROM THEIR CASH SAVINGS SO THAT THEY WI LL NOT LOOSE THEIR JOBS AND LIVELIHOOD BY WAY OF CLOSURE O F THIS FIRM. THESE EMPLOYEES AND HAMALIES WERE UNEDUCATED AND WERE NOT AWARE OF BANKING FACILITIES AND THEY GAVE PETTY LOANS IN CASH. THESE LOANS HELPED THE ASSESSEE TO REVIVE THE FIRM FROM FINANCIAL CRISIS. 10. THE ASSESSING OFFICERS OBSERVATION THAT THE ARREST OF SRI R. VENKATESWARA RAO IN CONNECTION WITH THE AFFA IR OF AN I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 6 URBAN CO-OPERATION BANK HAS NOTHING TO DO WITH THE BUSINESS OF THE FIRM, FAILS TO APPRECIATE THAT THE ASSESSEE IS A FIRM AND NOT A CORPORATE ENTRY. THE ASSESSEE ALS O RELIES ON THE FOLLOWING DECISIONS: A) INDUSTRIAL ENTERPRISE VS. DCIT (73 ITD 252) (HYD) B) OMEX ENGINEERS VS. CIT (294 ITR 599) C) HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (83 ITR 26 (SC) 11. FURTHER THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON THE JUDGEMENT OF RAJASTHAN HIGH COURT IN THE CAS E OF CIT VS. AJANTA DYEING AND PRINTING MILLS, 264 ITR 5 05 WHEREIN IT WAS HELD THAT PENALTY U/S. 271D IS COMPU TED ON THE LOAN WHICH EXCEEDS RS. 20,000 AS PERMISSIBLE U/ S. 269SS OF THE ACT. 12. THE LEARNED DR SUBMITTED THAT THE ASSESSEE WAS REQUIRED TO FURNISH AUDIT REPORT U/S. 44AB OF THE A CT AND AUDITOR IS REQUIRED TO FURNISH THE DETAILS REGARDIN G VIOLATION OF SECTION 269SS IN THE TAX AUDIT REPORT. BUT THE AUDITOR REPORTED NO SUCH VIOLATION BY THE ASSESSEE IN SPITE OF THE ASSESSEE VIOLATING THE PROVISIONS OF SECTION 269SS BY BORROWING LOAN OF RS. 39,28,236 FROM 83 PERSONS EXC EEDING RS. 20,000 ON EACH OCCASION. THE LEARNED DR SUBMIT TED THAT THE ASSESSEE HAS BORROWED RS. 17,46,490 OUT OF RS. 39,28,236 FROM 40 PERSONS ON 1 ST APRIL 2002 IN CASH AND THE ARREST OF MR. R. VENKATESWARA RAO WAS NOT MADE ON THE I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 7 FIRST DAY OF ACCOUNTING YEAR AND AS SUCH THE CONTEN TION OF THE ASSESSEE THAT DUE TO THE ARREST OF MR. R. VENKA TESWARA RAO ASSESSEE WAS FORCED TO TAKE CASH LOANS IS NOT C ORRECT. FURTHER, HE SUBMITTED THAT THE ASSESSEE IS NOT ABLE TO FURNISH ANY DOCUMENTARY EVIDENCE TO SHOW THAT THE ASSESSEE WAS PRESSURISED BY THE CREDITORS TO DISCHA RGE THE LIABILITIES IMMEDIATELY AND THAT FORCED THE ASSESSE E TO OBTAIN CASH LOANS. HE SUBMITTED THAT THE GROSS REC EIPT OF THE ASSESSEE WAS INCREASED SUBSTANTIALLY AS COMPARE D TO THE EARLIER YEAR AND THIS SHOWS THAT THE ARREST OF MR. R. VENKATESWARA RAO DID NOT AFFECT THE BUSINESS OF THE ASSESSEE AND AS SUCH HOW IT WOULD HAVE AFFECTED THE CASH POSITION OR LIQUIDITY OF THE ASSESSEE. ACCORDING T O THE DR, THE ASSESSEE HELD HUGE CASH IN HAND AT RS. 8,08,760 ON 31.3.2003 AND BORROWING OF THE CASH LOANS WITHOUT A NY HESITATION EXCEEDING RS. 20,000 IS GROSS VIOLATION OF SECTION 269SS OF THE ACT. HE RELIED ON THE ORDER OF THE CI T(A). 13. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE MAIN CONTENTION OF THE ASS ESSEES COUNSEL IS THAT THE ASSESSEE BORROWED CASH LOANS FR OM ITS EMPLOYEES AND THE PROVISIONS OF SECTION 269SS CANNO T BE APPLIED TO ANY AMOUNT RECEIVED FROM ASSESSEES EMPL OYEES IN CONTRAVENTION OF PROVISIONS OF THIS SECTION. EV EN ASSUMING THAT THE ASSESSEE RECEIVED CASH LOANS EXCE EDING I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 8 RS. 20,000, WE DO NOT SEE HOW IT IS EXCLUDED FROM T HE PURVIEW OF THE WORDS ANY OTHER PERSON APPEARING I N SECTION 269SS. IN OUR OPINION, THESE WORDS DENOTE ANY PERSON OTHER THAN THE ASSESSEE BECAUSE THERE WAS NO QUESTION OF ASSESSEE RECEIVING ANY MONEY FROM ITSEL F IN CONTRAVENTION OF THIS SECTION. WE, THEREFORE, FIND NO FORCE IN THIS CONTENTION OF THE ASSESSEE. HOWEVER, AS RE GARDS THE EXISTENCE OF REASONABLE CAUSE, THE ASSESSEES COUNS EL STATED THAT ONE OF THE ASSESSEES PARTNER WAS UNDER THREAT FROM THE CUSTOMERS OF THE CO-OPERATIVE SOCIETY WHER E HE WAS A DIRECTOR AND HE WAS NOT REGULARLY ATTENDING T HE BUSINESS OF THE ASSESSEE AND HE IS ON RUN TO AVOID THE HARASSMENT FROM PUBLIC AS WELL AS FROM POLICE. HE CANNOT BE ABLE TO CONCENTRATE ON THE BUSINESS OF THE ASSES SEE AND THE ASSESSEE IS HAVING DIFFERENT BRANCHES AT MUMBAI , ANDHERI, POORNA BHIWANDI, BHAYANDER, ULLHAS NAGAR, BHIWANDI (T), VASI, AHMEDABAD, SARKEJ, VAPI, SECUNDERABAD, FATEH NAGAR, JEEDIMETLA, DIWAN DEVDI, VIJAYAWADA, GUNTUR, BHUVANAGIRI AND CHENNAI IN ADDI TION TO THE HEAD OFFICE AT HYDERABAD. SINCE THERE WAS S HORTAGE OF CASH BALANCE IN SOME OF THE BRANCHES ON A PARTIC ULAR DATE, THE ASSESSEE WAS FORCED TO PAY THE DUES TO TH E CREDITORS WHO WERE TROUBLING IN AND OUT OF THE DAY AND THE EMPLOYEES SITTING IN SUCH OFFICE HAVING NO OPTION U SED THEIR I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 9 OWN MONEY TO PAY THE DUES OF THE CUSTOMERS TO ESCAP E FROM THEIR CLUTCHES AND TO AVOID UNPLEASANT SITUATI ON. FURTHER THE CONTENTION OF THE ASSESSEES COUNSEL IS THAT THOUGH THERE WAS POSITIVE CASH BALANCE IN CENTRALIS ED ACCOUNT WHEN THE ASSESSEE CONSOLIDATED ALL THE ACCO UNTS OF THE BRANCHES, ACTUALLY THERE WAS CASH SHORTAGE IN PARTICULAR BRANCHES WHERE THE CASH LOAN WAS TAKEN A ND THIS IS REASONABLE CAUSE AS PROVIDED U/S. 273B OF T HE ACT. 14. WE FIND FORCE IN THE ARGUMENT OF THE ASSESSEES COUNSEL. IT WILL NOT BE POSSIBLE FOR AN ASSESSEE T O PREDICT WITH PRECISION THE EXACT REQUIREMENT OF MONEY FOR DISCHARGING ITS OBLIGATION CONNECTED TO THE BUSINES S AND SOMETIMES IT IS NOT POSSIBLE TO KEEP EXACT AMOUNT O F CASH IN EACH BRANCH AS THEY ARE SITUATED IN DIFFERENT PA RTS OF THE COUNTRY. IT MAY NOT ALSO BE POSSIBLE FOR IT TO ANT ICIPATE THE EXACT DATE ON WHICH IT WILL BE REQUIRED TO DISCHARG E SUCH OBLIGATION. THERE CAN BE SOME DIFFERENCE BETWEEN W HAT WAS ANTICIPATED AND WHAT WAS ACTUALLY REQUIRED. IN ASS ESSEES CASE THE PARTNER AVOIDING THE PUBLIC IN VIEW OF A P ROBLEM IN A CO-OPERATIVE SOCIETY WHERE HE WAS A DIRECTOR. TH E EMPLOYEES ARE ACTUALLY INVOLVED IN THE BUSINESS OF THE ASSESSEE; TO SAVE THEIR SKIN THEY MIGHT HAVE INTROD UCED THEIR OWN CASH AND THIS CANNOT BE CONSTRUED AS DELI BERATE ATTEMPT BY THE ASSESSEE TO INTRODUCE UNACCOUNTED MO NEY I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 10 IN ASSESSEES BUSINESS. THE OBJECT OF INTRODUCING SECTION 269SS IS TO ENSURE THAT THE TAX PAYER IS NOT ALLOWE D TO GIVE FALSE EXPLANATION FOR HIS UNACCOUNTED MONEY, OR IF HE MAKES SOME FALSE ENTRIES HE SHALL NOT ESCAPE BY GIV ING FALSE EXPLANATION FOR THE SAME. DURING THE SEARCH AND SE IZURE, UNACCOUNTED MONEY IS UNEARTHED AND THE TAX PAYER WO ULD USUALLY GIVE THE EXPLANATION THAT HE HAD BORROWED O R RECEIVED DEPOSITS FROM FRIENDS, RELATIVES AND IT IS EACH FOR THE SO CALLED LENDER ALSO TO MANIPULATE HIS RECORDS TO SUIT THE PLEA OF THE TAX PAYER. THE MAIN OBJECTIVE OF SECTION 269SS IS TO CURB THIS MENACE OF MAKING FALSE ENTRIE S IN ACCOUNT BOOKS AND LATER ON GIVING EXPLANATION FOR T HE SAME. THE PROVISIONS OF SECTION 271D IS SUBSTANTIA LLY MITIGATED BY THE INCLUSION OF SECTION 273B PROVIDIN G THAT IF THERE WAS A GENUINE AND BONA-FIDE TRANSACTION AND T HE TAX PAYER COULD NOT GET A LOAN BY ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONA-FIDE REASONS THE AUTHORI TY VESTED WITH THE POWER TO IMPOSE PENALTY HAS A DISCRETIONARY POWER NOT TO LEVY PENALTY. THE ASSES SING OFFICER WHILE LEVYING THE PENALTY HAS TO SEE THE EN TIRE FACTS AND CIRCUMSTANCES OF THE CASE AND SHALL TAKE JUDICI OUS VIEW OF THE FACTS. IT HAS NOT BEEN BROUGHT ON REC ORD BY THE DEPARTMENT NOR BY THE ASSESSEE THAT THE ASSESSEE HA S SUFFICIENT MONEY OR CASH BALANCE ON EACH DAY OF BOR ROWAL I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 11 IN A PLACE WHERE IT HAS BORROWED CASH LOAN FROM ITS EMPLOYEES. IF THERE IS SHORTAGE OF CASH BALANCE IN A PARTICULAR BRANCH WHERE THE CASH LOAN WAS TAKEN EXC EEDING RS. 20,000 FROM ITS EMPLOYEES THEN THE ASSESSEE IS HAVING REASONABLE CAUSE FOR TAKING SUCH CASH LOANS AND PEN ALTY CANNOT BE LEVIED. FURTHER WHILE INTERPRETING THE P ROVISIONS OF SECTION 269SS, WE HAVE TO BEAR IN MIND THE OBJEC TIVE FOR WHICH IT WAS INTRODUCED. IF THE ASSESSEE IS ABLE TO LEAD EVIDENCE TO SHOW THAT NOT ONLY WAS THERE REASONABLE CAUSE FOR TAKING THE MONEY IN CASH, BUT THE AMOUNT DID NO T ALSO REPRESENT UNACCOUNTED MONEY EITHER OF THE ASSESSEE OR OF THE PERSONS FROM WHOM THEY WERE TAKEN, NORMALLY THA T SHOULD BE SUFFICIENT TO HOLD THAT THE PENALTY IS NO T JUSTIFIED. AS REGARDS THE GENUINENESS OF THE BORROWING IN THE PRESENT CASH, THERE DOES NOT APPEAR TO BE ANY DOUBT. THE AUTHORITIES HEREIN HAVE RAISED NO DOUBT ABOUT THE GENUINENESS AS IT IS CLEAR FROM THE FACTS OF THE CA SE. APPARENTLY, THE REVENUE AUTHORITIES WERE SATISFIED WITH THE ASSESSEES EXPLANATION REGARDING THE NATURE AND SOU RCE OF THE AMOUNT. THUS, THE TRANSACTIONS BETWEEN THE ASS ESSEE AND THE EMPLOYEES DID NOT FALL WITHIN THE MISCHIEF SOUGHT TO BE REMEDIED BY THE SECTION. AS ALREADY POINTED OUT BY US IF THE ASSESSEE WAS PREVENTED BY REASONABLE CAUS E FROM TAKING THE MONEY THROUGH ACCOUNT PAYEE CHEQUES OR I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 12 DEMAND DRAFT THE PENALTY CANNOT BE LEVIED. THE EXP RESSION OF REASONABLE CAUSE HAS TO BE CONSIDERED PRAGMATI CALLY AND KEEPING IN VIEW OF THIS EXPEDIENCY OF THE BUSIN ESS WHEREIN IT IS NOT ALWAYS POSSIBLE TO GET THINGS DON E OR TO ANTICIPATE THE COURSE OF THE EVENTS WITH INFALLIBLE PRECISION. THE ASSESSEE ALSO MADE A PLEA BEFORE US THAT MOST O F THE PAYMENTS WERE MADE TO DRIVERS OR OWNERS OF THE TRAN SPORT VEHICLES EITHER BEFORE THE BEGINNING OF THE BANKING HOURS OR AT THE CLOSE OF THE BANKING HOURS. HE SUBMITTED TH AT USUALLY THE TRANSPORT VEHICLES START FROM A PARTICU LAR PLACE BEFORE THE BANKING HOURS AND THE ASSESSEE HAS TO MA KE PAYMENT TO THE DRIVERS OR OWNERS OF THE VEHICLES TO WARDS HIRE CHARGES. THIS IS REGARDING VEHICLES GOING OUT FROM THE ASSESSEES PLACE. THE VEHICLES WHICH ARE USUALLY C OMING INTO ASSESSEES PLACE ARE USUALLY COMING AFTER THE BANKING HOURS AND THE ASSESSEE HAS TO MAKE PAYMENT TO THE D RIVERS OR THE OWNERS OF THE VEHICLES. IN SUCH CIRCUMSTANC ES THE ASSESSEE HAS TO MAKE PAYMENT AND THE ASSESSEES PAR TNER IS NOT AVAILABLE AND THE ASSESSEES EMPLOYEES HAVE MADE THE PAYMENTS. IN OUR OPINION THIS IS ALSO A REASON ABLE CAUSE NOT TO LEVY PENALTY. 15. FURTHER THE ASSESSEE CONTENDED THAT THE AMOUNT RECEIVED FROM THE EMPLOYEES CANNOT BE TERMED AS LOA N. THE WORDS IN EXPLANATION (III) BELOW SECTION 269SS EXCEPT I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 13 SAYING THAT LOAN OR DEPOSIT MEANS LOAN OR DEPOS IT OF MONEY. THE TERMS LOAN OR DEPOSIT ARE NOT MUTUA LLY EXCLUSIVE. THERE ARE NUMBER OF COMMON FEATURES BET WEEN THE TWO. A LOAN IS REPAYABLE THE MOMENT IT IS INCU RRED, WHILE IT IS NOT SO WITH DEPOSIT. IN A DEPOSIT, UNLI KE A LOAN, THERE IS NO IMMEDIATE OBLIGATION TO REPAY. NORMALL Y A DEPOSIT IS FOR A FIXED TENURE. THE AMOUNT TAKEN BY THE ASSESSEE IN THE PRESENT CASE IS FOR A SHORT PERIOD. IT HAS TO BE CONSIDERED AS TEMPORARY ADVANCE AND ONE HAS TO S EE WHETHER THERE WAS ANY STIPULATION AS TO THE PERIOD OR ANY STIPULATION FOR PAYMENT OF INTEREST. IF IT IS A TE MPORARY ADVANCE, SUCH TEMPORARY ADVANCES ARE OUTSIDE THE PU RVIEW OF SECTION 269SS OF THE ACT. TO SUM UP, THE ASSESS ING OFFICER HAS TO SEE WHETHER THE CASH LOAN WAS BORROW ED BY THE ASSESSEE ON ACCOUNT OF SHORTAGE OF CASH BALANCE IN A PARTICULAR PLACE WHERE THE CASH LOAN WAS TAKEN. FU RTHER HE HAS TO SEE WHETHER CASH LOAN WAS TAKEN FOR A SHO RT PERIOD WITHOUT ANY STIPULATION REGARDING REPAYMENT PERIOD OR INTEREST. EVEN OTHERWISE PENALTY U/S. 271D CANN OT BE LEVIED IN ANY CASE IF THERE IS A REASONABLE CAUSE F OR ACCEPTING THE CASH LOANS. THEREFORE, IF THERE IS O NLY TECHNICAL LAPSE FOR WHICH NO PENALTY COULD BE LEVIE D. WITH THESE OBSERVATIONS, WE SET ASIDE THE ISSUE TO THE F ILE OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 14 16. AT THIS POINT, WE MAKE IT CLEAR THAT THE ASSESSEE H AS RELIED ON THE JUDGEMENT OF RAJASTHAN HIGH COURT IN THE CASE OF AJANTA DYEING AND PRINTING MILLS (SUPRA) WH EREIN IT WAS HELD THAT PENALTY U/S. 271D IS TO BE COMPUTED O N THE AMOUNT OF LOAN WHICH EXCEEDS RS. 20,000 AS PERMISSI BLE U/S. 269SS. WE HAVE GONE THROUGH THIS JUDGEMENT. IN OUR OPINION THE RATIO LAID DOWN IN THIS JUDGEMENT CANNO T BE APPLIED TO THE FACTS OF THE PRESENT CASE IN VIEW OF THE JUDGEMENT OF THE SUPREME COURT IN THE CASE OF ASST. DIRECTOR OF INSPECTION (INVESTIGATION) VS. KUMARI A .B. SHANTI, 258 ITR 259 WHEREIN IT WAS OBSERVED THAT PE NALTY IS LEVIABLE IF THE AMOUNT OF CASH LOAN OR DEPOSIT O R AGGREGATE AMOUNT OF SUCH LOAN OR DEPOSIT IS RS. 20, 000 OR MORE. 17. ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST MARCH, 2011. SD/- (G.C. GUPTA) VICE PRESIDENT SD/- (CHANDRA POOJARI) ACCOUNTANT MEMBER HYDERABAD, DATED 31 ST MARCH, 2011 TPRAO I.T.A. NO. 425/HYD/2009 M/S. ANDHRA BOMBAY CARRIERS ======================= 15 COPY FORWARDED TO: 1. M/S. ANDHRA BOMBAY CARRIERS, 15-8-296, DURGA COMPLEX, GOSHAMAHAL, HYDERABAD. 2. THE ADDL. CIT, RANGE 7, I.T. TOWERS, A.C. GUARDS, HYDERABAD. 3. THE CIT(A), VIJAYAWADA 4 THE CIT-VI, HYDERABAD 5. THE DR A BENCH, ITAT, HYDERABAD