Rajasthan H.C : the loan was taken from his brother for immediate business need and that he was under bona fide belief that the acceptance of cash deposit below Rs. 20,000 does not contravene s. 269SS of the IT Act

High Court Of Rajasthan : Jaipur Bench

CIT vs. Raj Kumar Sharma

Section 260A, 271D, 273B

R. Lodha & R.S. Chauhan, JJ.

D.B. IT Appeal No. 118 of 2006

30th April, 2007

Counsel Appeared : Ms. Parinitoo Jain, for the Appellant : P. K. Kasliwal, for the Respondent

JUDGMENT

By the court :

We heard Ms. Parinitoo Jain for the Revenue and Mr. P.K. Kasliwal counsel for the assessee. That the assessee acted in contravention of the provisions of s. 269SS of the IT Act, 1961, by accepting a loan of Rs. 90,000 in cash in the year from 1st April, 2000, to 31st March, 2001, on different dates from his brother Pankaj Sharma is not in dispute. The details of the loan accepted by the assessee from his brother Pankaj Sharma are thus : Since in the opinion of the AO, the assessee acted in contravention of s. 269SS, notice was issued to the assessee to show cause as to why penalty under s. 271D of the IT Act may not be imposed on him. The explanation of the assessee in response to the show-cause notice was that the loan was taken from his brother for immediate business need and that he was under bona fide belief that the acceptance of cash deposit below Rs. 20,000 does not contravene s. 269SS of the IT Act. The AO imposed the penalty of Rs. 90,000 under s. 271D of the IT Act. In appeal preferred by the assessee, the CIT(A) maintained the order of the AO. On further appeal, the Tribunal by its order dt. 6th Oct., 2005, set aside the penalty levied under s. 271D. It is this order which is impugned in the present appeal by the Revenue. Counsel for the Revenue submits that the ignorance of law is no excuse, more so, the assessee being regular assessee was well aware of the legal provisions. According to her, the explanation furnished by the assessee does not make out any reasonable cause within the meaning of s. 273B of the IT Act and that the impugned order gives rise to the substantial question of law.

We are not persuaded by the submission of counsel for the Revenue. Sec. 271D of the IT Act provides for penalty for failure to comply with the provisions of s. 269SS of the IT Act. According to this provision, if a person, inter alia, accepts any loan in contravention of the provisions of s. 269SS of the IT Act, he shall be liable to pay, by way of penalty, a sum equal to the amount of loan or deposit so taken or accepted. Sec. 273B is an overriding provision. According to the said provision, no penalty shall be imposable on a person or assessee for any failure, inter alia, referred to s. 271D if he proves that there was reasonable cause for the said failure. The Tribunal in its order has found that the genuineness of the deposits made by the assessee’s brother Pankaj Sharma was not in doubt by the AO. The Tribunal noticed the explanation given by the assessee that the deposits were obtained by him to satisfy the immediate business requirement but found that this has not been established. However, the Tribunal was thus of the view that there was a reasonable cause to accept the deposit otherwise through bank draft of through cheque because the assessee bona fide believed that the cash transactions below Rs. 20,000 was permissible. It is true that the ignorance of law is no excuse, but the question here is whether the assessee was able to establish reasonable cause under s. 273B justifying that no penalty should be imposed in contravention of s. 271D of the IT Act. None of the transactions exceeds, as noticed above, Rs. 20,000. The Tribunal accepted tha the assessee bona fide believed that the cash transactions below Rs. 20,000 was permissible and the cause shown by the assessee constituted reasonable cause. The finding of the Tribunal cannot be said to be grossly perverse or unsustainable in law. In our considered view, the appeal does not give rise to any substantial question of law. It is dismissed in limine.

Rs. 17,000 on 13-12-2000

Rs. 18,000 on 15-12-2000

Rs. 15,000 on 25-12-2000

Rs. 18,000 on 24-01-2001

Rs. 17,000 on 30-01-2001

Rs. 5,000 on 31-01-2001 (in all Rs. 90,000)

[Citation : 294 ITR 131]

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