Section 269SS is attracted when the loan or deposit taken or accepted otherwise than by account payee cheque or account payee bank draft and in the Explanation (iii) below Sec.2 69SS, it is mentioned that loan or deposits means “loan or deposit of money” and transfer between two accounts by way of journal entry does [...]

Issue – The assessee had taken the amounts from four firms which were found to be in cash and the Assessing Officer has considered these payments were in violation of Section 269SS of the Act. Stand of assessee is that the amounts were taken in his capacity as partner and it cannot be taken as [...]

As far as the present case is concerned, except for stating that they had to make payments to the suppliers and the labours, there is hardly any material available on record to show any justification for receipt of cash over and above Rs. 20,000/- during the course of the year. The assessee admits that they [...]

In our considered view, in the light of the relationship between the assessee and her father-in-law, the Tribunal has rightly held that the genuineness of the transaction is not disputed, in which, the amount has been paid by the father-in-law for purchase of property and the source had also been disclosed during the assessment proceedings. [...]

We have heard rival submissions and have gone through the entire material available on record. Learned DR contends that ITAT in respect of above years while upholding the deletion of penalty u/s 271-D, has not considered the aspect of each transactions while ascertaining reasonable cause. In our view it is not so in as much as ITAT has consciously considered this aspect at more than one places and has held that AO though agreed that assessee has reasonable cause in mobilizing these deposits in rural and semi-urban areas, was not justified in levying penalty by holding that transactions based reasonable cause has not been spelt out.

The assessee must prove beyond the shadow of the doubt there existed a reasonable cause for not complying with the conditions contained in section 269SS of the Act. Circumstances under which the cash was accepted must be explained. Unfortunately no cogent material was produced in that direction.

On a plain reading of the provisions of section 269SS and 269T of the Act, it is amply clear that the said provisions would be attracted when loans or deposits in excess or twenty thousand rupees are made or repaid. Thus, a basic precondition for falling within the ambit of the said provisions is the existence of a loan or deposit.

In the present case, both, the Commissioner (Appeals) as well as the Tribunal have found that the transactions in question are neither in the nature of loans or deposits. Under the circumstances, the provisions of sections 269SS and 269T of the Act would not be applicable. Consequently, the question of contravention of such provisions attracting penalty under sections 271D and 271E of the Act would also not arise. Under the circumstances, no infirmity can be found in the impugned order of the Tribunal so as to give rise to a question of law, much less, a substantial question of law so as to warrant interference.

The Tribunal has not rested its decision on the only circumstance that it is the business of the assessee to collect deposits and, therefore, it was entitled to collect them in cash even if it involves violation of Section 269SS; that is not the substratum of the decision.

In the instant case, the AO did not dispute the genuineness of the transaction entered into between the assessee and Samajwadi Party and no addition had been made in this regard. Instead of cash, if the assessee had taken loan through cheque, it would have taken some time for process in clearing. Since the amount was deposited and withdrawn from bank on the same day for making cash payment to the Nazul Authority, there could be no reason to doubt the bona fide of the assessee.