IN THE ITAT AGRA BENCH
Deputy Commissioner of Income-tax, Circle-5
Akhilesh Kumar Yadav
IT Appeal Nos. 462 and 463 (Agra) of 2009
[Assessment Year 2006-07]
October 23, 2012
Bhavnesh Saini, Judicial Member
Both the appeals by the Revenue in the cases of different assessees are directed against different orders of ld. CIT(A)-II, Agra dated 24.09.2009 for the assessment year 2006-07, canceling the penalty u/s. 271D of the IT Act.
2. It is stated by the ld. Representatives of both the parties that the facts and circumstances of both the cases are same. Both the parties argued in the case of assessee, Shri Akhilesh Kumar Yadav and submitted that same order may be followed in the case of other assessee, Smt. Dimpal Yadav. Therefore, for the purpose of deciding both the departmental appeals, we take up the appeal in the case of the assessee, Shri Akhilesh Kumar Yadav.
3. We have heard the ld. Representatives of both the parties at length, perused the findings of authorities below and considered the material on record.
ITA No. 462/Agra/2009 (Sh. Akhilesh Kumar Yadav):
4. The facts of the case are that the assessee acquired lease hold rights over the Nazul land bearing Khasra No. 8-C, presently known as 1-A Block, Vikramaditya Marg, Thana Hazratganj, Lucknow vide agreement cum sale deed dated 31.01.2005 from Smt. Ujjwala Ramnath w/o late Shri Kamla Nath Ram, resident of 32A, Friends Colony (East), New Delhi. The rights were acquired by the assessee in the joint name with his wife, Smt. Dimpal Yadav. The said Nazul land was got converted into free hold in favour of the assessee and his wife, Vide the deed executed on 24.06.2005 for a total cost of Rs.44,67,208/-. The said amount of Rs.44,67,208/- was deposited in cash in the joint account of the assessee and his wife, Smt. Dimpal Yadav, maintained in State Bank of India Lucknow by Samajwadi Party for and on behalf of the assessee. From the perusal of the copy of account of the assessee in the books of Samajwadi Party, it was found that 50% of the above amount, i.e., Rs. 22,33,604/- has been debited to the account of the assessee. The amount has subsequently been paid back to the Samajwadi Party on 24.08.2005. It was noted by the AO that the assessee has taken cash loan from Samajwadi Party in contravention of the provisions of section 269SS of the IT Act and as such, liable for penalty u/s. 271D of the IT Act. Accordingly, the matter was referred to the Addl. Commissioner of Income-tax, Firozabad. Proceedings u/s. 271D were, accordingly, initiated by issuing notice to the assessee. The assessee filed written submissions stating therein about his ignorance to the provisions of section 269SS and also stated that there is no doubt about the genuineness of the transaction. The AO quoted some part of his reply in the penalty order, in which the assessee explained that as the funds were urgently required and the assessee was not having requisite funds at that point of time, therefore, Samajwadi Party, of which the assessee is a Member, came forward by depositing the amount directly in their bank account maintained in State Bank of India, Lucknow. The assessee was in urgent need of funds for getting the property converted into free hold property and was under the bona fide belief that the transaction, being genuine, is not violative of any provisions of law. The assessee has also referred to the memorandum, explaining the provisions of the Finance Bill, 1984 by which section 269SS was inserted into the Income-tax Act and Circular No. 387 dated 06.07.1984, issued by the CBDT with reference to the purpose and scope of introducing the section 269SS in the Act. The same is reproduced in 146 ITR (Statute) page 162 as under :
“Unaccounted cash found in the course of searches carried out by the Income-tax Department is often explained by taxpayers as representing loans taken from or deposits made by various persons. Unaccounted income is also brought into the books of account in the form of such loans and deposits, and taxpayers are also able to get confirmatory letters from such persons in support of their explanation.
With a view to circumventing this device, when enables taxpayers to explain away unaccounted ash or unaccounted deposits, the Bill seeks to make a new provision in the Income-tax Act debarring persons from taking or accepting, after 30th June, 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 such loan and deposits of Rs. 10,000/- or more. This prohibition will also apply in cases where on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not, and the amount or aggregate amount remaining unpaid is Rs. 10,000/- or more. The proposed prohibition would also apply in cases where the amount of such loan or deposit, together with the aggregate amount remaining unpaid on the date on which such loan or deposit is proposed to be taken, is Rs. 10,000 or more.”
4.1 It was, therefore, explained before the AO that as clarified by the Board, these provisions were introduced with a view to countering various devices adopted by the tax evaders for explaining unaccounted cash found during the course of search or for introducing their unaccounted income in the form of loans and deposits and it was introduced for countering the major economic evil of proliferation of black money etc. The AO, however, did not accept the contention of the assessee and was of the view that the above provision is inserted in the Income-tax Act with a view to countering cash transactions. In the case of assessee, there is no reasonable cause. The assessee’s case neither falls in any exceptional clause of section 269SS nor he produced any evidence to prove the urgency of depositing cash directly avoiding the transaction through banking channel. Nothing was brought on record that Nazul Department has put any condition or limitation or date by which the amount was to be deposited. No exigency has been brought on record. Accordingly, it was held that the assessee has no reasonable cause to accept the deposits/loans in cash. It was, therefore, held that the assessee has violated the provisions of section 269SS and accordingly, penalty was levied u/s. 271D of the IT Act.
5. The penalty order was challenged before the ld. CIT(A) and the same submissions were reiterated and the decision of Hon’ble Supreme Court in the case of Addl. Director of Income-tax v. Kum. A.B. Shanthi v. ADI, 255 ITR 258 was relied. It was submitted that the assessee was in need of money, which was deposited by his party into his account, which was ultimately paid to Nazul Department. No person of ordinary sense would like to remain tenant in lease hold property of which he could become owner by making certain payment to the Nazool Department.Therefore, the assessee has a bona fide belief that no provision of law has been violated. It was further submitted that no adverse finding has been given in the assessment order against the assessee. No case is made by the AO that this money represents any unaccounted or black money of the assessee. The AO was not justified in holding that no exigency or bona fides were brought on record. It was submitted that Samajwadi Party deposited the impugned amount on 23.06.2005 in the bank account of the assessee and on the same day, said amount was withdrawn for the purpose of making payment to the Government Authority for conversion of land from lease hold to free hold. Hence, there was no reason to doubt the bona fides of the assessee. The route of cash deposited through bank account of the assessee without direct receipt and payment of the impugned cash further endorsed the bona fides of the assessee. The AO was not justified in doubting the execution of conversion deed. There was no gap between the receipt of cash and subsequently utilization by paying the same amount to the Government department. On account of conversion of the land to free hold, the payment had to be made to the government Department. The ld. CIT(A) accepted the contention of the assessee because the assessee has been able to explain the exigency and the compelling reasons for raising of loan in cash. The ld. CIT(A) found that cash was deposited in the account of the assessee on 23.06.2005, which is necessitated by corresponding payment to the Government Department. Therefore, in terms of section 273B, the assessee has “reasonable cause” for his failure to comply with the provisions of section 269SS of the IT Act and accordingly, deleted the penalty and allowed the appeal of the assessee. The Revenue is in appeal against cancellation of penalty.
6. The ld. Representatives of both the parties reiterated their submissions and stand as was before the ld. CIT(A). The ld. DR relied upon the order of the AO and submitted that Samajwadi Party was not authorized to advance any loan to the assessee. Samajwadi Party deposited the impugned amount in the account of the assessee on 23.06.2005 and on the same day, said amount was withdrawn for the purpose of making payment to the Government Authority for conversion of land from lease hold to free hold. No bona fide has been shown by the assessee and there is a contradiction in the submissions of the assessee. There was no urgency of Nazul Department shown for deposit of amount in cash. Thus, the assessee failed to explain any reasonable cause for failure to comply with the provisions of the Act. No evidence showing urgency has been filed for taking cash loan and alternatively no urgency has been proved by the assessee. The ld. DR relied upon certain Tribunal decisions as were filed with letter of the Jr. DR dated 31.07.2012.
7. On the other hand, the ld. Counsel for the assessee reiterated the submissions made before the authorities below and submitted that the assessee was in need of money for getting the lease hold property converted into free hold. Genuineness of the transaction has not been disputed by the authorities below. There is no prohibition in the Constitution of Samajwadi Party to give loan/deposit to the assessee. Copy of the assessment order u/s. 143(3) dated 04.07.2008 for the assessment year under appeal is filed to show that the AO at the assessment stage discussed the genuine loan taken by the assessee for making the payment to Nazul Department for getting the property converted into free hold and no addition has been made and ultimately the amount has been returned to Samajwadi Party. He has submitted that the purpose of the above provision was to curb the black money and to give false explanation in the search cases, which is not the case of the assessee. At the fag end of hearing of appeals, he has also filed copy of the registered deed dated 24.06.2005 executed by Nazul Officer for converting the lease hold property into free hold and copy of challan for depositing the amount in question to Nazul Department in cash on 23.06.2005. Copies of the same are filed in the paper book. He has submitted that all the documents were filed before the authorities below, which is evident from the copy of the order-sheet filed in the paper book. He has submitted that the assessee has, thus, established the need of cash money and bona fides of the transaction since it was a case of urgency to deposit cash with Nazul Department. Therefore, the ld. CIT(A) on proper appreciation of facts and material on record rightly cancelled the penalty. In support of the contention, he has relied upon certain decisions, some of relevant decisions, we would be discussing in the order. Apart from the above submissions on merits, the ld. Counsel for the assessee also submitted that the assessee was of the age of 32 years in the assessment year under appeal and was of immature age and ignorant of law. Therefore, on that reason also, penalty should be deleted. He has, however, admitted that the assessee was Member of Parliament in the assessment year under appeal. The ld. Counsel for the assessee has insisted that this submission may also be dealt with by the Tribunal for considering reasonable cause for failure to comply with provisions of law.
8. We have considered the rival submissions and the material on record. The facts noted above in the order have not been disputed by both the parties. Before proceeding further, it would be relevant to reproduce the relevant provisions of law involved in the present proceedings and case laws as under :
8.1 Section 269SS provides as under :
“269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereafter in this section referred to as the depositor), any loan or deposit otherwise than by an account payee cheque or account payee bank draft if,—
(a) the amount of such loan or deposit or the aggregate amount of such loan and deposit ; or
(b) on the date of taking or accepting such loan or deposit, any loan or deposit taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid ; or
(c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b),
Is twenty thousand rupees or more :
Provided that the provisions of this section shall not apply to any loan or deposit taken or accepted from, or any loan or deposit taken or accepted by,—
(a) Government ;
(b) any banking company, post office savings bank or co-operative bank ;
(c) any corporation established by a Central, State or Provincial Act ;
(d) any Government company as defined in section 617 of the Companies Act, 1956 (1 of 1956) ;
(e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette :
Provided further that the provisions of this section shall not apply to any loan or deposit where the person from whom the loan or deposit is taken or accepted and the person by whom the loan or deposit is taken or accepted are both having agricultural income and neither of them has any income chargeable to tax under this Act.
Explanation.—For the purposes of this section,-
(i) “banking company” means a company to which the Banking Regulation Act, 1949 (10 of 1949), applies and includes any bank or banking institution referred to in section 51 of that Act ;
(ii) “co-operative bank” shall have the meaning assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949) ;
(iii ) “loan or deposit” means loan or deposit of money.]
8.2 Section 271D provides as under :
“271D. (1) If a person takes or accepts any loan or deposit in contravention of the provisions of section 269SS, he shall be liable to pay, by way of penalty, a sum equal to the amount of the loan or deposit so taken or accepted.]
(2) Any penalty imposable under sub-section (1) shall be imposed by the Joint Commissioner.”
8.3 Section 273B of the IT Act provides as under :
“273B. Notwithstanding anything contained in the provisions of clause (b) of sub-section (1) of section 271, section 271A, section 271AA, section 271B, section 271BA, section 271BB, section 271C, section 271CA, section 271D, section 271E, section 271F, section 271FA, section 271FB, section 271G, section 271H, clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, subsection (1) of section 272AA] or section 272B or sub-section (1) for sub-section (1A) of section 272BB or sub-section (1) of section 272BBB or clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause for the said failure.”
8.4 The memorandum, explaining above provisions, Board’s Circular and the purpose of bringing the above provision in the IT Act have been noted in 146 ITR (Statute) 162 (supra). It is clear from the above circular etc. quoted in this order, that these provisions were introduced in the Income-tax Act with a view to countering the various devices adopted by the tax evaders for explaining their unaccounted cash found during the course of search or for introducing their unaccounted income in the form of loans and deposits and it was introduced for countering the major economic evil of proliferation of black money etc. Hon’ble Supreme Court in the case of ADI v. Kum. A.B. Shanthi, 255 ITR 258, considering the constitutional validity of above provision held as under :
“The object of introducing sec. 269SS is to ensure that a tax payer is not allowed to give false explanation for his unaccounted money or if he makes some false entries, he shall not escape by giving false explanation for the same. During search and seizures, unaccounted money is unearthed and the taxpayer would usually give the explanation that he had borrowed or received deposits from his relative or friends and it is easy for the so-called lender also to manipulate his records to suit the plea of the taxpayer. The main object of sec. 269SS was to curb the menace of making false entries in the account books and later giving an explanation for the same.
The undue hardship of the provisions of section 271D, which replaced section 276DD providing for a penalty, is substantially mitigated by the inclusion of section 273B providing that if there was a genuine and bona fide transaction and the taxpayer could not get a loan or deposit by account-payee cheque or demand draft for some bona fide reason, the authority vested with the power to impose penalty has a discretionary power not to levy the penalty.”
8.5 Hon’ble Rajasthan High court in the case of CIT v. Manoj Lalwani, 260 ITR 590 held as under :
“Tribunal having found that the assessee exporter took the cash loan in contravention of s. 269SS because he was in urgent need of money for making the time-bound supplies, it was justified in accepting it as a reasonable cause for setting aside the penalty under s. 271D.”
8.6 Hon’ble Gauhati High Court in the case of CIT v. Bhagwati Prasad Bajoria (HUF),263 ITR 487 held as under:-
“In view of the decision of the apex court upholding the constitutional validity of s. 269SS, penalty under s. 271D could not be set aside on the ground that the provision of s. 269SS is ultra vires the Constitution; however, penalty was not leviable for the reason that the impugned transaction of loan finds place in the books of account of the assessee as well as the lender and none of the authorities found that the transaction was not genuine or that it was a sham transaction to cover up unaccounted money.”
8.7 Hon’ble Delhi High Court in the case of DIT (Exemption) v. All India Deaf & Dumb Society, 283 ITR 113 held as under :-
“Finding of Tribunal that there was no mala fides on the part of the assessee and no intent of violating the law in accepting and repayment of loans in cash when the need arose not being perverse, did not give rise to substantial question of law.”
8.8 Hon’ble Jharkhand High Court in the case of Omec Engineers v. CIT, 294 ITR 599 held as under :-
“Held, that there was no finding of the assessing authority, the appellate authority or the Tribunal that the transaction made by the assessee in breach of the provisions of section 268SS was not a genuine transaction. ON the contrary, the return filed by the assessee was accepted after scrutiny under section 143(3) of the Act. Further, there was no finding of the appellate authority that the transaction in breach of the aforesaid provisions made by the assessee was mala fide and with the sole object to conceal money. Consequently, penalty imposed under section 271D merely on technical mistake committed by the assessee, which had not resulted in any loss of revenue, was harsh and could not be sustained in law.”
8.9 Hon’ble Punjab & Haryana High Court in the case of CIT v. Speedways Rubber Pvt. Limited, 326 ITR 31 held –
“The Assessing Officer initiated proceedings for the violation of section 269SS of the Income-tax Act, 1961, inasmuch as the assessee accepted share application money of Rs.20,000 in cash. Thereafter, penalty was imposed. The Commissioner (Appeals) upheld the stand of the assessee that the amount received was not loan or deposit and no interest was payable that the transaction was bona fide, that the default was of technical nature and that in any case, the amount was received from the public and not from directors or shareholders. The Tribunal affirmed the view. On appeal :
Held, dismissing the appeal, that in view of the finding to the effect that the transaction was bona fide and the default was of technical nature the cancellation of penalty was justified.”
8.10 Hon’ble Gujrat High Court in the case of CIT v. Bombay Conductors and Electricals Ltd., 301 ITR 328 held-
“Held, that the Tribunal had found that there was no evidence to show that infraction of the provisions was with knowledge or in defiance of the provisions. It had further been held that there was nothing on record to indicate that the assessee had indulged in any tax planning or tax evasion. Not only was there a reasonable cause, as found by the Tribunal, but in the light of the finding of the Tribunal that the breach, if any, was merely a technical or venial breach no penalty was leviable.”
8.11 Hon’ble Allahabad High Court in its unreported decision in the case of CIT v. M/s. Shwatabha Investments (P) Ltd., in Income-tax Appeal No. 293 of 2008 dated 17.09.2010 (copy filed in paper book at page 116 by assessee) held as under :
“The Income-tax Appellate Tribunal by its order dated 21.11.2007 confirmed the order of the CIT(Appeals) deleting the penalty under section 271-D for the violation of section 269SS on the ground that the genuineness of transaction was not doubted and there was no scope for introducing any black money for transfer of cash from one concern to another concern. There is no illegality in the finding of the Tribunal. The appeal has no merit. It is, accordingly, dismissed.”
8.12 Considering the facts of the case in the light of the above provisions and the decisions, it is clear that the assessee has been able to establish reasonable cause for failure to comply with the provisions of law. Samajwadi Party deposited the impugned amount on 23.06.2005 in the joint bank account of the assessee in cash. On the same date, the said amount was withdrawn for the purpose of making payment to Nazul Department for getting the joint property of the assessee converted from lease hold to free hold. The registered deed dated 24.06.2005 executed by the Nazul Department is filed on record along with copies of the challan depositing the cash with Nazul Department on 23.06.2005. The confirmation of Samajwadi Party is filed in the paper book to support the above contention of the assessee. The copy of the assessment order for the assessment year under appeal dated 04.07.2008 u/s. 143(3) has been filed on record, in which the AO on the same matter in issue made enquiries from the assessee regarding taking the impugned loan from Samajwadi Party for conversion of the joint property of the assessee from lease hold to free hold and repayment of loan to Samajwadi Party. The AO did not dispute the genuineness of the transaction entered into between the assessee and Samajwadi Party and no addition has been made in this regard. The above facts would clearly reveal that on 23.06.2005 when Samajwadi Party deposited the amount in cash in the joint account of the assessee, the assessee was in dire need of (cash) money because on the same day the amount in cash was withdrawn from the joint account of the assessee and was deposited with the Nazul Department. It is supported by the challan of the treasury and the registered deed executed by the Nazul Officer on 23.06.2005 and 24.6.2005. If the assessee would have taken the loan from Samajwadi Party through banking channel through cheque, it would have taken some time for process in clearing. Since the amount is deposited in the joint account of the assessee on 23.06.2005 and was withdrawn on the same day for making cash payment to the Nazul Authority, there can be no reason to doubt the bona fide of the assessee. Thus, the assessee has been able to prove that for bona fide reasons the assessee had taken cash loan from his own party (Samajwadi Party) and entered into the genuine transaction. Routing of the cash deposit through the bank account of the assessee without direct receipt and payment of the impugned cash would further endorse the bona fide of the assessee. The AO without any reasons had doubted the explanation of the assessee because the AO failed to note that extreme circumstance explained by the assessee, would prove the necessity of the assessee to take cash loan on a particular date, i.e., 23.06.2005 and when there is no gap between the loan and the date of payment to Nazul Department, would prove that the assessee was in fact in need of money for making payment to Nazul department. The taking of loan through cheque would have delayed the execution of lease hold property into free hold. The AO has not made out any case that it was an unaccounted or black money used by the assessee. The AO has also not made out any case that the assessee possesses any unaccounted or black money or to explain any entries in the search case. Since the genuine transaction is supported by the confirmation of Samajwadi Party and is not disputed by the AO, therefore, no unaccounted income has been brought into books of assessee or his bank account. From the evidence and material on record, it is, therefore, clearly established that the assessee entered into genuine transaction of taking cash loan from Samajwadi Party for bona fide reasons, which is supported by the evidence and the amount in question is also repaid through banking channel. Therefore, the assessee has been able to establish that he has ‘reasonable cause’ for failure to comply with the provision of law. The decisions cited above and the Board’s circular clearly support the findings of the ld. CIT(A) for canceling the penalty in the matter. It is well settled law that penalty is not automatic in each and every case and it depends upon the facts and circumstances of each case. Since in this case, the assessee has produced confirmation from Samajwadi Party alongwith relevant documents on record to show that the assessee was in dire need of cash on a particular date for making cash payment to Nazul Department for getting the property converted into free hold. Therefore, it is not a fit case for levy of penalty and the ld. CIT(A), therefore, rightly exercised his jurisdiction in the matter for canceling the penalty. Considering the facts of the case in the light of the above discussion, we are of the view that the assessee has been able to explain reasonable cause for failure to comply with the provision of law. Therefore, the ld. CIT(A) rightly deleted the penalty in the matter. The decisions of the Tribunal cited by the ld. DR cannot be given preference against the decisions of Hon’ble High Court and Supreme Court referred to above. Similarly, the ld. Counsel for the assessee cited other decisions of the Tribunal and other High Courts, but in our opinion they are clearly distinguishable to the facts of the present case. They are not discussed here because it would only enhance the length of the order.
9. Before proceeding further, it is necessary to consider one more contention raised by the ld. DR that Samajwadi Party is not authorized to give any loan or advance to the assessee. Therefore, the genuineness of the transaction should be doubted in this case. The record reveals that earlier Bench of Tribunal after conclusion of the hearing re-fixed the case for hearing and directed the ld. Counsel for the assessee to file copy of Rules and Regulations of the Samajwadi Party along with relevant provision in the rule, which would permit advancing of loan to the office bearers of the Samajwadi Party. Somehow the order of the Bench dated 07.04.2011 was not complied with and ultimately the aforesaid appeal was withdrawn from earlier bench of ITAT, Agra Bench by the order of the Hon’ble Vice President, Delhi Zone. When new Bench was constituted at ITAT, Agra, aforesaid appeals were re-fixed for hearing on merits. The ld. Counsel for the assessee on several dates sought adjournments to comply with the order of the earlier Bench dated 07.04.2011 as above. Ultimately, the ld. Counsel vide his letter dated 01.08.2012 filed the copy of the constitution of Samajwadi Party, which is taken on record. In the aforesaid letter dated 01.08.2012, the ld. Counsel for the assessee also mentioned that the party constitution did not contain any prohibition in giving such loan to the members of the party. It was also written in the letter that this document, i.e., constitution of Samajwadi Party cannot be read in evidence and admitted at this stage, as neither the authorities imposed penalty nor deleted the penalty has referred or relied upon the constitution of the party. The ld. DR objected to the language used by the ld. Counsel and submitted that if that is the assessee’s case, the department may be permitted to file additional evidence, i.e., Constitution of Samajwadi Party and such objection is against order of Bench. The ld. Counsel for the assessee in view of the objection of the ld. DR submitted that the language used in his letter dated 01.08.2012 was not used with the consent of the assessee. Therefore, he sought permission to withdraw his letter dated 01.08.2012. Accordingly, the ld. Counsel for the assessee was permitted to withdraw his letter and the language contained therein dated 01.08.2012. Later on fresh copy of constitution of Samajwadi party is placed on record. In view of this matter, we are of the view that since earlier Bench of the Tribunal directed to place on record copy of Constitution of the Samajwadi Party, therefore, ld. Counsel for assessee should have followed the order of court as per law and should not have commented on the same. The ld. DR raised objection that Samajwadi Party is not authorized to give loan to the assessee, therefore, we find it appropriate to decide this issue also. The issue before the Tribunal is with regard to levy of penalty u/s. 271D of the Act for violation of provisions contained in section 269SS of the Act. The above provision did not prohibit taking of loan in cash from political party or otherwise. It simply provides mode of taking or accepting certain loans and deposits instead of cash. The prohibition is provided under these provisions for taking or accepting from any other person a loan or deposit otherwise than by account payee cheque or draft if it exceeded the prescribed limit. Therefore, whether Samajwadi Party had no provision in their Constitution for giving loan or advance to the assessee, would not be relevant criteria to decide the issue of levy of penalty u/s. 271D of the IT Act. Further, Samajwadi Party has filed their confirmation that the impugned loan was given to the assessee and his wife, which was repaid later on through banking channel. The AO in the regular assessment proceedings also did not doubt the genuineness of the transaction between the Samajwadi Party and the assessee & his wife. Therefore, the objection of the ld. DR has no relevance to matter in issue and accordingly, the same is rejected.
10. Now, we come to a point raised by the ld. Counsel for the assessee about the immature age of the assessee and his ignorance about law for pleading reasonable cause. This point is not arising from the finding and orders of the authorities below. Therefore, it is irrelevant point raised by the ld. Counsel for the assessee. Otherwise also, when the assessee has pleaded on merits before the authorities below about the “reasonable cause” for failure to comply with the provision of law in the light of the Board’s circular and other decisions, we do not find any justification for ld. Counsel for the assessee to have raised such a plea or to insist the Bench to decide the point. The ld. Counsel for the assessee admitted that assessee was Member of Parliament in the assessment year under appeal. The Hon’ble Members of Parliament are makers of laws and could not be said to be ignorant of law. Further, the assessee later on became Chief Minister of the State of Uttar Pradesh, therefore, such plea of ld. Counsel for assessee is irrelevant. It appears that such contention is also raised without consent or knowledge of assessee. As state above, this point is not arising out of the orders of the authorities below and the ld. CIT(A) cancelled the penalty on explanation of the assessee that the assessee has been able to prove that there was “reasonable cause” for failure to comply with the provisions of section 269SS and the findings of the ld. CIT(A) have been confirmed above. The contention of the ld. Counsel for the assessee is, accordingly, rejected.
11. Considering the above discussion, we are of the view that the ld. CIT(A) was justified in holding that in terms of section 273B of the IT Act, the assessee has been able to prove that there was a “reasonable cause” for failure to comply with the provisions of law. We, therefore, do not find any illegality or infirmity in the order of the ld. CIT(A) in deleting or canceling the penalty. The order of the ld. CIT(A) is confirmed and the departmental appeal is accordingly dismissed.
ITA No. 463/Agra/2009 (Smt. Dimpal Yadav):
12. The issue is same in the present departmental appeal in which the ld. CIT(A) on the same reasons given in the case of Shri Akhilesh Kumar Yadav, cancelled the penalty. Following the reasons for decision in the case of assessee, Shri Akhilesh Kumar Yadav, we dismiss the present departmental appeal as well.
13. In the result, both the departmental appeals are dismissed.