Income Tax Appellate Tribunal - Cochin
Muthoot M. George Bankers vs Asstt. Commissioner Of Income-Tax on 16 April, 1993
Equivalent citations: [1993]46ITD10(COCH)
ORDER
G. Santhanam, Accountant Member
1. These appeals are by the assessee against the levy of penalty respectively under Sections 271D and 271E of the Income-tax Act, 1961.
2. The appellant is a registered firm of nine partners engaged in money-lending business. The previous year relevant to the assessment year 1989-90 is the financial year ending on 31-3-1989. According to the learned Dy. CIT, Central Range, Ernakulam, the appellant had, during the relevant previous year, accepted in cash deposits or loans on various dates from different firms such as, Muthoot M. George Chits, Bangalore, Muthoot Bankers, New Delhi, Muthoot Bankers, Bangalore and Muthoot M. George Chitty, Faridabad, amounting in all Rs. 57,95,000 in violation of the provisions of Section 269SS of the Income-tax Act and, therefore, levied penalty under Section 271D of the Act in a sum equal to the amount of such loans or deposits. Similarly, the learned Dy. CIT, noticed that the appellant had, during the relevant previous year, made repayments in cash of deposits amounting to Rs. 58,50,000 on various dates between 17-2-1989 and 31-3-1989 to different parties such as Mithoot M. George Chitty, Bangalore, Muthoot Bankers, Bangalore, Muthoot Bankers, New Delhi and Muthoot M. George Chitty, Faridabad, in violation of the provisions of Section 269T of the Income-tax Act, 1961 and therefore levied penalty under Section 271E of the said Act in a sum equal to the amount of Rs. 58,50,000. The appellant carried the matter in appeal against the levy of penalty respectively under Sections 271D and 271E of the Act. It was contended before the learned CIT (Appeals) that the transactions involved transfer of funds from one sister concern to another sister concern and such transactions could not be termed as loans or deposits within the meaning of Section 269SS or as deposits within the meaning of Section 269T. Further, it was contended that the interest paid to the sister concerns was all accounted for and offered for income-tax assessment and no concealment of income was involved. Reliance was placed by the appellant on the Circular of the Board of Direct Taxes No. 387 dated 6-7-1984 (paras 32.1 to 32.7) explaining the provisions of Sections 269SS and 269T inserted by the Finance Act, 1984 for the proposition that the impugned provisions were intended only to curb black money transactions and on this basis it was contended that once the transactions are found to be genuine and no charge of concealment was levelled in respect of such transactions, levy of penalty under Section 271D or under Section 271E for venial violation, if any, of Section 269SS or 269T would be draconian in nature and effect and was not justified. It was also contended before the first appellate authority that the Madras High Court in the case of Kumari A.B. Shanthi v. A.D.I. [1992] 197 ITR 330 had struck down the provisions of Section 269SS as ultra vires the Constitution of India and as the provisions of Sections 269T and 271E are parallel provisions and represent the other side of the same coin, they should be also construed as ultra vires the Constitution. Further it was contended that the expression "loan or deposit" found in Section 269SS or the expression "deposit" found in Section 269T would not apply to transaction of funds inter se among the firms managed by the same group of individuals with a slight alteration in the respective constitution. More so, when the same individual is the managing partner of all such firms and the central office is located under the same roof. Lastly it was contended that several transactions comprised in the sum of Rs. 57,95,000 which were considered by the learned Dy. CIT as coming under the purview of Section 269SS are outside the provisions of Section 269SS. Likewise, it was also contended that several transactions comprised in a sum of Rs. 58,50,000 which were considered by the learned Dy. CIT as coming within the purview of Section 269T are outside the provisions of the said Section. Thus the appellant questioned the quantum of penalty also levied in this case under Sections 271D and 271E respectively of the IT Act, 1961.
3. The learned CIT (Appeals) accepted the contention of the appellant that the many transactions considered by the learned Dy. CIT as falling within the purview of Section 269SS or Section 269T did not really attract the provisions of either Section 269SS or Section 269T and in this view of the matter, he excluded a sum of Rs. 28,00,000 from the ambit of Section 269SS and a sum of Rs. 34,60,000 from the mischief of Section 269T and sustained penalty in respect of acceptance of deposits in cash in a sum of Rs. 29,95,000 and in a sum of Rs. 23,90,000 in respect of repayment of deposits or loans in cash. The revenue is not in appeal against the exclusions made by the learned CIT (Appeals) and the reliefs thus granted. The assessee is on appeal against the levy of penalty in a sum of Rs. 29,95,000 under the provisions of Section 271D and also the levy of penalty in a sum of Rs. 23,90,000 under the provisions of Section 271E of the IT Act.
4. The learned CIT (Appeals) did not accept the other contentions of the appellant. According to him for the impugned provisions to be attracted it is immaterial whether the transfer of funds between the firms were found to be genuine or not. Once the appellant accepted the deposits or loans in cash in violation of Section 269SS or made repayments of deposits in cash, in contravention of the provisions of Section 269T, penal provisions of Sections 271D and 271E are attracted. The argument that Section 269SS is ultra vires the Constitution as declared by the Madras High Court did not find favour with the first appellate authority for the reason that the same High Court in the case of K.R.M.V. Ponnuswamy Nadar Sons v. Union of India [1992] 196 ITR 431 had upheld the validity of the provisions of Section 269SS. As between the two decisions of the Madras High Court, the learned GIT (Appeals) preferred to follow the Division Bench decision upholding the constitutional validity of the provisions of Section 269SS. Alternatively, he held that even if one were to be guided by the decision of the same High Court in the case of Kumari A.B. Shanthi (supra), striking down the provisions of Section 269SS, inasmuch as it was not a decision of the jurisdictional High Court he was not bound to follow the same in the light of the decision of the Punjab and Haryana High Court in the case of CIT v. Ved Prakash [1989] 178 ITR 332 : 44 Taxman 365. He did not accept the contention of the appellant that because the transactions were between the sister concerns, the provisions of Sections 269SS and 269T would not be attracted as according to him the expression "person" included in Section 2(31) of the IT Act a firm also and there may be as many persons as there are firms ; nor did he accept the argument of the appellant that in the very nature of the transactions it cannot be said that the appellant had accepted the deposits or loans or made repayments of deposits as according to him the definition of "deposit" would cover the transactions of the nature reported between the firms as contained in the account of the appellant. Thus, the CIT (Appeals) sustained the levy of penalty on principle, but gave part relief to the appellant on an examination of the transactions as found in the books of accounts of the appellant. Not satisfied, the appellant is on second appeal.
5. Sri R Srinivasan, the learned Chartered Accountant submitted that the impugned transactions have taken place between 2-1-1988 and 23-3-1989 in respect of moneys obtained from the sister concerns and the repayments to the sister concerns took place between 4-1-1988 and 31-3-1989. Thus, all the transactions have taken place prior to 1-4-1989. Even if the alleged transactions are to be viewed as either receipt of deposits or loans in contravention of Section 269SS or repayments of deposits and advances in contravention of Section 269T, the relevant provisions which are applicable in the case of the appellant are the provisions of Sections 276DD and 276E. However, no action was taken under the above Sections. The provisions of Sections 271D and 271E can only apply prospectively to the transactions that take place on and from 1-4-1989. Thus, the levy of penalty under Section 271D or under Section 271E is without jurisdiction and is to be declared void ab initio.
6. Sri C. Abraham, the learned senior departmental representative contended that any amendment coming into force from the 1st April will be applicable to the assessment year beginning on 1st April of the year and as such it will cover all the transactions of the previous year relevant to the assessment year concerned. In this case, the previous year of the appellant ended on 31-3-1989 and the relevant assessment year is 1989-90. Sections 271D and 271E have come into force on and from 1-4-1989 and, therefore, there was nothing wrong in invoking the provisions of those Sections for levy of penalty in respect of the contraventions of Section 269SS and 269T.
7. We have considered rival submissions carefully. There is no indication in Section 269SS or Section 269T or any other provisions of the Income-tax Act, 1961, that the amount of deposits or loans accepted or the amount of deposits repaid otherwise than by an account payee cheque or account payee bank draft are to be treated as the income of the assessee unlike Section 269D which deals with the amount of hundi loans accepted or repaid otherwise than through account payee cheque as the income of the appellant. Further, Section 269SS and Section 269T are prohibitive in nature. The prohibition is in respect of the manner or the mode by which certain transactions are not to be done by persons mentioned therein whether such person is an assessee or not; whether such person is assessable or not; whether such person is having income or not. Thus the scope and ambit of Section 269SS and Section 269T are very wide and the infringement of the impugned provisions need not necessarily be confined to the case of an assessee or to the assessment of his income. Therefore, the usual concepts like the assessee, the previous year, the assessment year, or the law applicable to the assessment year cannot be imported into the provisions of Section 269SS or Section 269T. As a result, we are unable to accept the contention of the revenue that as the transactions have taken place in the previous year relevant to the assessment year 1989-90, the penal provisions of Sections 271D and 271E which came into force with effect from 1-4-1989 would stand attracted to the case of the assessee.
8. Clarifying the amendments made to Section 269T, the Board of Direct Taxes has issued Circular No. 522 dated 18-8-1988 which is reproduced at page 1747 of Volume 2, Fourth Edition, of Chaturvedi & Pithisaria's Income-tax Law and the same is as follows:
Amendments to Sections 40A(3), 269SS and 269T by the Direct Tax Laws (Amendment) Act, 1987 - Date of applicability - clarification regarding.- Provisions of Sections 40A(3), 269SS and 269T of the Income-tax Act, 1961, have been amended by the Direct Tax Laws (Amendment) Act, 1987 (Act No. 4 of 1988) and consequently the monetary ceilings prescribed under the aforesaid Sections have been raised from Rs. 2,500 to Rs. 10,000, Rs. 10,000 to Rs. 20,000 and Rs. 10,000 to Rs. 20,000 respectively. As per provisions of Section 1 (2) of the Direct Tax Laws (Amendment) Act, 1987, these changes have been made effective from 1-4-1989.
2. Board has received a number of representations regarding the date of applicability of the abovernentioned amended Sections of the Income-tax Act. It is hereby clarified that the amended provisions of Sections 269SS and 269T will apply to payments or repayments made on or after 1-4-1989. In respect of disallowance of payments made under Section 40A(3), the amendment will apply to payments made in the previous year relevant to the assessment year 1989-90 and subsequent years.
Further, in Circular No. 551 dated 23-1-1990, the Board explaining the amending Act of 1987, raising the monetary ceiling from Rs. 10,000 to Rs. 20,000, the insertion of the words "or other person" after the word "firm" and the enlargement of the term "deposit" has categorically stated at para 15.5 (page 5735 ibid) that "these amendments come into force with effect from 1-4-1989. and will, accordingly, apply in relation to the transactions entered into after this date". Sections 271D and 271E were inserted by the Direct Tax Laws (Amendment) Act, 1987 with effect from 1-4-1989 and the Departmental Circular No. 551 dated 23-1-1990, at para 16.6 explained the scope of the provisions in the following terms at page 5817 ibid as follows:
16.6. Insertion of new Sections 271D and 271E to provide for levy of penalties for failure to comply with the provisions of Sections 269SS and 269T.-Under the old provisions of Chapter XXI of the Income-tax Act, no penalties were prescribed for failure to comply with the provisions of Sections 269SS and 269T, which require that taking or accepting of certain loans or deposits or repayment of certain deposits by account payee cheques or account payee bank draft if the amount of the deposit or loan is Rs. 20,000 or more. These defaults, however, attracted prosecution under the provisions of Sections 276DD and 276E. It was decided that such defaults, should, instead of attracting prosecution, be made liable to penalties. The Amending Act, 1987, has, therefore, omitted the said Sections 276DD and 276E from the Income-tax Act and has inserted two new Sections 271D and 271E to provide for penalties for these defaults. The amount of penalty is a sum equal to the amount of loan or deposit taken or deposit repaid in contravention of Section 269SS or 269T.
From the above, it would be noticed that the monetary limit of Rs. 10,000 was raised to Rs. 20,000 under both the Sections of 269SS and 269T and the Board had already clarified that the higher monetary limit will cover the transactions on and from 1-4-1989. Board's Circular clarifying Sections 271D and 271E deals with higher monetary limit of Rs. 20,000 which came into force with effect from 1-4-1989. Therefore, it is reasonable to hold that the penal provisions of Section 271D and Section 271E are intended to be operative prospectively from 1-4-1989 in respect of transactions done on or after 1-4-1989 exceeding the monetary ceiling of Rs. 20,000 offending the provisions of Sections 269SS and 269T. In other words, these two penal provisions are not intended to cover the transactions entered into prior to 31-3-1989 when the monetary ceiling prescribed under Section 269SS or Section 269T was only in a sum of Rs. 10,000.
9. Even assuming, but not accepting that the concepts like "previous year", "assessment" and "assessment year" are germane to the provisions of Section 269SS and Section 269T and thereby for the penal provisions of Sections 271D and 271E, as contended by the learned senior departmental representative, we hold that the provisions of Sections 271D and 271E cannot be back-paddled in respect of transactions prior to 1-4-1989. In this view of the matter, we draw inspiration from the decision of the Supreme Court in the case of CIT v. Onkar Saran & Sons [1992] 195 ITR 1 though such a decision was rendered in respect of quantum of penalty for concealment of income consequent to change of law. In that case, the original returns for the assessment years 1961-62 and 1962-63 were filed. The exact dates on which, these returns were filed were not on record but assessments were completed in 1962 and 1963 respectively. Subsequently, notice under Section 148 of the Income-tax Act, 1961, was served on the assessee for both the years on 9-3-1965. However, the assessee chose to file its returns in response to the notices only on 27-2-1969 disclosing the same incomes as in the original returns. The Income-tax Officer made certain additions to the total income and additions of Rs. 22,988 and Rs. 9,604 respectively in those years became final. Penalty under Section 271(1)(c) was imposed on the basis that the Section as amended with effect from 1-4-1968 applied. The Tribunal held that there was a case of levy of penalty but directed that the penalty should be only on the basis of the law as it stood in the relevant assessment years and thus scaled down the quantum of penalty. On a reference, the High Court upheld the order of the Tribunal, but on a different ground viz., that the law applicable was the law as it stood on the date when the assessee ftled the original returns (viz., 1962 and 1963). On appeal to the Supreme Court, it was held affirming the decision of the High Court that even in a case where a return is filed in response to a notice under Section 148 involving an element of concealment, the law applicable would be the law as it stood at the time when the original return was filed for the assessment year in question and not the law as it stood on the date on which the return was filed in response to the notice under Section 148. In reaching this conclusion, the Apex Court drew support from its earlier decision in the case of Brij Mohan v. CIT [1979] 120 ITR 1 and also approved the decision of the Madras High Court in CIT v. S.S.K.G. Arthanariswamy Chettiar [1982] 136 ITR 145 and also the decision of the Delhi High Court in Addl CIT v. Joginder Singh [1985] 151 ITR 93. Thus, it is the law that is applicable on the date when the offending return was filed, that is relevant for the levy of penalty for concealment of income under Section 271(1)(c). On a parity of reasoning we are inclined to the view that in the case of the appellant, the law applicable would be the law as it stood on that date when the alleged "offending" transactions (that is, the transactions that were in contravention of Sections 269SS/269T) took place. The argument that the revenue not having initiated prosecution when the repealed provisions were in force would find it helpless to initiate any action after the repealing provisions have come into force cannot deter us from holding that the order under Sections 271D and 271E are void ab initio as having been passed without jurisdiction.
10. Sri Srinivasan vehemently contended that the provisions of Sections 269SS and 269T are unconstitutional and in this context he relied on the decision of the Madras High Court in the case of Kwnari A.B. Shanthi [supra). Sri Abraham stoutly opposed the view of Sri Srinivasan relying on the decision of the Madras High Court in the case K.R.M.V. Ponnuswarny Nadar Sons (supra) in which the constitutional validity of Section 269SS was upheld. Further, he contended that in K.R.M.V. Ponnuswamy Nadar Sons' case (supra) the decision was rendered by a Division Bench whereas in the other case the decision was rendered by a Single Judge Bench and hence the former will have precedence over the latter. He also contended that in the absence of jurisdictional High Court decision on the constitutional vires of the provisions of Sections 269SS and 269T, the Tribunal, which is a creature of the law, cannot take cognizance of the decision of the Madras High Court which is in favour of the taxpayer and for this proposition he relied on the decision of the Punjab and Haryana High Court in the case Ved Prakash (supra). Sri Srinivasan rejoined the issue by relying on the decision of the Bombay High Court in CIT v. Smt. Godauaridevi Saraf [1978] 113 ITR 589 and also the decision of the Madhya Pradesh High Court in CIT v. Vrajlal Manilal & Co. [1981]127 ITR 512. We have carefully considered rival submissions. No doubt, the Tribunal as a creature of the statute cannot entertain the question of ultra vires of the provisions of an Act as it is foreign to the scope of its Jurisdiction. That does not mean that if an Act has been declared ultra vires the Constitution by an High Court, the Tribunal should not take congnizance of such a decision in deciding the dispute between the taxpayer and Commissioner. Such a view is supported by the decision of the Bombay High Court in Smt. Godavaridevi Sarafs case (supra) and also the decision of the Madhya Pradesh High Court in Vrajlal Manilal & Co.'s case (supra). Contrary view is expressed by the Punjab & Haryana High Court in Ved Prakash's case (supra). It is settled law that in case of conflicting decisions and in the absence of a decision one way or the other by the jurisdictional High Court on the issue, the decision that is more in favour to the subject can be adopted and applied. We respectfully follow the decision of the Madras High Court in the case of Kumari A.B. Shanthi (supra) and hold that the penalty on the basis of Section 269SS levied under Section 271D is void ah initio. Sri Abraham vehemently contended that the decision of the Madras High Court upholding the validity of Section 269SS should have precedence over the decision of the same High Court in the case of Kumari A.B. Shanthi (supra) and the Tribunal should follow only the former decision and not the latter decision. We are unable to subscribe to the view canvassed by the learned senior departmental representative. For one thing the decision of the Madras High Court which is in favour of the taxpayer is a later decision in point of time, which has considered the earlier decision of the same High Court in K.R.M.V. Ponnuswamy Nadar Sons case (supra) and has pointedly pointed out that the issue whether Section 269SS was violative of Article 14 was not taken in K.R.M.V. Ponnuswamy Nadar Sons' case (supra) nor was that aspect touched upon KumariA.B. Shanthi's case (supra). Further, when there are more than one decision, one in favour of the taxpayer and the other in favour of the revenue, the Tribunal is free to follow the former rather than the latter.
11. Without prejudice to his contention that no penalty is leviable in this case, Sri Srinivasan contended that the provisions of Sections 271D and 271E are not mandatory but are only directory and, therefore, it is not that in every case that penalty can, be levied. On the other hand, Sri C. Abraham contended that the language of the impugned Sections do not permit of such interpretation. We have carefully considered the submissions. In both the Sections, the expression "shall be liable to pay" is found. On similar expressions that are found in Sections 276DD and 276E, as they stood then prior to their omission with effect from 1-4-1989, the Andhra Pradesh High Court in the case of ITO v. Lakshmi Enterprises [1990] 185 ITR 595 : 52 Taxman 450 held that the word "liable" used in the Section gives discretion to the Court with regard to the imposition of fine. The Court may either chose to impose fine or may dispense with the imposition of fine. It cannot be said that the Court has no discretion with regard to the quantum of fine to be imposed. Though this decision was rendered in the context of the old Sections 276DD and 276E, since similar expression is used in Sections 271D and 271E, we hold that the levy of penalty is not mandatory but is only directory in nature. Further, the law is well settled that penalty will not be imposed merely because it is lawful to do so. In Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26, the Apex Court observed whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judiciously and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act. Further in terms of Section 273B penalty is not imposable if the person proves that there was reasonable cause for the failure to observe the statutory provisions. Thus, we uphold the contention of Sri Srinivasan that the impugned provisions (Sections 271D & 271E) are only directory and not mandatory in nature.
12. Arguments were advanced before us on the merits of the case. The thrust of Sri Abraham's argument is that as the assessee had accepted or repaid deposits or loans in excess of Rs. 20,000 in cash, penalty was rightly sustained by the CIT (Appeals). Sri Srinivasan, on the other hand, vehemently contended that the transactions are between the sister concerns. The managing partner is the same person for all these concerns and the transactions will not fall within the definition of either "loan" or "deposit" and even if they are construed as loans or deposits there is only venial breach of the provisions and hence penalty in hefty sum of nearly Rs. 59 lakhs is totally uncalled for and unjustified. Having regard to rival submissions and the materials on record, we uphold the contention of Sri Srinivasan, the learned Chartered Accountant. It is not in dispute before us that the assessee has accepted moneys in cash from its sister concerns or repaid the same in cash. Many of them are partnership firms and one of them is a limited company. It is also not in dispute that Sri George, the managing partner of the aasessee-firm is also the managing partner of the sister concerns. It is also not in dispute before us that Sri George, the managing partner of the assessee-firm is also the managing director of the limited company; nor it is in dispute before us that the transactions of alleged deposits or alleged loans or the repayments thereof are among the sister concerns inter se. It is also on record that the accounts of these concerns are managed from Kozhencherry where the senior partners are residing. Nor is it in dispute that the assessee and the sister concerns with which it had dealings are all assessed to income-tax. In the circumstances, can it be said that the taking of moneys from one firm by another firm or repayments thereof constituted deposits or loans so as to attract the provisions of Sections 269SS and 269T?To make a deposit or loan, there must be at least two parties - the giver and the receiver-both in physical existence or in legal existence. The meaning of "deposit" and "loan" has been succinctly explained at page 5735 of Chaturvedi and Pithisaria's Income-tax Law, Fourth Edition, Volume 5, which is as follows:-
'Deposit' and 'loan' - these two are not identical in meaning. - It is true that both in the case of a loan and in the case of a deposit there is a relationship of a debtor and a creditor between the party giving money and the party receiving money. But in the case of a deposit, the delivery of money is usually at the instance of the giver and it is for the benefit of the person who deposits the money - the benefit normally being earning of interest from a party who customarily accepts deposits. Deposits could also be for safe-keeping or as a security for the performance of an obligation undertaken by the depositor. In the case of a loan, however, it is the borrower at whose instance and for whose needs the money is advanced. The borrowing is primarily for the benefit of the borrower although the person who lends the money may also stand to gain thereby by earning interest on the amount lent. Ordinarily, though not always, in the case of a deposit, it is the depositor who is the prime mover while in the case of a loan, it is the borrower who is the prime mover. The other and more important distinction is in relation to the obligation to return the amount so received. In the case of a deposit which is payable on demand, the deposit would become payable when a demand is made. In the case of a loan, however, the obligation to repay the amount arises immediately on receipt of the loan. It is possible that in case of deposits which are for a fixed period or loans which are for a fixed period, the point of repayment may arise in a different manner. But by and large, the transaction of a loan and the transaction of making a deposit are not always considered identical.
Further, it has been held by the Apex Court in CIT v. Bazpur Co-operative Sugar Factory Ltd. [1988] 172 ITR 321 : 38 Taxman 195 that the essence of a deposit is that there must be a liability to return it to the party by whom or on whose behalf it is made on the fulfilment of certain conditions. It is also pertinent to note that it is only with effect from 1-4-1989 and not before that the meaning of "deposit" is enlarged so as to Include "deposit of any nature" in the case of a person other than a company. Against this background, we examine the transactions between the sister concerns and the assessee. There are transfer of funds from and to the sister concerns. There is no evidence to show that money was loaned or kept deposited for a fixed period or repayable on demand. Further, the sister concerns and the assessee are owned by the same family group of people with a common managing partner with centralised accounts under the same roof. Transfer of funds has taken place in a whimsical manner. Therefore, it is rather difficult to say that the transactions are in the nature of deposits or loans with certain conditions attached to them, either as regards the period of such deposits or loans or with regard to their repayments. From the copies of the accounts furnished before us all that can be gathered is that funds have been transferred from and to the sister concerns as and when required and since the managing partner is common to all the sister concerns, the decision to transfer the funds from one concern to another concern or to repay the funds could be said to have been largely influenced by the same individual. In other words, the decision to give and the decision to take rested with either the same group of people or with the same individual. In such circumstances of the case, we hold that the transactions inter se between the sister concerns and the assessee cannot partake of the nature of either "deposit" or "loan" though interest might have been paid on the same. Excepting for the transfer of funds being witnessed in the books of accounts of the concerned firms, no material is on record to show issue of receipt or pronote in evidence of accepting a deposit or accepting a loan. Therefore, we hold that the transactions as are found in the books of accounts of the assessee cannot be termed as deposits or loans as understood in common parlance. It only represents diversion of funds from one concern to another depending upon the exigencies of the business. Further, the transactions have not been impeached as non-genuine or bogus. Hence the provisions of Sections 269SS and 269T are not attracted to the facts of the case. Even if they were to apply, in the facts and circumstances explained above, the action of the assessee firm in accepting the funds in cash or making refunds of such funds in cash can be ascribed to its bona fide belief that it would not attract the provisions of Sections 269SS or 269T given the nature of the transactions and the circumstances of its case. Bona fide belief coupled with the genuineness of the transactions will constitute reasonable cause for not invoking the provisions of Sections 271D and 271E. In this view of the matter also we cancel the order of penalty under Sections 271D and 271E.
13. In the result, the appeals are allowed.