Income Tax Appellate Tribunal - Patna
Income-Tax Officer vs Narsing Ram Ashok Kumar on 15 March, 1993
Equivalent citations: [1993]47ITD38(PAT)
ORDER
S.L. Banerjee, Judicial Member
1. The revenue has raised the following grounds against the order of the Id. CIT (A) dated 31-3-1992 (All sections referred to in this order are of Income-tax Act, 1961) :
On the facts and in the circumstances of the case, the 1d. CIT (A) was not Justified in deleting the penalty levied under Sections 27 1D of I.T. Act by accepting assessee's plea of reasonableness, bona fide nature of transaction, absence of mens rea etc. when the provisions of Section 271D are mandatory in character.
2. From the scrutiny of accounts, the Assessing Officer found that Rs. 10,080 and Rs. 21,960 was received by the assessee from Ashok Kumar and Rajesh Kumar respectively in cash which contravenes Section 269SS, therefore, is liable for penalty under Sections 27 1D. He levied penalty of Rs. 32,040 under that section. The assessee filed appeal against this order before the 1d. CIT (A).
3. Before the 1d. CIT (A) the assessee submitted that intention of Section 269SS was to curb bogus or dummy or unaccounted cash loans or deposits. In this case genuineness of the deposits is not in quandary, rather, it had been accepted by the Assessing Officer as genuine and the assessment order is ideograph of it. In earlier years and this year also bigger amounts had been transacted through bank only and it was only small amounts were transacted in cash. It was further submitted that there was genuine impression on the part of the assessee that one amount of Rs. 20,000 or more had to be transacted by cheque and not the small amounts in any particular year. It was also pointed out that Rs. 9,160 from Shri Rajesh Kumar was received on Sunday. It was pleaded that in the absence of any mens rea no penalty is irnposable and for that the decision of Supreme Court in Hindustan Steel Ltd. v. State of Orissa [1972] 83 ITR 26 was relied upon. It was also submitted that in the case of Cement Marketing Co. of India Ltd. v. Asslt. CST [1980] 124 ITR 15, the Supreme Court held that "where the assessee does not include a particular item in the taxable income under a bona fide belief that he is not liable so to include, it would not be right to condemn the return as a'False' return inviting imposition of penalty". The CIT (A) cancelled the penalty accepting the submission. He also observed that Ra. 9,160 was obtained on 16-4-1989 which was Sunday and on that day all the banks were closed. This amount should not have been considered by the Assessing Officer while levying penalty.
4. The Id. departmental representative submitted that only because the payment of one item i.e. Rs. 9,160 was received in cash on Sunday, the 1d. CIT (A) should not have cancelled the penalties levied for other deposits. He pleaded that it is not disputed that the deposits on which the penalty had been levied were in cash contravening Section 269SS and hence the penalty was rightly levied. The 1d. counsel for the assessee, on the other hand, argued that the intention of inserting Section 269SS has been discussed in Board's Circular in 152 ITR (St.) 22-23. It was pointed out that main purpose of this section was to damper devise to explain away unaccounted cash or unaccounted deposits. Here in this case in the assessment order there is no whisper about the unaccounted cash or unaccounted deposits and, therefore, the application of Section 269SS is erroneous. The 1d. counsel then argued that the assessee had an impression that deposits more than Rs. 20,000 of any particular year would attract Section 269SS and for this misconception no penalty should be levied. For this purpose he relied on the decision of the Supreme Court in Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh [1979] 118 ITR 326. In that case their Lordships held that there is no presumption in this country that every person knows law; it would be contrary to common sense and reason if it were so. The 1d. counsel argued that the word "liable" inserted in Section 27 1D clearly manifests that levy of penalty in this case is discretionary. He relied on the decision of the Hon'ble Andhra Pradesh High Court in the case of ITO v. Lakshmi Enterprises [1990] 185 ITR 595 where it has been held that the word liable' used in Section 269SS gives discretion to the Court with regard to imposition of fine. He, therefore, argued that the word 'shall' in Section 27 1D is not mandatory as the Assessing Officer had considered. The 1d. counsel also referred to Section 273B where it has been stated that no penalty shall be imposable on the assessee for any failure referred to the provisions of sections referred in Section 273B, if he proves that there was reasonable cause for the said failure.
5. I have considered the rival submissions, facts and the materials on record. At the outset I may say that the penalty for the transaction amounting to Rs. 9,160 cannot be levied in view of Section 273B. This transaction fell on Sunday and the same is not disputed. I agree with the 1d. CIT (A) that the day when the bank is closed, there is reasonable cause of taking the deposit in cash. Hence, penalty should not have been levied for this transaction in cash. I have carefully perused the Circular of the Board referred to by the 1d. counsel, but I am unable to catch myself with the interpretation. It is no doubt that Section 269SS was inserted for some purpose. The purpose was to, as clearly stated in the Circular, damper the transaction in cash to introduce unaccounted deposits. It does not suggest that in genuine transactions Section 269SS is not applicable. A posterior study of Circular foster other impression. This section enacted to enforce transactions of deposits or loan over certain limitation to be made through cheque media so that bogus transactions may be arrested. The difference is if it is a genuine loan, but received in cash, then onus lies on the assessee to explain why they were received in cash. If the same is reasonably explained he is not liable for penalty under Sections 27 1D. On the other hand, if he fails, the penalty would be levied even if there is no addition as income from undisclosed sources. The income from undisclosed sources can be added in the parlance of Section 68 and not Section 269SS. Section 269SS was inserted to discourage the transaction made in cash in case of deposits or loan over certain amount. In short, in my opinion, even it is genuine loan or deposit the assessee has to explain why it has been obtained in cash and if he is able to explain, Section 273B would come to its rescue and no penalty is leviable under Sections 27 1D, otherwise it is clearly leviable as intended by the Parliament inserting Section 269SS Now coming to the submission of the 1d. counsel about the unintended misinterpretation of Section 269SS by the assessee I am unable to subscribe the view. I find no ambiguity in Section 269SS which can mislead anyone about the intention and interpretation of the same. Section 269SS reads as under :
269SS. No person shall, after the 30th day of June, 1984, take or accept from any other person (hereinafter in this section referred to as the depositor), any loan or deposit otherwise than by ah 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 of 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 thousand rupees or more.
I have considered the decisions relied upon by the 1d. counsel for the assessee. I respectfully agree with the view taken by the Hon'ble High Court in Lakshmi Enterprises' case (supra) that the imposition of penalty contravening Section 269SS is discretionary and if it is misconception of law no penalty should be levied as stated by the Apex Court in Mottled Padampat Sugar Mills Co. Ltd.'s case (supra). But none of these is applicable in the present situation. In my view the submission of misconception cannot be reasonable cause in this case, when the section has no ambiguity, and, when there is no reasonable cause, as such, the rulings of Lakshmi Enterprises' case (supra) does not apply. The penalty, therefore, levied is confirmed except in respect of Rs. 9,160.
Before I end I must say that it is highly desirable that the CBDT for purposive interpretation of Section 269SS should issue instructions [in absence of authority to issue prescribed Circular like in Section 40A(3)] in quelling situations where this section is mutuable; it would result in rationally fruition of Section 269SS.
6. In the result, the appeal is partly allowed.