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3. Being aggrieved, the assessee appealed to the Commissioner (Appeals). Before the Commissioner (Appeals), the assessee filed written submissions, which read as under :

"l. The levy of penalty for alleged violation of provisions of section 269SS is not justified as the assessee has not committed any offence by accepting contribution from his wife and son for purchase of residential house in cash. It is not uncommon that family members pool their resources to purchase a property. The contributions so made by the family members are contributions/ gifts and not loans. The provisions of section 269SS are, therefore, not applicable to such contributions/gifts.

5. Before us, Shri Subash Dutt, advocate, the learned counsel for the assessee, reiterated the submissions made before the authorities below. He further submitted that the assessee had received contribution from his wife and son for purchasing a house. It was prosperity of family and transaction did not involve any interest element, and there was no promise to return amount with or without interest. He, therefore, submitted that the provisions of section 269SS would not apply and it can safely be held that there was a reasonable cause within the meaning of section 273B of the Income Tax Act, 1961. Accordingly, it was submitted that no penalty should be levied for violation of the provisions of section 269SS of the Act. He further submitted that the transaction, in question, was a genuine transaction and there was no scope for suspicion. It was also submitted that the assessee has entretained a bona fide belief that he had received contribution from his family members and, therefore, there was no violation of the provisions of section 269SS of the Act. In support of the above contention, the learned counsel for the assessee relied on the following decisions:

(1) Harpal Singh Jaswant Singh v. ITO (1995) 51 TTJ (Asr) 383.

(2) Dr. B.G. Panda v. Dy. CIT (2000) 111 Taxman 86 (Cal)(Mag) ITA No. 2742/Cal/1993, dated 10-3-1998).

6. Shri Kuljit Singh, the learned departmental Representative, supported the orders of the authorities below. He further submitted that the assessee had purchased the house in his individual capacity. According to the learned departmental Representative, had the assessee taken the amount of Rs. 50,000 each from his wife and son as contribution, the above property should have been in the name of HUF and not in the individual name of the assessee. He further submitted that the provisions of section 269SS are applicable even where transaction is between the husband and wife or parents and children. According to him, there is no such distinction that provisions of section 269SS could not be applicable to the transaction entered into between the husband and wife or son and father. He, therefore, submitted that the Commissioner (Appeals) was fully justified in confirming the penalty.

8. Applying the above ratio to the facts of the present case, it cannot be said that there was any element of loan or deposit as alleged by the assessing officer. In the instant case, there is yet another aspect of the matter. As an alternative, it was contended that in any case, the assessee has received contribution from his wife and son under the bona fide belief that as the amount was available in cash and they were not giving the amount as loans and it is not required to be paid by account payee cheques. The ass6ssee also pleaded that as the amount, in question, was being given by his family members with a clear understanding that same is contribution for the construction of house. According to the learned counsel for the assessee, for the sake of argument that if it is assumed that there was a default, the default can be considered as venial breach of law. The Hon'ble Supreme Court in the case of Hindustan Steel Ltd. v. State of Orissa (1972) 83 ITR 26 (SC) has held that when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is not liable to act in the manner prescribed by the statute. In the instant case, the assessee entertained a belief which was bona fide that the amounts received from wife and son were contributions and not loan or deposit within the meaning of section 269SS of the Act. The assessee was of the opinion that the amount, in question, did not require to be received by an account payee cheque or account payee draft. In our view, there was a reasonable cause and no penalty should have been levied. The learned Commissioner (Appeals) has referred to the observations made in the assessment order wherein it was stated that the assessee had later on sold the said property in his own name as the exclusive owner of the property and the whole sale proceeds have been credited in his bank account. In our view, the findings given in the assessment proceedings are relevant but not conclusive in the penalty proceedings. It is true that as the assessment proceedings and the penalty proceedings are two separate and independent proceedings because the consideration that arises in the penalty proceedings are different from those arising in the assessment proceedings. In fact, in that view of the matter, we have to see as to whether the assessee has violated the provisions of section 269SS of the Act. Simultaneously, we have also to see that what was the explanation of the assessee. In the instant case, the assessee took the plea that firstly, there was no violation of the provisions of section 269SS of the Act. Secondly, there was a reasonable cause. Thirdly, the assessee was under the bona fide belief that he was not required to receive the amount otherwise than by account payee cheque or account payee draft. As an alternative submissions, it was contended that the default can be considered either technical or venial breach of the provisions of law, and, therefore, no penalty under section 271D was leviable. In our view, there was a reasonable cause within the meaning of section 273B of the Act and, therefore, no penalty is leviable under section 271D of the Act. We accordingly find merit in the appeal of the assessee and delete the penalty levied by the assessing officer and confirmed by the Commissioner (Appeals).