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Mahavir Singh, J.M.

1. This appeal by the assessee is directed against the order of the CIT(A)-III, Chennai, dt. 23rd Aug., 1995. The relevant assessment year involved in this appeal is 1992-93.

2. The only issue in this appeal is that the CIT(A) has wrongly confirmed the penalty order passed under Section 271D of the IT Act, 1961.

3. Briefly stated facts are that the assessee firm filed its return of income for the asst. yr. 1992-93 which was assessed under Section 143(3) of the Act, dt. 24th Dec., 1993 and penalty proceedings under Section 271D of the Act was initiated for violation of the provisions of Section 269SS of the Act for accepting the loans in cash exceeding Rs. 20,000 or more. The Dy. CIT, issued show-cause notice to the assessee-firm that as to why the penalty under Section 271D of the IT Act should not be levied amounting to Rs. 5,19,917 in view of violation of provisions of Section 269SS of the IT Act for accepting the deposits in cash. During the course of assessment proceedings, the AO noticed from the tax audit report filed under Section 44AB of the IT Act that the assessee has violated the provisions of Section 269SS of the Act. In the tax audit report, it was mentioned that the assessee has accepted the deposits of Rs. 20,000 or more in cash and complete list was provided with the audit report in Annex. J to Form No. 3CD. The assessee could not adduce the reasons or the reasons adduced were not acceptable and in view of this, he levied the penalty on the following transactions:

Further, it was held by the Hon'ble High Court that:
Section 269SS was inserted in the IT Act by the Finance Act of 1984 w.e.f. 1st April, 1984, and was made operative from 1st July, 1984. The IT Department, in the course of searches carried out from time to time, recovered large amounts of unaccounted cash from the taxpayers who often give explanation to the effect that they had borrowed loans or received deposits from or by other persons. Sometimes it was noticed that unaccounted income was brought into the books of account in the forms of loans and deposits. The Department was not able to unearth such unaccounted cash. In order to plug the loopholes and to put an end to the practice of giving false and spurious explanations by the taxpayers, Parliament sought to introduce a new provision debarring parties from taking or accepting from any other person any loan or deposit. Originally the ceiling amount of cash transaction was at Rs. 10,000 and the same was subsequently increased to Rs. 20,000 w.e.f. 1st April, 1989. Section 276DD stated that if a party-person takes or accepts any loan or deposit in contravention of the provisions of Section 269SS, he shall be punishable with imprisonment for a term which may extend to two years and shall also be liable to fine to the extent of equal amount of such loan or deposit. Subsequently Section 271D, which is a penal clause in the Act, which provides for imposition of penalty for failure to comply with the provisions of Section 269SS was introduced w.e.f. 1st April, 1989, omitting Section 276DD from the said date. Thus, the original Section 276DD was replaced by Section 271D and the punishment of imprisonment was taken away. The failure to comply with the provisions of Section 269SS could only be visited with a penalty of fine equal to the amount of loan or deposit to be taken or accepted.
The objections raised by the assessee against the penalty imposed under Section 271D have been considered by the authorities below in keeping with the provisions of Section 269SS and it has been rightly held that the said objections raised by the assessee against invoking the provisions of Section 269SS and thus levying penalty under Section 271D of the IT Act were without any material force and it was only a defence for name sake.
11.8 In the case of Asstt. Director of Inspection (Inv.) v. Kumari A.B. Shanthi , the Hon'ble Supreme Court has held that :
Finally, the Hon'ble apex Court upheld the constitutional validity of the provisions of Section 269SS of the IT Act.
11.9 In another case law, in the case of Balaji Traders v. Dy. CIT (2001) 73 TTJ (Pune) 246 : (2001) 78 ITD 368 (Pune), the Tribunal Pune Bench has held that :
Regarding penalty under Section 271D, the first contention on behalf of the assessee was that the provisions of Section 269SS were brought on statute to counter the tax evasion and, therefore, the genuine transaction do not fall within the ambit of Section 269SS. One cannot accept such proposition as law. It is cardinal rule of interpretation that where the language of a statute is plain and unambiguous, the intention of legislature is to be gathered from the language of the statute itself and aids to the interpretation cannot be resorted to.