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13. Now, I take up appeal in ITA No. 340(JU)2004 relating to sustaining of penalty of Rs. 9,50,000/- under Section 271D of the Income Tax Act. The facts of the case are that the AO initiated penalty proceedings Under Section 271D for acceptance of cash loans of Rs. 5,50 lacs from Narain Ram Chhaba (HUF) and Rs. 7 lacs from Smt. Pitasi Devi w/o of the assessee in violation of provisions of Section 269SS of the Income-tax Act. In reply to the show cause notice, the assessee submitted that the HUF and his wife had only agricultural income and, therefore, the acceptance of such cash loans did not amount to violation of the provisions of Section 269SS. This submission of the assessee was found to be incorrect as the AO observed that for the earlier years both the HUF and assessee's wife had shown income from interest in addition to agricultural income. The next submission of the assessee that he started earning business income only after purchase of shop was again found to be factually incorrect for the reason that even for the earlier years, the assessee was being assessed to tax and income had been shown from interest. The assessee had, then, contended that the HUF and his wife had collectively purchased the shop. This submission was also rejected on the ground that the shop was purchased by the assessee in his individual capacity and amounts in question were shown as loans in the balance sheet. It was also contended that the assessee had to lake these loans because of emergent need for making the payment to Krishi Upaj Mandi. This submissions was again found to be factually incorrect on the ground that the immediate payment was required to be made only to the tune of Rs. 3 lacs. Thereafter, there was time gap for making the payment of the remaining amount. The assessee could have easily obtained loans by way of account payee cheques/bank drafts as there was sufficient time available for making the payment. Accordingly, the AO accepted the explanation of the assessee in respect of cash loans of Rs. 3 lacs due to urgent business need and levied a penalty of Rs. 9.50 lacs Under Section 271D as the assessee failed to explain any reasonable cause for acceptance of the same.

(iv) The other decisions relied upon by the assessee were also not applicable to the facts of the present case.

The assessee has now brought this issue in appeal before the Tribunal.

15. The learned counsel for the assessee has reiterated the submissions which were made before the authorities below. These have already been summarized by my ld. Brother in his order . These submissions are that the assessee belonged to an agriculturists family, the loans were taken from HUF and Smt. Pitasi Devi who were also having agricultural income, genuineness of the loan is not in doubt, there was a reasonable cause for accepting the cash loans because the assessee was required to make payments urgently to Krishi Upaj Mandi for the purchase of shop. It was also submitted that both the HUF and Smt. Pitasi Devi did not have any bank account, and, therefore, under such circumstances, penalty sustained by the learned CIT(A) may be cancelled.

17. Having heard both the parties and perusing the evidence and material on record, the issue that requires to be decided is that whether the assessee has been able to explain the reasonable cause for acceptance of cash loans in violation of provisions of Section 269SS. The submissions made before us are the same as made before the authorities, below. It is a settled position that levy of penalty Under Section 271D is not automatic. The assessee can explain that there was a reasonable cause for accepting such cash loans. But the fact whether there was a reasonable cause or not has to be seen in the light of explanation and reasons submitted before the authorities below. The explanation of the assessee that the loans had been taken from two persons who were agriculturists has been found to be factually incorrect by the authorities below. As discussed above, both the AC and the CIT(A) has observed that the HUF and assessee's wife were being assessed to tax in the earlier assessment years. In fact a copy of the return filed by the HUF from whom loan of Rs. 5.50 lacs was accepted in cash is at pages 69 & 70 of the paper book. A copy of the statement of income is at page 71 of the paper book. In the said statement, the assessee had shown interest income of Rs. 51250/- for the A.Y. 1999-2000. Similarly, a copy of the return filed for the AT. 2000-2001 is at page 74 & 75 of the paper book. The same shows interest of Rs. 41790/-. Similarly, a copy of the return filed in the case of Smt. Pitasi Devi for the A.Y. 1999-2000 is shown at page 79 of the paper book. A copy of the statement of income is at page 80 of the paper book. The same shows interest income of Rs. 25,650/- and agricultural income of Rs. 40,000/-. A copy of return for the assessment year 2000-2001 is at page 88 of the paper book. A copy of the statement of income is at page 84 of the paper book. The same shows interest income of Rs. 54,480/-, Thus, the claim of the assessee that the loans had been taken from the parties who were having agricultural income is factually wrong. It is also not denied that even the assessee was being assessed to tax even in the earlier asstt. years and he also earned income by way of interest.

19. Further, the explanation of the assesses that Smt. Pitasi Devi and HUF had no bank account is factually wrong. The statement of Sh. Narayan Ram i.e. the assessee is at pages 86 to 94 of the paper book. He categorically admitted that he had bank account with Central Bank of India, Merta and UCO Bank, Merta in his own name, in the UCO Bank, Merta, in the name of his wife Smt. Pitasi Devi and UCO Bank, Merta, in the name of HUF. Thus, all these persons had bank account in the same bank, same branch and same place. Therefore, these transactions could have been easily routed through banks. In fact, a copy of the statement of income of HUF for the AT. 1999-2000 is at page 71 of the paper book. The same shows bank interest of Rs. 18/-. This clearly shows that the HUF had bank account prior to the date when impugned loans were advanced to the assessee. Similarly, the statement of assets of Smt. Pitasi Devi as on 31.3.2000 is at page 85 of the paper book. The same also shows balance with UCO Bank. However, the exact date on which Bank Account was opened in the name of Smt. Pitasi Devi is not known. In case the Bank Account in the names of Smt. Pitasi Devi, and the assesses existed prior to the date when these loans were accepted as in the case of HUF, it cannot be said that there was a reasonable cause for accepting cash loans in violation of provisions of Section 269SS. This point requires further examination and verification and also these facts also need to be confronted to the assessee. In case Smt. Patasi Devi like HUF too had bank account in the same branch prior to the date when impugned loans were given the explanation of the assessee that loans were accepted for want of bank account need to be rejected.