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3. The facts of the cases are that during the course of assessment proceedings in the case of M/s Juneja Traders, Fazilka, the AO noticed that Shn Harbans Lal, Prop, of the said concern had advanced cash loans to various persons. He recorded the statement of Shri Harbans Lal, wherein he stated that he had advanced loans of Rs. 80,000 repayable in instalments of Rs. 100 per day. He further stated that he advanced fresh loan after the first loan was returned by the borrower. Since Shri Harbans Lal was not able to explain the source of various loans advanced to parties, he disclosed income under VDIS to cover these loans. The assessment was accordingly completed in the case of Shri Harbans Lal. Thereafter, it appears that the AO obtained copies of the accounts of various persons to whom he had given loans. The AO observed that the assessee had advanced loans in cash to various persons including these two persons in violation of the provisions of Section 269SS. He, therefore, referred the case to Jt. CIT, Bhatinda, for consideration of levy of penalty under Section 271D of the IT Act. Accordingly, the Jt. CIT issued show-cause notices to the aforesaid persons. Since he was not. satisfied with the explanation of the aforesaid persons, he imposed penalties of the following amounts for the below mentioned assessment years:

7.3 The provisions of Sections. 269SS and 269T have been introduced in the Act with a view to curb tax evasion. In the present cases, the undisputed facts of the cases are that these were small persons having no major source of income. Facts placed on record show that Shri Navin Kumar was working as salesman in a cloth shop, Sh. Ajay Kumar was an employee at Fazilka, Sh. Ashu Bagla was carrying on small business of readymade garments and Sh. Raj Kumar was carrying on labour job of printing and designing of cloth at Fazilka. None of these persons had ever filed IT returns. In spite of the fact that the AO levied penalty of the aforesaid amounts in all these cases by taking notice of heavy loans taken by these persons, no assessment/reassessment proceedings in these cases appeared to have been initiated. Thus, what could be the intention of these persons in accepting such cash loans ? It is certainly not the intention of these persons to evade the tax by taking these cash loans. The culprit in these cases appears to be Shri Harbans Lal who was being assessed to tax and who advanced these cash loans because these were given out of his undisclosed income. It is precisely for this reason that he disclosed income under the VDIS. Therefore, there does not appear to be any mala fide intention on the part of these persons in accepting such cash loans because they had no taxable income at all. Thus, the explanation given by these persons during the course of proceedings before the authorities below that they were ignorant of the provisions of the Act and they were under bona fide belief that they were not violating any provisions of the Act in accepting such cash loans appeared to be bona fide. It is no doubt true that ignorance of law is of no excuse. But there is also no presumption that every person knows the law. Reliance in this regard is placed on the judgment of Hon'ble Supreme Court in the case of Motilal Padampat Sugar Mills Co. Ltd. v. State of Uttar Pradesh and Ors. (supra).

2. Despite that learned AM did not agree to change his stand and returned the files to me on last Friday of my working at Amritsar. So under these circumstances, I am writing my order.

3. In ITA Nos. 357/Asr/2000 & 358/Asr/2000, the facts indicate that during the course of assessment proceedings in the case of M/s Juneja Traders, Fazilka, the AO noticed that Shri Harbans Lal Prop, of the said concern had advanced cash loans to various persons and he declared such amounts as his income under VDIS and after finalisation of assessment in his case, copy of accounts of borrowers were obtained by the AO who found that Shri Navin Gumber S/o Shri Sohan Lal, Cloth Merchants, opposite M/s Khem Chand Bahadur Chand Ahuja, Fazilka accepted certain loans in cash i.e., otherwise than by account payee cheque or account payee draft, the details of which is given below from M/s Juneja Traders, Fazilka, during the year relevant to the asst. yrs. 1995-96 and 1996-97 in contravention of the provisions of Section 269SS of the IT Act, 1961 :

28. As a result, the appeals for both the years are allowed for statistical purposes.

29. As regards appeals in the case of Ashu Bangla in ITA Nos. 377 and 378/Asr/2000 for the asst. yrs. 1995-96 and 1996-97 are concerned, the facts indicate that the assessee is doing business of readymade garments at Fazilka and has never filed IT return. The AO while making the assessment of M/s Juneja Traders, Fazilka, found that this concern has advanced loans to various persons against interest. During the course of assessment proceedings, Shri Harbans Lal Juneja, Prop, of the firm, is found to have advanced cash loans to various persons aggregating to Rs. 20,000 and above in cash, i.e., otherwise than by crossed cheque or bank draft as required under Section 269SS. The AO referred the matter to Jt. CIT who issued notice to the assessee with respect to acceptance of cash loan of Rs. 30,000 and Rs. 45,000 on two and four occasions for the asst. yrs. 1995-96 and 1996-97, respectively. The first notice remained uncomplied with and in response to second notice, the assessee submitted that due to financial crisis, he opened a tea stall and closed his business; that he took loan of Rs. 20,000 by cheque on 12th Jan., 1995 as the same was required for smooth running of his business; that other amounts mentioned in the notices were never taken by him; that his income never crossed the taxable limit; that due to these reasons, he never violated the provisions of Section 269SS; that therefore, proceedings may kindly be dropped. Another opportunity was given to the assessee who attended the proceeding and case was adjourned for 7th Jan., 2000. On said date, the assessee stated that he took Rs. 10,000 from M/s Juneja Traders, Fazilka, which was not mentioned in the written submission earlier furnished by him and on the request of the assessee, penalty proceeding was adjourned for 14th Jan., 2000. After that the assessee did not appear and Jt. CIT treating the assessee to have contravened the provision, imposed the penalty of Rs. 30,000 and Rs. 45,000 for the asst. yrs. 1995-96 and 1996-97, respectively, while refuting the pleas as raised by the assessee on the ground of having not been substantiated.