Law:

Section:

Section 271D/271E of the Income-tax Act, 1961 - Penalty - For failure to comply with section 269SS Where Tribunal found that amounts alleged to have been received in cash or paid in cash were mere book entries and were part of transactions on behalf of family members, it could not be said that there was violation of sections 269SS and 269T so as to attract penalty [A.Y. 1991-92]. During the course of assessment proceedings, the Assessing Officer noticed that the assessee, who carried on the business of money-lending and trade in jewellery, had accepted various loans / deposits from different parties and repaid such loans/deposits to different parties in contravention of the provisions of sections 269SS and 269T. Accordingly, penalty was levied on the assessee under section 271D and 271E. The Tribunal held that the amounts of the alleged receipts except the amounts of cash loan taken by the assessee and the amount received by the assessee on maturity of NSCs of different family members could not be treated as loan and deposits nor amounts of repayments could be treated as for violation of the provisions of section 269T as amounts were not received in cash by the assessee nor he paid the amounts in cash to different family members but most of the amounts involved were based on mere book entries. The Tribunal also found that the assessee was prevented by a reasonable cause in light of the affidavit of one J.B., the advocate and the income-tax practitioner, having standing of 33 years, as the gentleman had opined that the assessee would not violate the provisions of sections 269SS and 269T if the assessee received amounts from the family members and repaid same to different family members. The Tribunal, therefore, deleted the penalty. Held that the Tribunal had found that on the facts and in the light of the evidence on record there was no violation of either the provisions of section 269SS or section 269T. The Tribunal had further found that there was a reasonable cause, assuming that there was any violation by the assessee. Hence, the Tribunal had rightly deleted the penalties levied under sections 271D and 271E. B.B. Naik for the Appellant. Varun Patel and S.N.…

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