Law: Income Tax Act, 1961

Section: 256(2),269-SS271D

Income-tax----Reference---Question of law---Loans and deposits---ITO finding that assessee accepting deposits in cash exceeding Rs.20,000 in contravention of S.269-SS ---Assessee contending that deposits received from agriculturists on sale of their produce and two deposits were in the nature of "Amanat"--¬Deputy CIT imposing penalty---Tribunal reducing penalty---Tribunal submitting, Statement of case while referring question of law to High Court relating to cancellation of penalty under 5,.2560) at instance of Revenue--¬Question whether no penalty was leviable: on two deposits on ground that those deposits were "Amanat" and not loan arose for reference---Indian Income Tax Act, 1961, Ss.256(2), 269-SS & 271-D. The Income-tax Officer during the assessment proceedings for the assessment year 1990-91 found that the assessee which derived income mainly as commission agents, had accepted certain deposits in cash exceeding Rs.20,000 (the deposits aggregated to Rs.1,82,200) in contravention of the provisions of section 269-SS of the Income Tax Act, 1961. The Income-tax Officer referred the matter to the Deputy Commissioner of Income-tax who completed the assessment and made additions to the assessees income. The Deputy Commissioner of Income-tax, thereafter initiated penalty proceedings under section 271-D of the Income Tax Act, 1961. In the penalty proceedings the assessee contended that the credits or the deposits were received from agriculturists on the sale of their produce, that the deposits were -in the nature of "Amanat", that he was under a bona fide belief that Section 269-SS was not applicable to loans or deposits taken or accepted from agriculturists. The Deputy Commissioner of Income-tax rejected the contentions of the assessee and imposed penalty under section 271-D at Rs.1,82,200 equivalent to the amount of deposits on the ground that the deposits were not covered under section 273-B of the Act because the assessee had not been able to prove that there was any reasonable cause for failure to accept deposits by account payee cheques or drafts. The Commissioner of Income-tax (Appeals) confirmed the levy of penalty. The Tribunal accepted in part the…

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