ORDER
R.S. Syal, A.M.
1. These two appeals by the Revenue arise out of the orders passed by the CIT(A) on 16th Dec., 1994 and 27th April, 1995 deleting the penalties imposed under Sections 271D and 271E of the Act, respectively. Since the issue raised in both the appeals is similar, we are, therefore, proceeding to dispose them of by this common order for the sake of convenience.
518/Jp/1995 : Penalty under Section 271D
2. Briefly stated, the facts of this case are that during the course of assessment proceedings, it was found by the AO that the assessee had accepted cash deposits in contravention of provision of Section269SS in the following Cases:
SI. No. Name of the Party Dated Cash Deposit 1. Shri Khubi Lal 16.10.1990 Rs. 25,000 2. Shri Shyam Lal 12.07.1990 Rs. 20,000 3. Shri Gautam Kumar Kothari 17.10.1990 Rs. 25,000 4. Shri Manohar Lal Sukh Lal 14.07.1990 Rs. 20,000 5. Shri Shyam Lal Devi Lal 17.07.1990 Rs. 30,000 6. Shri Manohar Lal Bhura Lal 19.07.1990 Rs. 20,000 7. Shri Anil Kumar 01.01.1991 Rs. 55,000 8. Shri Prakash Chand Shantilal Rs. 25,000 9. Shri Rang Lal Phoolchand Rs. 20,000
On being called upon to show reasons as to why penalty should not be imposed, it was stated by the assessee that he derived income from purchase and sale of vegetable ghee and oil only and the amounts were genuinely received for which the said parties had filed confirmations and also admitted that they were not having any bank account when the deposits were made with the assessee. It was also stated that the assessee was ignorant of these provisions, as the implications/consequences for the acceptance of loan in cash was never brought to the notice of the assessee by his counsel Shri Narayan Lal Menaria, advocate, who was looking after the taxation matters since last two years and he himself was only a matriculate. It was also stated that the assessee was having sufficient opening and closing cash balance when the loans and deposits were taken which meant that the assessee was not in need of any funds for the immediate purpose but the loans were accepted due to ignorance of law. The affidavit of Shri Narayan Lal Menaria, advocate, was also placed on record confirming that at no point of time he made any instructions or conveyed the position of law to the assessee with regard to the restriction on accepting the loans and advances in cash otherwise than by account payee cheques. Not-accepting the assessee’s submissions, the AO imposed penalty of Rs. 2,40,000 under Section 271D of the Act, which came to be deleted in the first appeal.
3. We have heard the rival submissions and perused the relevant material on record. There is no dispute about the fact that there was in fact a violation of provisions of Section 269SS inasmuch the assesses accepted the above referred nine loans in cash exceeding the specified limit. At the same time, it is relevant to note that the provisions of Section 271D are subject to the provisions of Section 273B which stipulate for the non-imposition of penalty if the assessee proves that there was reasonable cause for violation or to comply with the relevant provisions. Adverting to the facts of the case, we find that primarily it was argued before the AO that none of the persons had any bank account at the time when they made the deposits. Second and more important point is the assessee’s ignorance of relevant provision on which the assessee was not advised by his counsel. Affidavit of Shri Narayan Lal Menaria, advocate of the assessee to this effect was placed before the AO. It shows that the assessee was not aware or was not enlightened upon this fact more specifically in the background of the situation that he was only a matriculate, as is borne out from the impugned order. The Hon’ble Supreme Court in the case of Hindustan Steel Ltd v. State of Orissa has held that an order imposing penalty for failure to carry out a statutory obligation is the result of a quasi-criminal proceeding and penalty will not ordinarily be imposed unless the party obliged, either acted deliberately in defiance of law or was guilty of conduct, contumacious or dishonest, or acted in conscious disregard of its obligation. It was further held that whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if a minimum penalty is prescribed, the authority competent to impose the penalty will be justified in refusing to impose penalty, when there is a technical or venial breach of the provisions of the Act or where the breach flows from a bona fide belief that the offender is net liable to act in the manner prescribed by the statute. This decision has been applied by the Hon’ble jurisdictional High Court in the case of CIT v. Superintending Engineer, Udaipur . The learned Authorised Representative has brought to our notice an order passed by the Jodhpur Bench of the Tribunal in the case of Narayan Ram Chhaba v. ITO and Anr. (2005) 97 TTJ (Jd)(TM) 297 : (2005) 96 ITD 163 (Jd)(TM) wherein the penalty imposed under Section 271D, almost on similar facts was deleted. In view of the totality of the facts and circumstances of the case, we are of the considered opinion that the learned CIT(A) was justified in deleting the penalty of Rs. 2,40,000 imposed under Section 271D of the Act. His order is, therefore, upheld.
1378/Jp/1995 : Penalty under Section 271E
4. The facts of the case are that the assessee made repayment of loan/deposit in cash in contravention of provisions of Section 269T as under :
———————————————————-
SI. No. Name of the Party Deposit Repayment ---------------------------------------------------------- 1. Shri PrakashChand Shantilal Rs. 25,000 Rs. 25,000 2. Shri Rang Lal Phoolchand Rs. 20,000 Rs. 20,000 ----------------------------------------------------------
The assessee advanced the same reasons before the AO for deletion of penalty, which were given in support of his case against penalty under Section 271D. Not satisfied with the assessee’s explanation, the AO imposed penalty of Rs. 45,000 which came to be deleted in the first appeal wherein the learned CIT(A) relied on his order passed in assessee’s own case for penalty under Section 271D of the Act. Both the sides are in agreement that the facts of this appeal are similar to that of penalty under Section 271D and the outcome in the said earlier appeal be applied here also.
5. In one of the foregoing paras, we have upheld the action of the first appellate authority in deleting the penalty imposed under Section 271D of the Act. As the repayment of loans have been made in the instant appeal in respect of two persons out of total nine from whom the loans were accepted in cash in violation of provisions of Section 269SS, we are of the considered opinion that the view taken in that appeal being the reasonable cause for acceptance of loans in cash, would hold good here also in repayment of such loans. We, therefore, uphold the impugned order.
6. In the result, both the appeals of the Revenue stand dismissed.