T.R. Sood, A.M. - (1.) IN these two appeals by assessee, order of CIT(A) has been challenged for imposition of penalty under Sections 271D and 271E. As both the appeals relate to same assessment year and penalty has been imposed emerging from same facts both were heard together and are being disposed of by this common order.
(2.) ITA No. 298/Ind/1995 In this appeal, assessee has raised 10 grounds but at the time of hearing the learned counsel for the assessee submitted that all the grounds relate to only one issue i.e., confirmation of imposition of penalty amounting to Rs. 48,500 under Section 271D of the Act. The brief facts of the case are during assessment proceedings, AO noticed that assessee has taken certain sums in cash and repayments were made in cash which were in violation of Section 269SS and 269T, therefore, penalty proceedings under Sections 271D and 271E were initiated. During penalty proceedings it was submitted that assessee was located in a small town and was not having any bank account. It was also submitted that assessee was not conversant with the amendments made in income-tax and that is why this default was committed. It was further submitted that there was no mens rea, therefore, penalty could not be imposed. AO found that though Bengumganj where assessee is located is small place but banking facilitates are easily available there. There were other assessees who were making their dealings through banking channels. He also opined that ignorance of law was not a justified reason for not following law. Keeping all the circumstances in view, a penalty of Rs. 48,500 in respect of two sums received in cash being Rs. 35,000 from Laxmichand Jain and Rs. 13,500 from Sitaram was imposed. Before CIT(A), assessee could not improve upon his case, therefore, penalty was confirmed.
(3.) BEFORE us, learned authorised representative submitted that genuineness of loans was not disputed. He further submitted that assessee was located in a small town where it may not be possible to keep updated about the latest legal provisions. He referred to p. 7 of the compilation which is copy of the reply submitted before Dy. CIT, Bhopal. He submitted that detailed reasons for not complying Section 269SS were submitted before Dy. CIT. He also invited our attention to p. 15 of the compilation where copy of account of Shri Laxmichand Jain and Shri Sitaram is given. He referred to the account of Shri Laxmichand Jain and pointed out that on 11th Sept., 1989, only a sum of Rs. 10,000 was taken from him and at this point there was no violation of provision of Section 269SS. He then pointed out that on 13th Sept., 1989, a further sum of Rs. 15,000 was taken, thus the aggregate became Rs. 25,000 and violation, if any, of Section 269SS was made to the extent of Rs. 5,000 only. Later on a further sum of Rs. 10,000 was taken from this party thus total violation is only to the extent of Rs. 15,000 only. In this regard, he referred to Section 269SS and pointed out that limit of Rs. 20,000 or more has been mentioned after items (a), (b) & (c) which means that violation would start only after the sum exceeds Rs. 20,000 because item (c) consider both the items (a) and (b) i.e. amount of loan or deposit taken and amount remaining unpaid on that date. He also relied on Vir Sales Coipn. v. Asstt. CIT (1994) 50 TTJ 130 (Ahd) and Dr. Deepak Muchala v. ITO (1997) 58 TTJ 524 (Mumbai).;