P.B.MAJMUDAR,J. - (1.) BY filing this appeal, the CIT, Bikaner has challenged the order dt. 27th March, 2002 passed by the Tribunal, Jodhpur Bench, Jodhpur in ITA No. 2145/Jp/1996, which pertains to the asst. yr. 1993 -94, by which, the Tribunal has dismissed the appeal filed by the Revenue and confirmed the order passed by the CIT(A) -I, Jodhpur.
(2.) THE respondent -assessee is a contractor and for the purpose of his business, he had taken certain loans from its sister concern. The particulars of loan taken by the respondent -assessee on various dates find place in the order of the AO and the same are as under: Date of loan/deposit Amount27.09.92 Rs. 2,00,00015.10.92 Rs. 2,00,0005.11.92 Rs. 5,30021.11.92 Rs. 1,00,000 - - - - - - - - - - - - - - -Rs. 5,05,300 - - - - - - - - - - - - - - - It is submitted by the learned Counsel for the appellant that the aforesaid transactions are in violation of Section 269SS of the IT Act, 1961 (hereinafter referred to as the Act) as the payment was made by cash and not by way of cheque or through bank draft. A show -cause notice was issued under Section 274 read with Section 271D of the Act to the respondent -assessee. In response to the aforesaid notice, the assessee appeared before the AO and submitted his reply. The case of the respondent -assessee is that the payment was required to be made to the labourers at the site and for that reason, the amount was accepted in cash. It is submitted that there was no mens rea or mala fide intention in accepting the amount by cash and not by cheque or bank draft. The AO, however, was not satisfied with the said explanation and by his order dt. 29th Aug., 1996 ,came to the conclusion that it was not genuine transaction and there is no reasonable cause for accepting the deposits in cash aggregating to Rs. 5,05,300. He accordingly, levied penalty of Rs. 5,05,300 on the respondent -assessee under Section 271D of the Act. The said order is produced as Annex. - 1 in compilation. Being aggrieved by the decision of the AO, the respondent -assessee preferred an appeal before the CIT(A) -I, Jodhpur, being Appeal No. 77/1996 -97. The appellate authority found that; the appellant before it (respondent herein) is a contractor doing business in a remote area of Nokha Tehsil and he was required to make spot payments to the labourers, etc. and for that the appellant (respondent herein) needed cash. The appellate authority also found that the respondent -assessee borrowed the money from its sister concern at the work site and, therefore, it is only a technical breach of law and for a mere technical breach, no penalty is exigible. He accordingly, set aside the order of penalty. The Revenue was not satisfied with the aforesaid decision and preferred an appeal being ITA No. 2145/Jp/1996 before the Tribunal, Jodhpur Bench, Jodhpur. The Tribunal having agreed with the finding of the CIT(A) -I, Jodhpur, ultimately, dismissed the appeal filed by the Revenue, against which, the Revenue has filed this appeal under Section 260A of the IT Act, 1961. This Court, while admitting the appeal, formulated the following substantial question of law: Whether, on the facts and in the circumstances of the case, the Tribunal is legally correct in confirming the order of CIT(A) -I holding that transaction with sister concern is only a technical breach of law for which no penalty is exigible and thereby deleting the penalty of Rs. 5,05,300 imposed for violation of the provisions of Section 269SS even though the deposits/loans were not accepted through a/c payee cheque/bank draft but received in cash without any business expediency and/or absolute need and in violation of mandatory provisions.
(3.) LEARNED Counsel Mr. K.K. Bissa submitted that even though it is true that the respondent -assessee had taken loan from its sister concern, but the acceptance of the said amount is in violation of Section 269SS of the Act. If any amount more than Rs. 20,000 is accepted, the same has to be accepted by cheque or bank draft and not by cash. Learned Counsel further submitted that therefore, it is a clear case of violation of said provisions and, therefore, the first authority was justified in imposing the penalty.;