- (1.) HEARD learned Counsel for the parties.
(2.) THE assessee, by this appeal, seeks to challenge the order of the Tribunal dt. 26th April, 2002. The appeal was admitted on 14th Nov., 2002, by framing following substantial questions of law: (1) Whether under the facts and in the circumstances of the case the Tribunal was justified in reversing the order of CIT(A) and holding that the penalty under Section 271D amounting to Rs. 1,65,000 was correctly imposed by the AO ? (2) Whether under the facts and circumstance of the case the breach of the provisions of Section 269SS of the Act was merely a technical or venial breach for which no penalty under Section 271D should have been imposed ? (3) Whether under the facts and circumstances of the case the phrase 'equal to' contained in Section 271D of the Act leaves no discretion in the hands of the authority imposing penalty or it cannot maximum penalty to be imposed with discretion to impose lesser penalty ? The necessary basic facts are that the AO vide his order Annex. 1 found that during the relevant year, the assessee had taken loan/deposits for a sum of Rs. 1,65,000 in cash and, thereby, committed violation of provisions of Section 269SS and, therefore, he incurred liability of penalty under Section 271D. The learned AO considered the explanation of the assessee about the reasonable cause, as contemplated by Section 273B, and found that the explanation is not believable. The explanation given was about the assessee's mother having become ill, who was required to be taken to Bombay and in receiving the amount by cheque, it would have involved some time, which he would not wait for.
(3.) IN appeal, the learned CIT(A) set aside the penalty only by observing that provisions of Section 269SS are applicable only in those cases where deposits are treated as genuine and if the same are not genuine then recourse to Section 68 of the IT Act would be taken, and in that event, the amount shall be added to the assessee's income as unexplained credit and that would not attract Section 271D. The learned CIT(A) only found that the AO has accepted the genuineness of the cash deposits and has not made any addition on the ground, and that the cash deposits were not proved, and it is only a technical aspect if the assessee accepted the cash deposits in order to meet the treatment of serious illness of appellant's mother at Bombay, and that explanation cannot be rejected even if no evidence with regard to the illness of the mother is produced, and since no mens rea is involved. It was also found that it will be too harsh to levy penalty in such circumstance, and set aside the penalty.;