The main legal point established in the judgment is the requirement to prove reasonable cause for failing to abide by the conditions of Section 269SS and the discretionary power of the authorities to impose penalties.

K.S. Jhaveri, J.

1. By way of this appeal, the assessee has challenged the judgment and order of the Income Tax Appellate Tribunal, Rajkot 'SMC' Bench, Rajkot (For short, "the Tribunal") in ITA No. 759/RJT/2005 dated 07.11.2006, whereby the appeal filed by the assessee was dismissed.

2. At the time of admitting this Appeal, following question of law was framed:-

"(A) Whether on the facts and in the circumstances of the case the Tribunal was right in law in confirming the levy of penalty of Rs. 1,05,000/- under Section 271E of the Income Tax Act, 1961?"

3. Mr. D.R. Patel, learned counsel for the appellant submitted that the issue involved in this appeal is squarely covered by the decision of this Court in the case of Commissioner of Income-tax, Ahmedabad-IV v. Maa Khodiyar Construction reported in [2014] 45 taxmann.com 566 (Gujarat) and another decision in the case of Commissioner of Income-tax v. Shreenathji Corpn. Reported in [2015] 56 taxmann.com 439 (Gujarat). He submitted that considering the observations made in aforesaid decisions, present appeal may also be disposed of accordingly.

4. Mr. Pranav Desai, learned counsel for the respondent supported the order of the Tribunal and submitted that the Tribunal has not committed any error while passing the impugned order.

5. We have heard both the learned counsel and perused the record. In the case of Maa Khodiyar Construction (Supra), this Court has observed as under:-

"It is contended by the Revenue that though the genuineness of the transactions had not been doubted and assuming that these agriculturists were residing in the remote areas that would not permit the respondent to make any breach of provision of Section 269SS of the Act. Any transaction above a sum of Rs. 20,000/- in cash would invite the rigor of levying of penalty. It is also argued that a huge amount of Rs. 42.75 lakhs had been taken in cash, and therefore, both the authorities committed error in deleting the penalty. Reliance is placed on the decisions of Delhi High Court in case of Commissioner of Income Tax v. Samora Hotels (P) Limited, reported in [2012] 19 taxmann.com 285 (Delhi) and of Kerala High Court in case of K.V George v. Commissioner of Income-tax, reported in [2014] Taxmann.com 261 (Kerala).

7. Delhi High Court in case of Commissioner of Income Tax v. Samora Hotels (P) Limited [Supra] has answered the question in favour of the Revenue and against the assessee in a case where assessee company had entertained a bona fide belief that the loans accepted by it from its Directors and shareholders were not covered by the provisions of Section 269SS of the Act. Such belief also, according to the Court, was not borne out from the record. When asked to furnish the details, the assessee did not take the plea that the said receipts were loans, but, maintained that because they were the receipts from directors and shareholders, they were not covered under section 269SS. In other words, the specific plea was taken by the company that the amounts in question represented the share application money and that these were not loans or deposits at all. When clear stand of the assessee was that the said amounts were not loans or deposits, the Delhi High Court observed that the assessee company could not have entertained a bona fide belief that the loans accepted by it from directors and shareholders were not covered by the provisions of Section 269SS of the Act.

8. In case of K.V George v. Commissioner of Income-tax [Supra], the Kerala High Court held that the burden is on the assessee to prove that there was reasonable cause for receiving cash from various persons. It was a case where the assessee had accepted loans exceeding the limit specified under the Act from certain creditors. When asked to explain the reasonable cause, the assessee had failed to explain the same and instead had stated that substantial amount was received from the creditors. Nothing was emerging as to why such amount was received by way of ca