Honble NAOLEKAR, J.–Following substantial questions of law arise for adjudication by this Court :-

1. ``Whether, in the facts and circumstances of the case the Tribunal had erred in law in deleting the penalty under Section 271 D for violation of provisions of sections 269 SS of the Act?

2. ``Whether, for levying the penalty under Section 271 D for violation of section 269 SS of the Act is it required by the assessing officer to look into genuineness of loan or deposit?

The facts of this case are that the assessee is a proprietor of M/s Viva Art Creation and engaged in the export business of garments. The assessment was completed u/S. 143(1)(a) of the Income Tax Act, 1961 (for short, `the Act of 1961) on 30.11.1998. Later on the Assessing Officer noted that the assessee has taken loan of Rs. 2.5 lacs in cash. This was noted from page No.3 of Tax Audit Report. As per para 10 of the said report Mukesh Kumar Manwani had advanced cash loan of Rs. 2.5 lacs to the assessee. On the basis of the information received from the Assessing Officer, the Joint C.I.T. issued a show cause notice dated 24.12.1998, requiring the assessee to show cause why an order imposing penalty should not be passed u

Click Here to Read the rest of this document