1 itxa2759-09+1 sas IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.2759 OF 2009 AND INCOME TAX APPEAL NO.2760 OF 2009 The Commissioner of Income Tax, Central-III, Mumbai ..Appellant. V/s. Shri Babane Dashrath Hande ..Respondent. Mr. Suresh Kumar for the appellant. Ms. Aasifa Khan for the respondent. CORAM : J.P. DEVADHAR AND K.K. TATED, JJ. DATED : 4TH OCTOBER, 2011 P.C. :- 1. Whether the ITAT was justified in deleting the penalty levied under Section 271D / 271E of the Income Tax Act, 1961, is the question raised in these appeals. 2. The assessee is a fruit vendor and commission agent in the APMC Market, Navi Mumbai. A search and seizure action under Section 2 itxa2759-09+1 132(1) of the Income Tax Act, 1961 ('the Act' for short) was carried out at the residential and business premises of the assessee on 26/2/2003. During the course of search and seizure operation, various incriminating documents were seized. 3. In the block assessment proceedings, the assessing officer noticed that the assessee had been accepting loans and also repaying loan amounts aggregating to Rs.20,000/- or more in cash and not by account payee cheque as contemplated under Section 269SS of the Act. Similarly, loans were also repaid in cash in violation of Section 269T of the Act. Since the transactions were in contravention to Section 269SS / 269T of the Act, the assessing officer initiated penalty proceedings under Sections 271D / 271E of the Act. The appeals filed by the assessee against the penalty orders were dismissed by CIT(A). On further appeals filed by the assessee, the ITAT deleted the penalty by recording a finding that the assessee is often required to take loans and make repayments in cash and that in the past for several years the department has accepted those transactions and no penalty was imposed. The ITAT further recorded the finding of fact that the transactions recorded in the books of accounts maintained by the assessee were genuine transactions and there was no intention to evade taxes. In these circumstances, in our opinion, the decision of the ITAT in holding that there was reasonable cause for accepting / repaying 3 itxa2759-09+1 loan in cash, is based on finding of fact and no question of law arises out of the orders of the ITAT. 4. We make it clear that we have not endorsed the view of the ITAT that in view of the provisions of Section 158BH, the penalty was not imposable. We keep the issue open for being agitated in an appropriate case. We have upheld the decision of the ITAT only on the ground that in the facts of the present case, the penalty was not imposable. 5. The appeal is accordingly dismissed with no order as to costs. (K.K. TATED, J.) (J.P. DEVADHAR, J.)