Sh. Amar Nath, V. ACIT, Kangra

CO 1/CHANDI/2013

• Counselvise Citation: [2013] 122 COUNSELVISE.COM (IT) 8221 (ITAT-CHANDIGARH)
• Duration Of Justice: 22 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 31-01-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 09-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J S NAGAR
• Assessee Lawyers: P N ARORA
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH B, CHANDIGARH BEFORE SHRI T.R. SOOD, A.M AND MS. SUSHMA CHOWLA, J M ITA NO. 1199/CHD/2012 ASSESSMENT YEAR : 2008-09 A.C.I.T. CIRCLE, PALAMPUR V AMAR NATH PROP. M/S AMAR NATH HARISH CHAND, NEAR MUNICIPAL COMMITTEE KANGRA AAYPN 8879 L CROSS-OBJECTIONS NO. 1/CHD/2013 ARISING OUT OF ITA NO. 1199/CHD/2012 ASSESSMENT YEAR : 2008-09 AMAR NATH V A.C.I.T. CIRCLE, PALAMPUR PROP. M/S AMAR NATH HARISH CHAND, NEAR MUNICIPAL COMMITTEE KANGRA AAYPN 8879 L (APPELLANT) (RESPONDENT) DEPARTMENT BY SMT. J.S. NAGAR ASSESSEE BY: S/SHRI P.N. ARORA & ANIL VASUDEVA DATE OF HEARING 30.1.2013 DATE OF PRONOUNCEMENT 31.1.2013 O R D E R PER T.R.SOOD, A.M THIS APPEAL IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A), SHIMLA DATED 23.8.2012 AND THE ASSESSEE HAS FILED AN CROSS-OBJECTIONS. ITA NO. 1199/CHD/2012 REVENUES APPEAL 2. IN THIS APPEAL THE REVENUE HAS RAISED THE FOLLOW ING GROUND: 1 ON THE FACTS AND CIRCUMSTANCES, THE LD. CIT(A) H AS ERRED IN DELETING THE ADDITION OF RS. 13,15,000/- B Y INVOKING SECTION 273B OF THE INCOME-TAX ACT IN ORDE R TO 2 GIVE IMMUNITY TO THE ASSESSEE FROM THE PENALTY U/S 271D FOR VIOLATION OF SECTION 269SS. 3 AFTER CONSIDERING THE RIVAL SUBMISSIONS WE FIND T HAT THE ASSESSEE IS AN INDIVIDUAL AND IS ENGAGED IN THE BUS INESS OF DISTRIBUTION OF PRODUCTS FROM HALDI RAM, NESTLE, PA RLEY AND WRIGLEY ON AGENCY BASIS. THE ASSESSEE HAD BANK LIM IT OF RS.30 LAKHS AND HAD ACCEPTED THE CASH DEPOSIT AMOUN TING TO RS. 13,15,000/- FROM HIS SON SHRI RAJESH ANAND. THE ASSESSING OFFICER WAS OF THE VIEW THAT THIS WAS IN CONTRAVENT ION TO SECTION 269SS. THEREAFTER A SHOW CAUSE NOTICE WAS ISSUED WHY PENALTY SHOULD NOT BE LEVIED U/S 271D OF THE AC T. IN RESPONSE IT WAS MAINLY SUBMITTED THAT THE CASH WAS RECEIVED TO MEET THE EMERGENCY FUND REQUIREMENT. THE ASSESSEE WAS OUT OF STATION AND IN HIS ABSENCE THE AMOUNT WAS DEPOSI TED BY HIS DAUGHTER-IN-LAW WHO WAS LOOKING AFTER THE ACCOUNTS OF BOTH THE FIRMS. HOWEVER, THE ASSESSING OFFICER DID NOT FIND FORCE IN THE SUBMISSIONS AND LEVIED PENALTY U/S 271D OF THE ACT. 4 ON APPEAL BEFORE THE LD. CIT(A), THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER WERE REITERATED. IT WA S FURTHER SUBMITTED THAT ENTIRE AMOUNT WAS RETURNED THROUGH C HEQUE ON 13.3.2008 I.E. WITHIN SHORT TIME. IT WAS EXPLAINED THAT THE TRANSACTION WAS GENUINE AND THE DEFAULT, IF ANY, WA S OF TECHNICAL NATURE. IT WAS FURTHER SUBMITTED THAT HA D THIS MONEY NOT BEEN TAKEN, THE CHEQUE OF VARIOUS PRINCIPLES LI KE HALDIRAM WOULD HAVE GOT BOUNCED AND INVITED TROUBLE FOR THE ASSESSEE U/S 138 OF THE NEGOTIABLE INSTRUMENTS ACT. THIS CL EARLY SHOWS THAT THERE WERE COMPELLING CIRCUMSTANCES AND THE PE NALTY SHOULD NOT HAVE BEEN LEVIED. RELIANCE WAS PLACED ON VARIOUS CASE LAWS. THE LD. CIT(A) FOUND FORCE IN THE SUBMI SSIONS AND DELETED THE PENALTY. 3 5 BEFORE US, THE LD. DR FOR THE REVENUE STRONGLY SU PPORTED THE ORDER OF THE ASSESSING OFFICER. HE REFERRED TO PAGE 63 OF THE PAPER BOOK WHICH IS A COPY OF BANK STATEMENT AN D POINTED OUT THAT OD LIMIT HAD ONLY BEEN DECREASED ON 22.2.2 008 WHEN FIRST DEPOSIT WAS ACCEPTED AMOUNTING TO RS. 1,25,00 0/-. SAME IS THE SITUATION ON OTHER DATES. THEREFORE, IT CA NNOT BE SAID THAT THERE WAS A DIRE NEED TO FUND AND THE ASSESSEE HAD REASONABLE CAUSE TO ACCEPT THE CASH DEPOSIT. 6 ON THE OTHER HAND, THE LD. COUNSEL OF THE ASSESSE E SUBMITTED THAT FROM 22.2.2008 TO 3.3.2008 THE ASSES SEE AND HIS SON WERE OUT OF STATION. DURING THAT PERIOD CERTAI N CHEQUES WERE PRESENTED BY THE SUPPLIER OF GOODS WHO ARE GIV EN CHEQUES IN ADVANCE. ACCOUNTS OF BOTH THE FIRMS WERE BEING LOOKED AFTER BY ASSESSEES DAUGHTER-IN-LAW. SHE NOTICED THAT TH ERE WAS CASH AVAILABLE IN THE FIRM OF ASSESSEES SON AND TH EREFORE, THAT CASH WAS DEPOSITED IN THE BANK. THE FUNDS WER E REQUIRED URGENTLY OTHERWISE THE CHEQUES COULD HAVE GOT BOUNC ED. HE FURTHER PLEADED THAT A SURVEY WAS CONDUCTED ON THE PREMISE OF THE ASSESSEE ON 4.3.2008 AND CASH WAS FOUND SHORT A MOUNTING TO RS. 13 LAKHS AND IN REPLY TO THE QUESTION IT WAS CLEARLY SUBMITTED THAT THERE WAS A CASH BALANCE OF RS. 13 LAKHS IN M/S ANAND TRADERS I.E. THE FIRM BELONGING TO ASSESSEES SON AND THERE WAS A SHORTAGE OF CASH IN M/S AMAR NATH & SON S AMOUNTING TO RS. 13 LAKH. THIS HAPPENED BECAUSE A SSESSEES WIFE MRS. RITIKA ANAND WHO COULD NOT OPERATE BANK A CCOUNTS DEPOSITED CASH BELONGING TO M/S ANAND TRADERS IN AS SESSEES ACCOUNT. THIS FACT HAS BEEN ACCEPTED BY EH ASSESSI NG OFFICER DURING ASSESSMENT PROCEEDINGS. THEREFORE, IT IS CL EAR THAT CASH WAS URGENTLY REQUIRED IN THE ABSENCE OF ASSESS EE WHICH WAS TAKEN BY THE ASSESSEES DAUGHTER-IN-LAW AND DEP OSITED IN ASSESSEES ACCOUNTS. THIS SHOULD BE CONSTRUED AS R EASONABLE 4 CAUSE. IN THIS REGARD RELIANCE WAS ALSO PLACED ON THE DECISION OF AMRITSAR BENCH OF THE TRIBUNAL IN CASE OF SHRI R AMAN GUPTA PROP. M/S RAMAN & CROSS-OBJECTIONS. JAMMU V. ADDL C IT, JAMMU IN ITA NO. 05/ASR/2010, CIT V. SPEED WAYS RUB BER (P) LTD (2010) 326 ITR 31 (PH). 7 WE HAVE HEARD THE RIVAL SUBMISSIONS CAREFULLY AND FIND FORCE IN THE SUBMISSIONS OF THE LD. COUNSEL OF THE ASSESSEE. THE LD. CIT(A) HAS ADJUDICATED THIS ISSUE VIDE PARA 4, 4.1 AND 4.2 WHICH ARE AS UNDER: 4 RIVAL SUBMISSIONS HAVE BEEN CAREFULLY CONSIDERED WITH REFERENCE TO THE FACTS OF THE CASE, THE RELEVA NT PROVISIONS OF LAW AND THE CASE LAWS RELIED UPON. I T IS NOTED THAT THE ASSESSING OFFICER HAD CONDUCTED DETA ILED EXAMINATION OF THE CASH ENTRIES IN THE APPELLANTS BANK ACCOUNT WHICH WERE ON ACCOUNT OF THE CASH RECEIVED BY THE ASSESSEE FROM HIS SON SHRI RAJESH ANAND. THE EXPLANATION OF THE ASSESSEE WAS DULY ACCEPTED BY TH E ASSESSING OFFICER WHILE CALCULATING THE CASH POSITI ON DURING THE COURSE OF SURVEY ACTION AT THE ASSESSEE S PREMISES. THE SUBMISSIONS MADE BY THE APPELLANT DU RING THE COURSE OF APPELLATE PROCEEDINGS WERE ALSO MADE AT LENGTH BEFORE THE ASSESSING OFFICER BUT THE ASSESSI NG OFFICER HAS NOT COMMENTED ON THE MERIT OF THE SAME WHILE PASSING THE ORDER U/S 271D OF THE ACT. THERE ARE A LSO FOUND TWO CLERICAL ERRORS IN THE ASSESSING OFFICER S ORDER ON PAGE 1 WHERE IN THE DATES OF CASH DEPOSITS HAVE BEEN MENTIONED AS 28.5.2008 AND 29.9.2008 INSTEAD OF THE ACTUAL DATES OF 28.2.2008 AND 29.2.2008. 4.1 A PERUSAL OF THE RELEVANT BANK ACCOUNT (NO. 00000055124184943) OF THE ASSESSEE WITH THE STATE B ANK OF PATIALA REVEALS THAT THE CHEQUES WERE CLEARED ON THE VERY SAME DATES OR SHORTLY THEREAFTER ON WHICH THE CASH WAS DEPOSITED BY THE ASSESSEE. IT IS ALSO FACTUALL Y CORRECT THAT ALL THESE CHEQUES WERE ISSUED BY THE ASSESSEE TO THE COMPANIES WITH WHICH HE WAS HAVING BUSINESS DEALINGS AS THE DISTRIBUTOR OF THEIR PRODU CTS. THE SAID CASH TRANSACTION HAVE BEEN MADE BY THE APPELLANT WITH HIS SON OVER A PERIOD OF 11 DAYS, FR OM 22.2.2008 TO 3.3.2008. THE ENTIRE AMOUNT RECEIVED IN CASH WAS RETURNED BY THE ASSESSEE BY A SINGLE CHEQU E ON 13.3.2008, I.E. WITHIN 10 DAYS FROM THE DATE OF REC EIPT OF THE LAST CASH AMOUNT, AND WITHIN LESS THAN A MONTH FROM THE DATE OF THE FIRST RECEIPT OF CASH. THUS THE AS SESSEE DID NOT HOLD THE FUNDS RECEIVED IN CASH FROM HIS SO N EVEN FOR A PERIOD OF ONE MONTH. THE FACT THAT THE ASSES SEE REPAID THE ENTIRE AMOUNT THROUGH CHEQUE ALSO CLEARL Y INDICATES THAT THERE WAS NO INTENTION ON THE PART O F THE ASSESSEE TO EITHER CONCEAL THE TRANSACTION IN CASH WITH HIS SON OR TO CONCEAL HIS INCOME. THAT THE FUNDS W ERE 5 URGENTLY NEEDED FOR BUSINESS EXIGENCY IS INDICTED F ROM THE FACT THAT THERE WAS A SIMULTANEOUS CLEARING OF CHEQ UES BY THE COMPANIES FROM THE ASSESSEES BANK ACCOUNT, AND THAT THE ASSESSEE WAS NOT HOLDING THAT FUNDS FOR HI S OWN BENEFIT. THE DEPOSIT OF THE CASH IN THE BANK ACCOU NT OF THE ASSESSEE CLEARLY SHOWS THAT THERE WAS NO MOTIVE TO CONCEAL THE TRANSACTION OF LOAN OR TO DE-FRAUD THE REVENUE. THAT THE LOAN WAS RECEIVED FOR A TEMPORARY PERIOD TO TIDE OVER THE SITUATIONAL CRISIS ALSO STA NDS CLEARLY ESTABLISHED FROM THE FACT THAT THE ENTIRE L OAN WAS PROMPTLY REPAID BY THE ASSESSEE THROUGH AN ACCOUNT PAYEE CHEQUE. 4.2 SECTION 273B OF THE ACT ENVISAGES A NON-OBSTANT E CLAUSE AS AGAINST SECTION 271D. IN THE EXCEPTIONAL SITUATION ENVISAGED IN SECTION 273B OF THE ACT, IT IS PERMISSIBLE FOR AN ASSESSEE TO SUBSTANTIATE REASON ABLE CAUSE FOR HIS FAILURE TO COMPLY WITH THE PROVISION S OF SECTION 269SS. ON THE FACTUAL MATRIX OF THE CASE, THE APPELLANT HAS SUCCESSFULLY DISCHARGED THE AFORESAID OBLIGATION BY SHOWING THE BUSINESS EXIGENCY COMBINE D WITH A BONAFIDE BELIEF ON NON-APPLICABILITY OF SECT ION 269SS TO THE TRANSACTIONS BETWEEN THE FATHER AND TH E SON. THE PENALTY IMPOSED U/S 271D OF THE ACT IS, THEREFO RE, DIRECTED TO BE DELETED ON A CONSIDERATION OF REASONABLENESS WITHIN THE MEANING OF SECTION 273 B OF THE ACT. 8 PERUSAL OF THE ANSWER TO QUESTION OF THE STATEMEN T RECORDED DURING SURVEY ON 4.3.2008 READS AS UNDER: QUESTION - PLEASE STATE THE CASH IN HAND IN BOTH T HE CONCERNS. ANSWER - IN ANAND TRADERS CASH IN HANDS IS ABOUT RS. 13 LAKHS AND IN M/S AMAR NATH HARISH CHAND, CAS H IN HAND (-) RS. 13 LAKHS APPROXIMATELY. THIS IS BECAU SE I COULD NOT OPERATE THE ENTRIES DUE TO SOME PROBLEMS AND IN MY ABSENCE, MY WIFE SMT. RITIKA ANAND WHO ALSO LOOK AFTER THE ACCOUNTS OF BOTH THE FIRMS, DEPOSITED THE CASH PERTAINING TO ANAND TRADERS IN THE BANK ACCOUNT OF M/S AMAR NATH HARISH CHAND. THE ABOVE CLEARLY SHOWS THAT DURING THE ABSENCE OF THE ASSESSEE AND HIS SON, SMT. RITIKA ANAND WIFE OF THE ASSESSEE DEPOSITED CASH IN ASSESSEES ACCOUNT OUT OF CASH BA LANCE AVAILABLE WITH ANAND TRADERS WHICH IS A FIRM OF ASS ESSEES SON. NO ADVERSE INFERENCE HAS BEEN TAKEN IN ASSESSMENT O N ACCOUNT OF THIS SHORTAGE OF CASH DURING ASSESSMENT PROCEEDI NGS. THE ASSESSEE BEING A AGENT OF REPUTED COMPANIES LIKE HA LDIRAM, PARLE AND NESTLE, IT IS COMMON PRACTICE THAT SUCH B IG 6 COMPANIES TAKE CHEQUES ON ACCOUNT OF SUPPLIES IN AD VANCE, IT WAS FOUND THAT THERE WAS DEFICIENCY IN THE ACCOUNT, THEREFORE, CASH HAD TO BE DEPOSITED. THIS BECOMES CLEAR FROM THE COPY OF THE STATEMENT FILED AT PAGE 62, 69 OF THE PAPER BOO K AND RELEVANT ENTRIES FOR THE PERIOD 22.2.2008 TO 25.2.2 008 AS AN EXAMPLE ARE BEING EXTRACTED BELOW: 22.2.08 22.2.208 CHEQUE DEPOSIT - 822 FROM 551138487 84/822 35,000 -28,64,885.71 22.2.08 22.2.08 CASH DEPOSIT 1,25,000 -27,39,885.71 22.2.08 22.2.08 CREDIT BY CLG 1,18,116 -26,21,769.71 22.2.08 22.2.08 CREDIT BY CLG 43,173. -25,78,596.71 23.2.08 23.2.08 CHEQUE WDL- 332836 332836 4,16,468 -29,95,064.71 23.2.08 23.2.08 CHEQUE WDL 332819 332819 3,47,120 -33,42,184.71 23.2.08 23.2.08 CASH DEPOSIT 4,00,000 -29,42,184.71 23.2.08 23.2.08 DEBIT TO CHARGES FOR CLAIMING CH RECEIVED UNPAID 75.00 -29,42.259.71 23.2.08 23.2.08 CREDIT BY CLG 10,589 -29,31,672.71 23.2.08 23.2.08 CREDIT BY CLG 50,000 -28,81,672.71 25.2.08 25.2.08 CASH DEPOSIT 50,000 -28,31,672.71 25.2.08 25.2.08 CHEQUE WDL MICR CLAIMING 332763 332763 2,21,752.08 -30,53,424.79 25.2.08 25.2.08 CREDIT BY CLG 36,500 -30,16,924.79 25.2.08 25.2.08 CREDIT BY CLG 24,000 -29.92,924.79 THE ABOVE CLEARLY SHOWS THAT FOR EXAMPLE CASH OF RS . 1,25,000/- WAS DEPOSITED ON 22.2.2008 AND RS. 4 LA KHS WAS DEPOSITED ON 23.2.2008. THE SAME IS THE SITUATION IN THE LATTER DATES. IF THIS CASH WAS NOT DEPOSITED CHEQUES WHIC H WERE CLEARED ON 23.2.2008 WOULD HAVE GOT BOUNCED. IN THE ABSENCE OF THE ASSESSEE AND HIS SON, SMT. RITIKA ANAND COUL D NOT HAVE 7 SIGNED THE CHEQUES AND THE ONLY COURSE LEFT WAS TO DEPOSIT THE CASH SO AS TO GET THE CHEQUES CLEARED AS THE ASSESS EE HAD A CC LIMIT ONLY OF RS. 30 LAKHS. WE ARE OF THE OPINI ON THAT THIS CASH WAS REALLY FOR EMERGENCY NEEDS AND NEEDS TO CO NSTRUED AS REASONABLE BECAUSE FOR ACCEPTING THE CASH DEPOSI T. THEREFORE, THE LD. CIT(A) HAS CORRECTLY DECIDED TH E ISSUE AND WE DECLINE TO INTERFERE IN HIS ORDER. 9 IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED . CROSS-OBJECTIONS NO. 1/CHD/2013 10 VARIOUS GROUNDS TAKEN IN THE CROSS-OBJECTIONS AR E ONLY IN SUPPORT OF THE ORDER OF THE LD. CIT(A) WHICH WE HAV E CONFIRMED WHILE ADJUDICATING THE REVENUES APPEAL. ACCORDING LY THE CROSS-OBJECTIONS STANDS ALLOWED. 11. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND THE CROSS-OBJECTIONS OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 31.01.2013 SD/- SD/- (SUSHMA CHOWLA) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEM BER DATED : 31.01.2013 SURESH COPY TO: THE APPELLANT/THE RESPONDENT/THE CIT/THE C IT(A)/THE DR