The Addl CIT, Rajahmundry Range, Rajahmundry V. Sri Bh Harshavardhana Raju, Penumantra

CO 7/VIZ/2011

• Counselvise Citation: [2011] 122 COUNSELVISE.COM (IT) 6277 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 1 month(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 13-07-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 13-06-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D KOMALI KRISHNA
• Assessee Lawyers: Y R RAO
• Keywords: Bonafide belief; Reasonable cause

Judgement Text

ITA 208 AND CO 7 OF 2011 BH. HARSHAVARDHANA RAJU P ENUMANTRA PAGE 1 OF 5 IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI BR BASKARAN, ACCOUNTANT MEMBER ITA NO.208/VIZAG/2011 ASSESSMENT YEAR: 2007-08 ADDL. CIT, RAJAHMUNDRY RANGE BH. HARSHAVARDHANA RAJU, S/O LATE SRI BVMS VARMA, PENUMANTRA (APPELLANT) VS. (RESPONDENT) PAN NO:AKHPB 2437 D C.O. NO.7/VIZAG/2011) (ARISING OUT OF ITA NO.208/VIZAG/2011) ASSESSMENT YEAR: 2007-08 ADDL. CIT, RAJAHMUNDRY RANGE BH. HARSHAVARDHANA RAJU, S/O LATE SRI BVMS VARMA, PENUMANTRA (APPELLANT) VS. (RESPONDENT) PAN NO:AKHPB 2437 D DEPARTMENT BY: SMT. D. KOMALI KRISHNA, SR.DR ASSESSEE BY: SHRI Y.R. RAO, ADVOCATE ORDER PER SHRI B. R. BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION O F THE ASSESSEE ARE DIRECTED AGAINST THE ORDER DATED 15.03.2001 PAS SED BY LEARNED CIT(A), RAJAHMUNDRY AND IT RELATES TO THE ASSESSMENT YEAR 2 007-08. THE APPEAL OF THE REVENUE IS BARRED BY LIMITATION BY 03 DAYS. TH E REVENUE HAS MOVED A PETITION FOR CONDONING THE DELAY. HAVING REGARD TO THE SUBMISSIONS MADE IN THE SAID PETITION, WE CONDONE THE DELAY AND ADMIT T HE APPEAL FOR HEARING. 2. THE PENALTY OF RS.9,39,000/- LEVIED UNDER SECTIO N 271D OF THE ACT, HAVING BEEN DELETED BY THE LEARNED CIT (A), THE REV ENUE IS IN APPEAL BEFORE ITA 208 AND CO 7 OF 2011 BH. HARSHAVARDHANA RAJU P ENUMANTRA PAGE 2 OF 5 US. THE ASSESSEE HAS FILED CROSS OBJECTION IN SUPPO RT OF THE ORDER OF THE LEARNED CIT (A). 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BR IEF. IT WAS NOTICED BY THE ASSESSING OFFICER THAT THE ASSESSEE HAS RECEIVE D LOANS IN CASH ON VARIOUS DAYS DURING THE YEAR UNDER CONSIDERATION FR OM HIS FAMILY MEMBERS, WHICH IN AGGREGATE EXCEEDED THE LIMIT OF RS.20,000/ - PRESCRIBED UNDER SECTION 269SS OF THE ACT, EVEN THOUGH THE AMOUNT TA KEN IN EACH OCCASION WAS LESS THAN RS.20,000/-. NAME RELATIONSHIP AMOUNT SRI BHUPATHIRAJU VENKATA BROTHER 1,34,000 PRUDVI RAMA RAJU SRI BHUPATHIRAJU RAMA RAJU GRANDFATHER 1,02,000 SMT. BHUPATHIRAJU PADMA KUMARI GRAND MOTHER 7,03,0 00 TOTAL 9,39,000 ===== THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SEC.269SS OF THE ACT BY TAKING THESE LOANS IN CA SH AND ACCORDINGLY REFERRED THE MATTER TO THE ADDL. COMMISSIONER OF IN COME TAX, WHO LEVIED A PENALTY OF RS.9,39,000/- UNDER SECTION 271D OF THE ACT. THE APPEAL FILED BY THE ASSESSEE BEFORE THE LEARNED CIT (A) WAS ALLOWED . HENCE THE REVENUE IS IN APPEAL BEFORE US. 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE RELIEF GRANTED BY THE LEARNED CIT (A) ON THE GROUND THAT T HE ASSESSEE WAS IGNORANT OF LAW IS NOT JUSTIFIED AND THE SAME CANNO T BE TAKEN AS A BONAFIDE BELIEF IN TERMS OF SEC.273B OF THE ACT. 5. ON THE CONTRARY, THE LEARNED AUTHORISED REPRESEN TATIVE SUBMITTED THAT THE IMPUGNED AMOUNTS WERE TRANSFERRED TO THE A CCOUNT OF THE ASSESSEE FROM THE ACCOUNTS OF OTHER FAMILY MEMBERS IN ORDER TO MAKE CERTAIN INVESTMENT IN THE NAME OF THE ASSESSEE. HE FURTHER SUBMITTED THAT THE ITA 208 AND CO 7 OF 2011 BH. HARSHAVARDHANA RAJU P ENUMANTRA PAGE 3 OF 5 ASSESSEES FATHER DIED IN THE YEAR 2002 AS WAS A PA TIENT WITH PROLONGED ILLNESS. HENCE THE ASSESSEE WAS UNDER THE CARE OF HIS GRAND FATHER NAMED SHRI B. RAMARAJU RIGHT FROM HIS CHILDHOOD AND THE F INANCIAL AFFAIRS OF ALL THE FAMILY MEMBERS ARE LOOKED AFTER BY SHRI B. RAMA RAJ U. THE IMPUGNED TRANSACTIONS OF TRANSFER OF FUNDS WERE ALSO CARRIED OUT BY THE GRAND FATHER OF THE ASSESSEE UNDER THE BONAFIDE IMPRESSION THAT THE AMOUNTS COULD BE GIVEN IN CASH IF THE SAME DOES NOT EXCEED RS.20,000 /- ON EACH OCCASION. ACCORDINGLY THE LEARNED AUTHORISED REPRESENTATIVE S UBMITTED THAT THERE WAS A REASONABLE CAUSE IN ACCEPTING THESE AMOUNTS BY WA Y OF CASH IN VIOLATION OF SEC. 269SS OF THE ACT. 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE WAS A STUDENT AT THE RELEVANT POINT OF TIME AND THE YEAR UNDER CONSIDERA TION WAS HIS 2 ND YEARS RETURN OF INCOME. IT IS ALSO NOT DISPUTED THAT AL L THE AFFAIRS OF THE ASSESSEE AS WELL AS OTHER FAMILY MEMBERS ARE LOOKED AFTER BY HIS GRAND FATHER. THE ASSESSEE HAS FILED CONTRA ACCOUNT COPIES OF THE IMP UGNED TRANSACTIONS AND THE SAME ARE PLACED IN PAGES 8 TO 11 OF THE PAPER B OOK COMPILED BY THE ASSESSEE. THESE ACCOUNT COPIES SHOW THAT THE AMOUN TS RANGING FROM RS.17,000/- TO RS.19,000/- HAVE BEEN TRANSFERRED FR OM THE ACCOUNT OF THE FAMILY MEMBERS ON VARIOUS DATES TO THE ACCOUNT OF T HE ASSESSEE. THE AMOUNT SO TRANSFERRED ON EACH OCCASION DID NOT EXCE ED RS.20,000/- AND THE SAME VINDICATES THE SUBMISSION OF THE ASSESSEE THAT HIS GRAND FATHER WAS UNDER BONAFIDE BELIEF THAT SUCH KIND OF TRANSFERS A RE PERMISSIBLE UNDER THE ACT. ON SUCH A BELIEF ONLY, THE FUNDS AVAILABLE WI TH THE OTHER FAMILY MEMBERS APPEAR TO HAVE BEEN TRANSFERRED TO THE ACCO UNT OF THE ASSESSEE ON VARIOUS DATES. THE LEARNED CIT (A) HAS ALSO CON SIDERED THIS ASPECT WHILE DELETING THE IMPUGNED PENALTY. FOR THE SAKE OF CONV ENIENCE, WE EXTRACT BELOW THE DECISION OF THE LEARNED CIT (A): 5.4 APPLYING THE AFORE-STATED FACTORS AND CIRCUMST ANCES IN THE APPELLANTS CASE, IT COULD BE OBSERVED THAT THE APPELLANT ITA 208 AND CO 7 OF 2011 BH. HARSHAVARDHANA RAJU P ENUMANTRA PAGE 4 OF 5 IS AN ABSENTEE ASSESSEE WHOSE TAX MATTERS ARE BEING LOOKED AFTER BY HIS PATERNAL GRAND FATHER, WHO APPEARS TO HAVE EITHER NO KNOWLEDGE OR SEMI KNOWLEDGE OF THE PROVIS IONS OF THE ACT RELATING TO TRANSACTIONS INVOLVING ACCEPTAN CE AND REPAYMENT OF LOANS AND DEPOSITS IN CASH EXCEEDING T HE PRESCRIBED LIMIT OF RS.20,000/-. NO DOUBT, SUCH GRA NT FATHER OF THE APPELLANT ALONG WITH OTHER MEMBERS OF HIS FA MILY INCLUDING THE APPELLANT WERE NOT THE FIRST TIME ASS ESSEES BUT HAD BEEN ENROLLED AS ASSESSEES FROM THE EARLIER YEA RS, AND, PERHAPS, MIGHT HAVE OBTAINED THE SERVICES OF ANY TA X PRACTITIONER IN FILING THEIR PAST RETURNS. BUT THEN SOME TIMES, IT SO HAPPENS THAT THE ASSESSEES TEND TO UNDERTAKE TRANSACTIONS IN CERTAIN SITUATIONS WITH THEIR LIMIT ED KNOWLEDGE OF THE LEGAL PROVISIONS AND PROCEDURE, WI THOUT REALIZING THAT THEIR MISPLACED ACTION COULD LEADING TO DEFAULTS, THEREBY ATTRACTING PENAL PROVISIONS. IN T HE INSTANT CASE, IT APPEARS TO BE SUCH A CASE OF MISCALCULATED ADVENTURE RESULTING IN DEFAULT UNDER SECTION 269SS OF THE ACT ON THE PART OF THE APPELLANT. SINCE THERE IS NO DOU BT ABOUT THE FACT THAT THE APPELLANT HIMSELF, ON ACCOUNT OF HIS PURSUANCE OF STUDIES OUTSIDE HIS NATIVE PLACE, HAD NO DIRECT ROLE TO PLAY IN THE METHOD AND MODE OF TRANSACTION IN AUGMENTING FUNDS FOR THE PURPOSE OF INVESTMENT IN H IS NAME, HE CANNOT BE ENTIRELY BLAMED FOR THE DEFAULT COMMITTED BY HIS GRAND FATHER ON HIS BEHALF. HAVING REGARD TO THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF T HE CASE, IT CAN BE SAID THAT THERE EXISTED A REASONABLE CAUSE O N THE PART OF THE APPELLANT IN COMMITTING DEFAULT IN ACCE PTING CASH LOANS EXCEEDING THE PRESCRIBED LIMIT FROM HIS FAMIL Y MEMBERS IN CONTRAVENTION OF THE PROVISIONS OF THE S ECTION 269SS OF THE ACT. ACCORDINGLY, THE APPELLANT DESERV ED A LENIENT VIEW ON THE ISSUE AND, CONSEQUENTLY, PENALT Y UNDER SECTION 271D OF THE ACT IN HIS CASE WAS NOT EXIGIBL E. HENCE, THE ORDER LEVYING PENALTY OF RS.9,39,000/- UNDER SE CTION 271D OF THE ACT IS, HEREBY, CANCELLED. THUS, WE NOTICE THAT THE LEARNED CIT(A) HAS TAKEN I NTO CONSIDERATION THE FACT THAT THE ASSESSEE, BEING A STUDENT STUDYING OU TSIDE HIS NATIVE PLACE, HAD NO DIRECT ROLE TO PLAY IN THE METHOD AND MODE O F TRANSACTION IN AUGMENTING FUNDS FOR THE PURPOSE OF INVESTMENT IN H IS NAME. FURTHER THE IMPUGNED AMOUNTS HAVE BEEN RECEIVED ONLY FROM THE C LOSE RELATIVES OF THE ASSESSEE. IN THESE CIRCUMSTANCES, THE EXPLANATION OF THE ASSESSEE THAT THESE TRANSACTIONS HAVE BEEN ENTERED INTO WITH A BO NAFIDE BELIEF THAT THERE ITA 208 AND CO 7 OF 2011 BH. HARSHAVARDHANA RAJU P ENUMANTRA PAGE 5 OF 5 WILL BE NO VIOLATION OF THE PROVISIONS OF SEC. 269S S OF THE ACT, CAN BE TAKEN AS A REASONABLE CAUSE. HENCE WE DO NOT FIND ANY IN FIRMITY IN THE DECISION OF LEARNED CIT(A) AND ACCORDINGLY UPHOLD HIS ORDER. 7. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS OBJECTION OF THE ASSESSEE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON 13.7.2011 SD/- SD/- (SUNIL KUMAR YADAV) (B R BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PVV/SPS VISAKHAPATNAM, DATE: 13 TH JULY, 2011 COPY TO 1 THE ADDL. COMMISSIONER OF INCOME TAX, RAJAHMUNDRY 2 SHRI BH. HARSHAVARDHANA RAJU, S/O LATE SRI B.V.M. S. VARMA, D.NO.9- 146 PENUMANTRA 3 4. THE CIT RAJAHMUNDRY THE CIT(A), RAJAHMUNDRY 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM