Central Public School, Shiksha Smiti, KOTA V. ADDITIONAL COMMISSIONER OF INCOME TAX (EXEMPTION), JAIPUR

ITA 1001/JPR/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6120 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 19-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI JCIT DR DHK
• Keywords: Reasonable cause

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,O JH HKKXPUN] YS[KK LNL; LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, AM VK;DJ VIHY LA-@ ITA NO. 1001 & 1002/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR: 2014-15 CENTRAL PUBLIC SCHOOL SHIKSHA SAMITI 3-G-16, TALWANDI KOTA CUKE VS. THE ADDL. CIT (EXEMPTION) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AAATC 7898 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY: SHRI P.C. YADAV, ADVOCATE JKTLO DH VKSJ LS@ REVENUE BY:SHRI J.C. KULHARI, JCIT - DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 05/04/2018 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 21 /05/2018 VKNS'K@ ORDER PER BHAGCHAND, AM BOTH THESE APPEALS HAVE BEEN FILED BY THE ASSESSEE EMANATES FROM THE SEPARATE ORDERS OF THE LD. CIT(A), KOTA DATED 06-10-2017 FOR THE ASSESSMENT YEAR 2014-15 IN SUSTAINING THE PENALTY U/S 271D AND 271E OF THE I.T. ACT, 1961 RESPECTIVELY. THE ASSESSEE HA S RAISED THE FOLLOWING GROUNDS OF APPEAL. ITA NO.1001/JP/2017 A.Y. 2014-15 U/S 271D 1. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND IN LAW, THE IMPUGNED PENALTY ORDERS HAS BEEN PA SSED ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 2 WITHOUT PROVIDING ADEQUATE OPPORTUNITY TO THE ASSES SEE AND IS LIABLE TO BE QUASHED. 2. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND IN LAW, THE PENALTY ORDER IS BASED ON ASSUMPTIO N, WHIMS AND CAPRICES OF THE LD. ADDL. CIT (EXEMPTION) AND N OT ON ANY CONCLUSIVE EVIDENCE AND IS LIABLE TO BE QUASHED . 3. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND IN LAW, THE LD. ADDL. CIT (EXEMPTION) GROSSLY ERRED IN IMPOSING PENALTY U/S 271D OF RS. 9,98,200/- 4. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND IN LAW THE LD. ADDL. CIT (EXEMPTION) GROSSLY E RRED IN CONSIDERING AN AMOUNT OF RS. 4,08,200/- RECEIVED FR OM MR. GAURAV SHARMA AND RS. 5,90,000/- RECEIVED FROM SHRI BALLABH SHARMA AS VIOLATION OF SECTION 269SS WHEREA S MONEY WAS RECEIVED FOR BUSINESS EXIGENCY. 5. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES IN LAW, THE ASSESSMENT OF ABOVE MENTIONED GROUND HAS B EEN MADE ON BELIEFS AND SURMISES AND ESTIMATES AND IS L IABLE TO BE QUASHED. ITA NO.1002/JP/2017 A.Y. 2014-15 U/S 271E 1. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND IN LAW, THE IMPUGNED PENALTY ORDERS HAS BEEN PA SSED WITHOUT PROVIDING ADEQUATE OPPORTUNITY TO THE ASSES SEE AND IS LIABLE TO BE QUASHED. 2. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND IN LAW, THE PENALTY ORDER IS BASED ON ASSUMPTIO N, WHIMS AND CAPRICES OF THE LD. ADDL. CIT (EXEMPTION) AND N OT ON ANY CONCLUSIVE EVIDENCE AND IS LIABLE TO BE QUASHED . ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 3 3. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND IN LAW, THE LD. ADDL. CIT (EXEMPTION) GROSSLY ERRED IN IMPOSING PENALTY U/S 271E OF RS.2,39,110/- 4. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES AND IN LAW THE LD. ADDL. CIT (EXEMPTION) GROSSLY E RRED IN CONSIDERING SEVEN NOS. OF PAYMENT TOTALING TO RS. 1 ,34,880/- AGAINST RENT TO MR. GAURAV SHARMA AS VIOLATION OF S ECTION 269T 5. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES IN LAW, THE ADDL. LD. CIT (EXEMPTION) GROSSLY ERRED IN CONSIDERING TWO PAYMENTS TOTALING TO RS. 14,230/- F EE COLLECTION KEPT BY MR. GAURAV SHARMA AS VIOLATION O F SECTION 269T. 6. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES IN LAW THE ADDL. CIT (EXEMPTION) GROSSLY ERRED IN CONS IDERING A TRANSFER ENTRY OF RS. 90,000/- FROM ONE ACCOUNT O F MR. GAURAV SHARMA TO ANOTHER ACCOUNT OF MR. GAURAV SHAR MA AS VIOLATION OF SECTION 269T. 7. THAT UNDER THE GIVEN FACTS AND CIRCUMSTANCES IN LAW, THE ASSESSMENT OF ABOVE MENTIONED GROUND HAS B EEN MADE ON BELIEFS AND SURMISES AND ESTIMATES AND IS L IABLE TO BE QUASHED. 2.1 THE LD.AR OF THE ASSESSEE PRAYED FOR DELETION O F PENALTY IMPOSED UNDER SECTION 271D AND 271E OF THE ACT. THE LD.AR O F THE ASSESSEE FILED THE FOLLOWING WRITTEN SUBMISSION. 1. THE PRESENT ASSESSEE APPEAL IS ARISING FROM THE OR DER OF CIT (A) DATED 06.10.2017. IN ORDER TO ASSIST THE HONBLE BENCH THE ASSESSEE HAS PREPARED THE SYNOPSI S IN WHICH THE FACTS AND SUBMISSIONS ARE MADE IN BRIEF. 2. ASSESSEE IS A SOCIETY CONSTITUTED ON 18.04.1979. IT IS ENGAGED IN THE DISSEMINATION OF EDUCATION SIN CE ITS INCEPTION. EARLIER IT WAS PROVIDING EDUCATION UP TO PRIMARY LEVELS, THEREAFTER IT GOT AFFILIATION WIT H ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 4 RAJASTHAN BOARD AND THEN CBSE AND NOW ASSESSEE SOCI ETY IS RUNNING SCHOOL UP TO SENIOR SECONDARY LEVEL. ALL THESE FACTS ARE COMING OUT FROM THE ORDER OF JO DHPUR BENCH GRANTING APPROVAL OF 10(23C)(VIA) VIS-A -VIS THE IMPUGNED YEAR. COPY OF THE DECISIONS IS ANNEXE D IN PAPER BOOK. CERTAIN DATES WHICH GOES TO THE RO OT OF THE MATTER ARE AS UNDER:- 3. IT IS SUBMITTED THAT ON 25.09.2014, ASSESSEE SOCIE TY HAS APPLIED FOR APPROVAL OF 10(23C) BEFORE THE C CIT UDAIPUR. THE CCIT UDAIPUR VIDE ITS ORDER DATED 17.0 8.2015, DENIED THE EXEMPTION OF 10(23C)(VI) TO THE ASSESSEE. AGAINST THE ORDER OF THE CCIT UDAIPUR ASS ESSEE HAS COME BEFORE THE ITAT AND THE HONBLE ITAT VIDE ITS ORDER DATED 30.11.2016, ALLOWED THE APPEAL OF THE ASSESSEE. 4. IT IS SUBMITTED THAT WHILE PASSING THE ORDER OF 10 (23C)(VI) LD CCIT HAS MADE AN OBSERVATION THAT ASSE SSEE HAS ALLEGEDLY VIOLATED THE PROVISIONS OF SECTION 26 9SS AND 269T OF THE ACT. AND HENCE HE DIRECTED THE JCIT FOR INITIATING PENALTY OF 271D AND 271E OF THE ACT. 5. IT IS SUBMITTED THAT WHEN THE MATTER WAS SUBJUDICE BEFORE THE ITAT JODHPUR BENCH THE JCIT EXEMPTION LEVIED THE PENALTY UNDER SECTION 271E ON THE GROUND THAT ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTI ON 269T OF THE ACT. 6. DURING THE COURSE OF PENALTY PROCEEDINGS THE JCIT ALLEGED THAT ASSESSEE HAS MADE CERTAIN PAYMENTS TO THE KEY PERSONS AND HENCE VIOLATED THE PROVISION OF SEC TION 269T OF THE ACT. IT HAS BEEN OBSERVED THAT ASS ESSEE HAS MADE PAYMENTS TO ONE MR. GAURAV SHARMA AND BRIJ BALLABH SHARMA THE DETAILS OF PAYMENTS MADE HAS BEEN GIVEN IN THE ASSESSMENT ORDER AT PAGE NO-3. 7. IT HAS BEEN FURTHER ALLEGED THAT THE ASSESSEE HAS ALSO RECEIVE PAYMENTS IN CASH AND. FOR WHICH AO HAS LEVIED SEPARATE PENALTY UNDER SECTION 271D. 8. THE AO HAS ALSO IGNORED THE PAYMENTS MADE IN CASH TO BRIJ BALLABH SHARMA TO THE TUNE OF RS.8,77,000/- 9. AT LAST THE CONTROVERSY INVOLVED IN THE PRESENT AP PEAL NARROW DOWN TO THE SUM OF RS 2,39,110/- ALLEGE D TO HAVE BEEN PAID IN CASH TO SHRI GAURAV SHARMA, WITHO UT ANY REASONABLE CAUSE. THE DETAIL OF SUM PAID TO SHRI GAURAV SHARMA IS AS UNDER:- DATE EVENT REMARKS IF ANY 18.04.1979 ASSESSEE SOCIETY CAME INTO EXISTENCE 27.05.2015 ASSESSEE SOCIETY GOT AFFILIATION WITH RAJASTHAN BOA RD 25.09.2014 ASSESSEE SOCIETY MADE APPLICATION FOR REGISTRATION WITH CCIT AS PER THE PROVISIONS OF SECTION 10(23C) 17.08.2015 CCIT PASSED ORDER DENYING THE APPROVAL OF 10(23C) 21.03.2016 JCIT EXEMPTION JAIPUR IMPOSE PENALTY OF RS 2,39,110 /- UNDER SECTION 271E ON VIOLATION OF 269T 30.11.2016 ITAT JODHPUR ALLOWED THE APPEAL OF THE ASSESSEE AND REVERSED THE ORDER OF THE CCIT ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 5 10. THE CIT(A) AFFIRMED THE ACTION OF THE AO NOW ASSESSEE IS BEFORE THIS HONBLE BENCH AND CRAVE S TO SUBMIT AS UNDER: - 11. IT IS SUBMITTED THAT ENTIRE EXERCISE OF LEVY OF PE NALTY IS WITHOUT JURISDICTION:- IT IS SUBMITTED THA T CCIT HAS EXCEEDED HIS JURISDICTION WHILE PROCESSING THE APPL ICATION OF THE ASSESSEE UNDER SECTION 10(23C)(VI) O F THE ACT. 12. IT IS SUBMITTED THAT IT IS THE SETTLED POSITION OF LAW THAT AT THE TIME OF GRANT OF APPROVAL OF SECTI ON 10(23C) THE CCIT HAS TO SEE THE ACTIVITIES OF THE TRUST OR SOCIETY AS THE CASE MAY BE AND THE OBJECT OF THE TR UST BEING CHARITABLE IN NATURE. IT IS SUBMITTED THAT CCIT CAN NOT GO BEYOND THAT IN OTHER WORDS HE CANNOT EXAMINE THE ACCOUNTS OF THE ASSESSEE AT THE TIME OF GRANTING AP PROVAL. A REFERENCE CAN BE MADE TO THE FOLLOWING DECISIONS. A. MANAS SEWA SAMITI VS CCIT 282 CTR 0302(BOM):- IN THIS CASE IT HAS BEEN OBSERVED AS UNDER:- THE SUPREME COURT CATEGORICALLY HELD THAT THE AUTH ORITY WAS REQUIRED TO CONSIDER THE NATURE AND GENUINENESS OF THE ACTIVITIES OF THE APP LICANT INSTITUTION. THE CONDITIONS SET OUT IN THE THIRD PROVISO WAS NOT TO BE TESTED AT THE STAGE OF APPROVAL SINCE THE REQUIRED FACTS WOULD TAKE PLACE IN FUTURE. THE REQUIREMENT M ENTIONED IN THE THIRD PROVISO COULD ONLY BE TESTED WHEN ASSESSMENT PROCEEDINGS WERE BEI NG MADE AND, THE AUTHORITY, AT THAT STAGE,WOULD CONSIDER THE REQUIREMENT PROVIDED IN THE THIRD PROVISO. AT THE STAGE OF REGISTRATION, THE AUTHORITY IS ONLY REQUIRED TO EXAMINE THE NATURE, ACTIVITY AND GENUINENESS OF THE INSTITUTION. THE MERE EXISTENCE THAT THERE IS SOME PROFIT DOES NOT DISQUALIFY THE APPLICANT IF THE SOLE PURPOSE OF EXI STENCE WAS NOT PROFIT MAKING BUT EDUCATIONAL ACTIVITIES. THE AUTHORITY WAS REQUIRED TO FIND OUT THE PREDOMINANT OBJECT OF THE ACTIVITY AND SEE WHETHER THE INSTITUTION EXI STS SOLELY FOR EDUCATION AND NOT TO EARN PROFIT 13. IT IS SUBMITTED THAT IN VIEW OF THE ABOVE JUDGMENT OF BOMBAY HIGH COURT IT IS SUBMITTED THAT THE CCIT HAS EXCEEDED HIS JURISDICTION IN DIRECTING THE JCIT TO LEVY PENALTY UNDER SECTION 271E OF THE ACT. IT IS S UBMITTED THAT THE PENALTY UNDER THIS SECTION IS NOT AN AUTOM ATIC; THERE ARE HUNDREDS OF EXCEPTION TO THIS PENAL PROVISION, AS PROPOUNDED BY THE COURTS FROM TIME TO TIME. AND THESE ASPECTS NEED EXAMINATION OF ACCOUNTS AT THE T IME OF ASSESSMENT AND NOT AT THE TIME OF GRANT OF APPROVAL , THERE MAY BE SEVERAL PROS AND CONS FOR MAKING PAY MENTS IN CASH. AND ALL THESE ASPECTS NEED DEEPER SCRUTINY OF FACTS EXAMINED BY THE AO FIRST AND THEN JCIT. 14. IT IS SUBMITTED THAT JCIT HAS FURTHER FAILED TO AP PRECIATE THAT THE HONBLE ITAT VIDE ITS ORDER DATED GAURAV SHARMA FIN THE BOOKS OF CENTRAL PUBLIC SCHOO L) S.NO. DATE PARTICULARS DEBIT CREDIT EXPLANATION 1 01.04.2013 OPENING 129620 2 03.04.2013 CASH 4230 FEES DIRECTLY RECEIVED BY DIRECTOR 3 13.05.2013 CASH 24000 PAID AGAINST RENT 4 29.06.2013 CASH 12500 PAID AGAINST RENT 5 23.07.2013 CASH 10000 FEES DIRECTLY RECEIVED BY DIRECTOR 6 25.07.2013 CASH 5000 PAID AGAINST RENT 7 30.09.2013 CASH 47380 PAID AGAINST RENT FOR URGENT REGUIREMENT OF FUNDS TO THE DIRECTOR 9 29.10.2013 CASH 40000 PAID AGAINST RENT 13 23.11.2013 CASH 500 PAID IN THE NATURE OF IMPREST 14 02.12.2013 CASH 1500 PAID IN THE NATURE OF IMPREST 16 05.03.2014 CASH 4000 PAID AGAINST RENT 17 06.03.2014 CASH 2000 PAID AGAINST RENT 18 31.03.2014 GAURAV SHARMA A/C 90000 TRANSFER ENTRY FROM ONE ACCOUNT TO ANOTHER 19 TOTAL 241110 ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 6 30.11.2016 HAS REVERED THE ENTIRE ORDER OF THE CCIT AND NOT THE PART ORDER OF THE CCIT AND HENCE THE O RDER OF CCIT IS NO MORE IN THE EXISTENCE, THEREFORE ALL OBS ERVATIONS MADE IN THAT ORDER WOULD BECOME INFRUCTUO US AND PENALTY LEVIED IS VOID AB INITIO 15. WITHOUT PREJUDICE TO THE ABOVE IT IS NEXT SUBMITTE D THAT IT IS ALSO AN ADMITTED POSITION OF FACTS THA T THE JCIT HAS LEVIED PENALTY UNDER SECTION 271E ALLEGING THE VIOLATION OF THE PROVISIONS OF SECTION 269T BY THE ASSESSEE SOCIETY. 16. IT IS SUBMITTED THAT IT IS AN ADMITTED POSITION OF FACTS THAT THE ASSESSEE HAS APPLIED FOR REGISTRATIO N BEFORE THE CCIT AS PER THE PROVISIONS OF SECTION 10 (23C) IN AN OPEN AND BONA-FIDE MANNER, ASSESSEE HAS ALSO PRODUCED THE RELEVANT BOOKS AND O THER DOCUMENTS WITHOUT ANY MANIPULATION. HAD THE ASSESSEE WOULD HAVE MANIPULATED THE ENTRIES THE CCIT WOULD NOT HAVE SEEN THESE ENTRIES. THEREFORE, IN THIS CASE NO PENALTY IS LEVIABLE. 17. IT IS SUBMITTED THAT PROVISIONS OF SECTION 269T CA N ONLY BE APPLIED FOR THE TRANSACTION OF LOANS AND DEPOSITS AND NOWHERE ELSE. IT IS SUBMITTED THAT CASE OF THE ASSESSEE IS THAT PAYMENTS MADE TO SHRI GAURAV SHARM A ARE NEITHER LOANS NOR DEPOSITS AND THE SAME HAVE BEEN M ADE TO ON VARIOUS COMMERCIAL EXIGENCIES. THE ASSESS EE IN ORDER TO PROVE THE REASONABLE CAUSE BEHIND THE MAKI NG OF THESE PAYMENTS HAS FILED VARIOUS DOCUMENTS. HOWEVER THE AO COULD NOT BE ABLE TO REFUTE THESE WI TH ANY COGENT MATERIAL AND HAS LEVIED THE PENALTY I N AN ARBITRARY MANNER. THE AO HAS EVEN IGNORED THE FACT THAT ONE ENTRY OF 90,000/- IS A JOURNAL ENTRY AND T HERE IS A CREDIT BALANCE OF RS 1, 29,620 OF MR. GAURAV SHARMA , FOR WHICH NO BENEFIT HAS BEEN GIVEN. IT IS SUBMIT TED THAT IF WE GIVE THE NET RESULT OF THESE TWO ENTRIES THEN ONLY AN AMOUNT OF RS 19,380/-WILL REMAIN. HENCE NO ACTION OF SECTION 271E IS MAINTAINABLE AGAINST THAT. 18. IN VIEW OF THE ABOVE IT IS SUBMITTED THAT PENALTY LEVIED MAY BE QUASHED. 2.2 ON THE OTHER HAND, THE LD. DR SUPPORTED THE ORD ERS OF THE LD. CIT(A) AS TO UPHOLDING THE PENALTY OF RS. 9,98,200 /- U/S 271D AND RS. 2,39,110/- U/S 271E OF THE ACT. 2.3 THE RELEVANT PARA OF THE LD. CIT(A) WITH REGARD TO UPHOLDING THE PENALTY U/S 271D AND 271E OF THE ACT ARE AS UNDER:- PENALTY U/S 271D IN THE LIGHT OF THE ABOVE DISCUSSION AND THE LEGAL POSITION IN THIS REGARD, I AM OF THE OPINON THAT THERE WAS NO BONA FIDE REASON FOR VIOLA TION OF SECTION 269SS AND 269T OF BY THE SOCIETY IN RESPECT OF TRANSACTION WITH THE KEY MANAGERIAL PERSONNEL, NOR WAS ANY BUSINESS EXIGENCY PROVED IN THE COURSE OF EXAMINATI ON DONE BY THE ADDL. DIT(E) IN THE MATTER. IN THE ABSENCE O F ANY PROOF, THE ADDL. CIT(E) WAS JUSTIFIED IN REJECTING THE ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 7 CONTENTION OF THE ASSESSEE. UNDER THE CIRCUMSTANCES , THE PENALTY OF RS. 9,98,200/- IMPOSED U/S 271D IS TO BE UPHELD. PENALTY U/S 271E - IN THE LIGHT OF THE ABOVE DISCUSSION AND THE LEGAL POSITION IN THIS REGARD, I AM OF THE OPINION THAT THERE WAS NO BONA FIDE REASON FOR VIOL ATION OF SECTION 269T BY THE SOCIETY IN RESPECT OF TRANSACT ION WITH THE KEY MANAGERIAL PERSONNEL, NOR WAS ANY BUSINESS EXIGENCY PROVED IN THE COURSE OF EXAMINATION DONE B Y THE ADDL. DIT(E) IN THE MATTER. IN THE ABSENCE OF ANY P ROOF, THE ADDL. CIT(E) WAS JUSTIFIED IN REJECTING THE CONTEN TION OF THE ASSESSEE. UNDER THE CIRCUMSTANCES, THE PENALTY OF R S. 2,39,110/- IMPOSED U/S 271E IS TO BE UPHELD. 2.4 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. WE HAVE ALSO TAKEN INTO CONSID ERATION THE PLEADINGS AND WRITTEN SUBMISSION OF THE ASSESSEE ON THE ISSUE OF IMPOSING PENALTY U/S 271D AND 271E RESPECTIVELY. THE PENALTY U/S 26 9SS AND 269T ARE LEVIED WHEN LOAN OR DEPOSIT IS ACCEPTED AND REPAID OTHER THAN ACCOUNT PAYEE CHEQUE OR BANK DRAFT IN EXCESS OF RS. 20,000/ -. THESE PROVISIONS WERE FOR THE PURPOSE TO COUNTERACT THE EVASION OF T AX BY CASH TRANSACTION IN RESPECT OF LOAN AND DEPOSITS. HOWEVER, THE PENAL TY UNDER THESE SECTIONS ARE NOT IMPOSABLE WHEN THE ASSESSEE ESTABLISHES THA T THERE WAS A REASONABLE CAUSE FOR SUCH FAILURE ON THE PART OF TH E ASSESSEE. THE ASSESSEE IS RUNNING A SCHOOL IN THE RENTED PREMISES BY ITS K EY MANAGERIAL PERSON NAMELY SHRI GAURAV SHARMA AND SHRI B.B. SHARMA. THE SCHOOL IS ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 8 AFFILIATED WITH RAJASTHAN BOARD WHICH IS HINDI MEDI UM SCHOOL. THE SCHOOL WAS NOT GROWING RATHER IT WAS IN DECLINING T REND AND THE REVENUE OF THE SCHOOL WAS DEPLETING. THE ASSESSEE SOCIETY S UFFERED DEFICIT OF RS. 6,37,842 DUE TO FALL IN THE REVENUE. THE TOTAL REVE NUE FELL FROM RS.81,42,451 DURING THE F.Y. 2011-12 TO RS. 69,36,9 00/- IN THE F.Y. 2013-14. FOR DEVELOPING INFRASTRUCTURE, SHRI B.B. S HARMA, KEY MANAGERIAL PERSON, TOOK MORTGAGE LOAN OF RS. 35.00 LACS FROM UCO BANK BY MORTGAGING PERSONAL HOUSE AND THAT LOAN WAS USED TO ACQUIRE THE LAND FOR EXPANSION. THE KEY MANAGERIAL PERSON GAVE THEIR FOUR HOUSES TO THE SCHOOL OUT OF WHICH TWO WERE GIVEN WITHOUT RENT AND FOR TWO HOUSES NOMINAL RENT OF RS. 10,000/- EACH PER MONTH WERE BE ING CHARGED. EVEN THE RENT WAS NOT BEING PAID REGULARLY BY THE SOCIET Y. THE RENT OF RS. 1,49,110/- WAS PAID IN CASH ON NINE OCCASIONS AGAIN ST RENT AMOUNT WHICH WAS CREDITED IN THE ACCOUNT OF SHRI GAURAV SHARMA. THERE WAS A DEBIT OF JOURNAL ENTRY OF RS. 90,000/- FROM OTHER ACCOUNT O F SHRI GAURAV SHARMA. THE SECOND ACCOUNT OF SHRI GAURAV SHARMA CONSISTED OF A CREDIT OF RS. 2.40 LACS AS AGAINST RENT OF RS. 1.20 LACS TO THE HOUSE BELONGING TO HIM AND RS. 1.20 LACS TO THE HOUSE BELONGING TO HIS FAT HER SHRI B.B. SHARMA. IT WAS DUE TO THE ERROR THAT THERE WERE TWO ACCOUNTS O PENED FOR SHRI GAURAV ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 9 SHARMA AND ALSO SHARE OF RENT OF SHRI B.B. SHARMA W AS SHOWN TO THE CREDIT OF SHRI GAURAV SHARMA. THESE FACTS SUGGEST T HAT CASH PAYMENT TO SHRI GAURAV SHARMA ACCOUNT TO THE TUNE OF RS. 1,49, 110/- WERE AGAINST THE RENT AND THESE PAYMENTS CANNOT BE TERMED AS DE POSITS. THE ASSESSEE HAS EXPLAINED THAT THESE CASH PAYMENT DEPOSITS AND CASH REPAYMENTS WERE MADE TO REDUCE THE MANAGERIAL HARDSHIP AND FOR THE PURPOSE OF BUSINESS EXIGENCY. ALL THESE TRANSACTIONS WERE BONA FIDE AND THERE WAS NO VIOLATION TO THE INTENT OF INSERTION OF SECTION 269 SS AND 269T OF THE ACT. THE ASSESSEE HAS FILED THE ENTRYWISE EXPLANATION, E .G. THE CASH DEPOSIT OF RS. 20,000/-ON 11-10-2013 IN THE BANK WAS DIRECTLY DEPOSITED BY SHRI GAURAV SHARMA FOR PAYMENT OF SALARY TO THE SCHOOL S TAFF. SIMILARLY, THE CASH AMOUNT OF RS. 50,000/- WAS DEPOSITED BY THE DI RECTOR SHRI GAURAV SHARMA FOR CHEQUE CLEARANCE OF ASNA ASSOCIATES AGAI NST BUILDING CONSTRUCTION. THUS AT THE FACE OF IT, THESE CASH DE POSITS OF LOANS AND REPAYMENT WERE MADE EITHER IN BUSINESS EXIGENCY OR PAYMENT OF RENT OR OTHER LIABILITIES. IT IS ALSO PERTINENT TO MENTION THAT THE ASSESSEE SOCIETY WAS GRANTED EXEMPTION U/S 10(23C)(VI) OF THE ACT BY ITAT JODHPUR BENCH IN ITA NO.495/JP/JODH/2015 VIDE ITS ORDER DAT ED 29-11-2016 HOLDING THE INTENTION AND PURPOSE OF THE ASSESSEE S OCIETY AS BONA FIDE. ITA NO.1001/JP/2017 CENTRAL PUBLI C SCHOOL SHIKSHA SAMITI VS ADDL. CIT (EXEMPTION), JAIPUR 10 HENCE, CONSIDERING THE TOTALITY OF THE FACTS AND CI RCUMSTANCES OF THE CASE, WE HOLD THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN CO NFIRMING THE PENALTY U/S 271D AND 271E OF THE ACT. THUS BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 3.0 IN THE RESULT, THE APPEALS OF THE ASSESSEE ARE ALLOWED ORDER PRONOUNCED IN THE OPEN COURT ON 21-05-2018. SD/- SD/- FOT; IKY JKO HKKXPUN (VIJAY PAL RAO) ( BHAGCHAND) U;KF;D LNL; / JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21/05/ 2018 *MISHRA VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- CENTRAL PUBLIC SCHOOL SHIKSHA SAMIT I, KOTA 2. IZR;FKHZ@ THE RESPONDENT- ADDL. CIT (EXEMPTION),JAIPUR 3. VK;DJ VK;QDRVIHY@ CIT(A). 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 1001/JP/2016) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR