ITO, Ward - 2(3), Midnapore, Paschim Medinipur V. M/s. Pallishree Rice Mill, Paschim Medinipur

ITA 1045/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54703 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 26-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: N O N E
• Keywords: Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' $# , ! ) [BEFORE SHRI S. V. MEHROTRA, AM & SRI MAHAVIR SING H, JM] #% #% #% #% / I.T.A NO. 1045/KOL/2011 $&' '() $&' '() $&' '() $&' '()/ // / ASSESSMENT YEAR: 2006-07 INCOME-TAX OFFICER, WD-2(3), MIDNAPORE VS. M/S. PAL LISHREE RICE MILL (PAN:AADEP 9097 P) (+, /APPELLANT ) (-.+,/ RESPONDENT ) DATE OF HEARING: 25.11.2011 DATE OF PRONOUNCEMENT: 25.11.2011 FOR THE APPELLANT: SHRI S. K. ROY FOR THE RESPONDENT: N O N E / / ORDER PER MAHAVIR SINGH, JM ( ' $# ' $# ' $# ' $#, , , , ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVI, KOLKATA IN APPEAL NO.110/CIT(A)-XXXVI/KOL/37/R-2,MID/09-10 DATED 03.0 5.2011. ASSESSMENT WAS FRAMED BY ITO, WD-2(3), MIDNAPORE U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEARS 2006-07 VIDE HIS OR DER DATED 29.12.2008. THE PENALTY IN DISPUTE WERE LEVIED BY ADDL. CIT, RANGE-2, MIDNAPOR E U/S 271D OF THE ACT VIDE HIS ORDER DATED 17.09.2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING LEVY OF PENALTY BY ADDL. CIT U/S. 271D OF THE ACT FOR VIOLA TION OF PROVISIONS OF SECTION 269SS OF THE ACT. FOR THIS, REVENUE RAISED FOLLOWING FOUR GROUN DS OF APPEAL: 1) AT THE TIME OF PENALTY PROCEEDINGS U/S. 271D OF THE I. T. ACT, 1961 DATED 17.09.2009 A PENALTY AMOUNT OF RS.44,70,000/- WAS LEVIED FOR VIO LATION OF PROVISION OF SECTION 269SS OF THE I. T. ACT, 1961 REGARDING CASH TRANSACTION B ETWEEN THE ASSESSEE FIRM AND TWO SISTER CONCERNS. 2) AS THE MANAGEMENT OF THE ASSESSEE FIRM AND TWO S ISTER CONCERNS WERE UNDER SAME ROOF AND THE HELM OF AFFAIRS OF ALL THE CONCERNS WE RE UNDER SUBSTANTIAL NUMBER OF COMMON PARTNERS, THE BUSINESS EXIGENCY AS STATED CO ULD HAVE BEEN MADE OUT BY EASY 2 ITA 1045/K/2011 PALLISHREE RICE MILL A.Y.06-07 BANK TRANSFER AVAILABLE IN THE IMMEDIATE VICINITY O F ALL THE CONCERNS WHERE THEY OPERATED THEIR BANK A/CS. THIS VERY FACT MAY HAD BEEN OVERL OOKED BY THE LD. CIT(A) AT THE TIME OF EXAMINING THE FACTS AND CIRCUMSTANCES OF APPEAL. 3) SECTION 269SS OF THE I. T. ACT, 1961 SPECIFICALL Y PROVIDED THAT NO PERSON SHALL TAKE OR ACCEPT FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT OT HERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT EXCEEDING RS.20, 000/-. THE LD. CIT(A) HAD ERRED IN DELETING THE ENTIRE AMOUNT OF PENALTY LEVIED WITHOU T GOING THROUGH THE MATERIAL FACTS, THE ESSENCE OF SECTION 269SS OF THE I. T. ACT, 1961. 4) THE CASE LAWS USED IN THE APPELLATE ORDER FOR DE LETING PENALTY IMPOSED U/S. 271D OF THE I. T. ACT, 1961 AMOUNT OF RS.44,70,000/- ARE PU RELY DISTINGUISHABLE WITH THE FACTS OF THE CASE. ABOVE ALL, IN THE LIGHT OF THE BOARDS INSTRUCTION NO. 3/2011, DATED 09.02.2011, THE MONETARY LIMIT FOR FILING APPEAL BEFORE THE APPELLA TE TRIBUNAL IS RS.3,00,000/- CONSIDERING THE AFORESAID FACTS A 2 ND APPEAL IS STRONGLY SUGGESTED IN THIS CASE. 3. THE BRIEF FACTS LEADING TO THE ABOVE ISSUE ARE T HAT ASSESSMENT WAS COMPLETED U/S. 143(3) OF THE ACT ON 29.12.2008. DURING THE COURSE OF ASS ESSMENT PROCEEDINGS, ASSESSING OFFICER NOTICED THAT ASSESSEE HAS TAKEN DEPOSIT IN CASH, EX CEEDS RS.20,000/- FROM M/S. SREE KRISHNA ENTERPRISE AND M/S. MAA SARADA RICE MILL, LUTUNIA, SABANG, MIDNAPORE(W) TOTALING RS.16,50,000/- AND RS.28,20,000/- RESPECTIVELY (RS. 44,70,000/-) ON DIFFERENT DATES DURING THE F.Y. 2005-06 RELATING TO ASSESSMENT YEAR 2006-07, W HO ARE ASSESSEES SISTER CONCERNS, IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. ACCORDINGLY, ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271D OF THE ACT AND PENALTY WAS REFERRED TO ADDL. CIT FOR LEVY OF PENALTY U/S. 271D OF THE ACT FOR CONTRAVENT ION OF PROVISIONS OF SECTION 269SS OF THE ACT. LD. COUNSEL FOR THE ASSESSEE NOW BEFORE US STA TED THAT ADDL. CIT, RANGE-2, MIDNAPORE LEVIED PENALTY OF RS.44,70,000/- U/S. 271D OF THE A CT FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT BY ACCEPTING RS.44,70,000/-, OTHE RWISE THAN BY ACCOUNT PAYEE CHEQUE OR BANK DRAFT I.E. ACCEPTED ONLY IN CASH. ACCORDING TO ADDL. CIT, RANGE-2, KOLKATA, THIS IS A LOAN RECEIVED BY ASSESSEE IN CASH, HENCE HE LEVIED PENAL TY. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO DELETED THE PENALTY. AGGRIEVED, NOW ASSESSEE IS IN APPEALS BEFORE US. 4. WE HAVE HEARD SUBMISSIONS OF LD. DR SHRI S. K. R OY AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. IT IS A FACT THAT IN AS SESSMENT YEAR 2006-07, THE ASSESSEE HAS RECEIVED TEMPORARY CASH ADVANCES ON VARIOUS DATES F ROM TWO SISTER CONCERNS EXCEEDING RS.20,000/-, TOTALING TO RS.44,70,000/- IN VIOLATIO N OF PROVISIONS OF SECTION 269SS OF THE ACT. THESE ADVANCES WERE ADMITTEDLY IN CASH. IT IS ALSO AN ADMITTED POSITION THAT THESE CASH 3 ITA 1045/K/2011 PALLISHREE RICE MILL A.Y.06-07 ADVANCES WERE ACCEPTED BY ASSESSEE. WE ALSO FIND TH AT ASSESSEE BEFORE 1 ST APPELLATE AUTHORITY SUBMITTED THAT DUE TO BUSINESS EXIGENCY, FUNDS WER E TEMPORARILY TRANSFERRED FROM THE BOOKS OF M/S. SREE KRISHNA ENTERPRISE AND OF M/S. MAA SARADA RICE MILL TO THE ACCOUNTS OF THE ASSESSEE FIRM AS THE SAID MONEY WAS FULLY PAID BACK IN THE S AME FINANCIAL YEAR. HE ALSO SUBMITTED THAT SINCE THE ENTIRE TRANSACTION WERE MADE AMONGST THE SISTER CONCERNS AS WELL AS FOR BUSINESS EXIGENCY, THE SAME COULD NOT BE TERMED AS ADVANCE T AKEN AS HELD BY ASSESSING OFFICER AND, THEREFORE, THERE WAS NO VIOLATION OF SECTIONS 269SS AND 269T OF THE ACT AND NO PENALTY CAN ATTRACT U/S. 271D OF THE ACT IN THIS CASE. WE FIND THAT HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NATVARLAL PURSHOTTAMDAS PAREKH (2008) 30 3 ITR 5 (GUJ) HAS NOTED THE FACT AND GIVEN FINDING THAT AMOUNTS, WHICH ARE MERE BOOK ENT RIES AND TRANSACTIONS ON BEHALF OF FAMILY MEMBERS DOES NOT VIOLATE THE PROVISIONS OF SECTION 269SS AND 269T AND PENALTY CANNOT BE IMPOSED U/S. 269SS FOR VIOLATION OF SECTION 269SS & 269T OF THE ACT I.E. PENALTIES U/S. 271D AND 271E OF THE ACT. HONBLE GUJARAT HIGH COURT HA S CONFIRMED THE FINDING OF TRIBUNAL, WHEREIN TRIBUNAL HELD THAT ASSESSEE WAS PREVENTED B Y REASONABLE CAUSE IN THE LIGHT OF THE AFFIDAVIT OF ONE SHRI J. B. SHAH, THE ADVOCATE AND THE INCOME-TAX PRACTITIONER HAVING STANDING OF 33 YEARS AS HE OPINED THAT THE ASSESSEE WOULD NO T VIOLATE THE PROVISIONS OF SECTIONS 269SS AND 269T OF THE ACT IF THE ASSESSEE RECEIVES AMOUNT S FROM THE FAMILY MEMBERS AND REPAYS TO DIFFERENT FAMILY MEMBERS. HONBLE GUJARAT HIGH COU RT HAS CONFIRMED THAT THIS IS A REASONABLE CAUSE EVEN THOUGH ASSUMING THAT THERE WAS VIOLATION BY ASSESSEE UNDER SECTIONS 269SS AND 269T OF THE ACT. EVEN OTHERWISE SIMILARLY, TRANSAC TIONS AMONG SISTER CONCERNS WAS HELD TO BE OUT OF THE PURVIEW OF SECTION 269SS IN VIEW OF THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE CIT VS. IDHAYAM PUBLICATIONS LTD. (2006) 2 85 ITR 221 (MAD), WHEREIN HONBLE HIGH COURT HAS CONFIRMED THE FINDINGS OF TRIBUNAL AS TH E TRIBUNAL FOUND THAT M, THE PROPRIETOR OF SISTER CONCERN WAS ONE OF THE DIRECTORS OF THE COMP ANY AND THERE WAS A RUNNING ACCOUNT IN HIS NAME AND IT DOES NOT ATTRACT PROVISIONS OF SECTION 269SS OF THE ACT. HONBLE HIGH COURT ALSO DISMISSED THE APPEAL OF REVENUE BY HOLDING THAT THE TRANSACTION BETWEEN THE ASSESSEE AND THE DIRECTOR CUM SHAREHOLDER WAS NOT THAT OF LOAN OR DE POSIT AND IT WAS ONLY A CURRENT ACCOUNT IN NATURE AND NO INTEREST WAS BEING CHARGED IN THE ABO VE TRANSACTION. GOING THROUGH THE FACTS OF CASE BEFORE US, WE ARE OF THE VIEW THAT THE TRANSAC TION BETWEEN ASSESSEE AND ITS SISTER CONCERNS NAMELY, M/S. SREE KRISHNA ENTERPRISE AND M/S. MAA S ARADA RICE MILL FOR GIVING A SUPPORT AND HELP AND NOT DENIED BY REVENUE, IN LAW WAS NOT A LO AN OR DEPOSIT IN STRICTER SENSE OF SECTION 269SS OF THE ACT AND IT WAS ONLY A FINANCIAL SUPPOR T. ONCE THIS IS THE POSITION, THE TRANSACTION 4 ITA 1045/K/2011 PALLISHREE RICE MILL A.Y.06-07 DOES NOT FALL IN THE AMBIT OF SECTION 269SS OF THE ACT. ACCORDINGLY, APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 6. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . . , ! ' '' ' $# $# $# $# , ! (S. V. MEHROTRA (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( 0 0 0 0) )) ) DATED : 25 TH NOVEMBER, 2011 '12 $&34 $5' JD.(SR.P.S.) / 6 -$$7 87(9- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT ITO, WD-2(3), MIDNAPORE 2 -.+, / RESPONDENT, M/S. PALLISHREE RICE MILL, VILL & PO LUTUNIA, PS, SABANG, DIST. PASCHIM MEDINIPUR. 3 . $/& ( )/ THE CIT(A), KOLKATA 4. $/& / CIT, KOLKATA 5 . '$? -$& / DR, KOLKATA BENCHES, KOLKATA .7 -$/ TRUE COPY, /&@/ BY ORDER, #4 /ASSTT. REGISTRAR .