Tervinder Singh Sethi, Kolkata V. ITO, Ward - 32(4), Kolkata, Kolkata

ITA 1074/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54774 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 05-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K ROY
• Assessee Lawyers: BINOD SHARMA
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: KOL KATA () BEFORE . . , ! '# '# '# '# /AND ' # , ! ) [BEFORE SHRI S. V. MEHROTRA, AM & SRI MAHAVIR SINGH , JM] #$ #$ #$ #$ / I.T.A NO. 1074/KOL/2011 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2007-08 TERVINDER SINGH SETHI VS. INCOME-TAX OFFICER, WD-32(4), KOLKATA (PAN: AIQPS 3987 G) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 27.12.2011 DATE OF PRONOUNCEMENT: 27.12.2011 FOR THE APPELLANT: SHRI BINOD SHARMA FOR THE RESPONDENT: SHRI S. K. ROY . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XIX, KOLKATA IN APPEAL NO.24/CIT(A)-XIX/ITO,WD-32(4),KOL/10-11 DATED 31.05 .2011. ASSESSMENT WAS FRAMED BY ITO, WD-32(4), KOLKATA U/S.143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2007-08 VIDE HIS ORDER DA TED 27.11.2009. PENALTY IN DISPUTE WAS LEVIED BY ADDL. CIT, RANGE-32, KOLKATA U/S. 271D OF THE ACT VIDE HIS ORDER DATED 24.05.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE PENALTY LEVIED U/S. 271D OF THE ACT. FOR THIS, ASS ESSEE HAS RAISED FOLLOWING GROUNDS: 1) THAT ON THE FACTS OF CASE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) WAS NOT JUSTIFIED IN CONFIRMING PENALTY U/S. 271D IMPOSED B Y ADDL. CIT RANGE 32 AMOUNTING TO RS.1,00,000/- WHICH IS ARBITRARY, UNWARRANTED AND B AD IN LAW. A) THAT THE ASSESSING OFFICER NOT INITIATED PENALTY PROCEEDING IN COURSE OF ASSESSMENT PROCEEDING, BUT THE ADDL CIT INITIATED PENALTY PROC EEDING U/S.271D BY ISSUING SHOW CAUSE NOTICE DATED 3.2.20 10 AFTER ASSESSMENT PROCE EDING BARRED BY LIMITATION AND THEREBY NOTICE U/S.274 READ WITH SECTION 271 OF IT ACT 1961 DATED 3.2.20 10 ITSELF BAD IN LAW. B)THAT ON THE FACTS OF CASE LD. CIT ( APPEALS) WAS NOT JUSTIFIED IN NOT CONSIDERING THE ACCOMMODATION OF SUM AMONGST THE FAMILY MEMBER AS C URRENT ACCOUNT AND NOT A LOAN BECAUSE THERE WAS NO STIPULATION NOR ANY INTEREST C HARGED FOR SUM ACCOMMODATED AMONGST THE FAMILY MEMBERS. THE SUM ADVANCED BY SIS TER AMOUNTING TO RS. 1,00,000/- IN CASH TO APPELLANT DUE TO CONTINUOUS FOUR DAYS BANK HOLIDAY AND FOR EMERGENCY OF MEDICAL ATTENTION OF THEIR MOTHER. THE APPELLANT HAVING NO KNOWLEDGE ABOUT THE VARIOUS PROVISION OF ACT, WHICH DULY ADMITTED BY HIM BEFORE ADDL. CIT AND THEREBY ALSO CONSTITUTE REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF ACT. 2 ITA 1074/K/2011 TERVINDER SINGH SETHI A.Y.07-08 3. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER DURING THE COURS E OF ASSESSMENT PROCEEDINGS NOTICED THAT THE ASSESSEE HAS ACCEPTED LOAN OF RS.29.30 LACS FROM MS NAYA SETHI OUT OF WHICH LOAN OF RS. 1 LAC WAS ACCEPTED IN CASH DURING THE FY 2006-07. THE AS SESSING OFFICER SENT A PROPOSAL TO ADDL. CIT, RANGE-32, KOLKATA FOR INITIATING PENALTY PROCE EDINGS U/S. 271D OF THE ACT FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT FOR ACCE PTING LOAN EXCEEDING RS.20,000/- I.E. RS. 1 LAC AS ON 12.4.2006. DURING THE PENALTY PROCEEDING S BEFORE ADDL. CIT, THE ASSESSEE CONTENDED THAT MS NAYA SETHI CERTIFIED GIVING LOAN OF RS. 1 L AC IN CASH AFTER WITHDRAWING MONEY FROM SYNDICATE BANK VIDE CHEQUE NO.554274 DATED 12.04.20 06. BEFORE ADDL. CIT ASSESSEE ALSO CONTENDED THAT HE HAS ACCEPTED LOAN FROM HIS SISTER MS NAYA SETHI FOR URGENT RETURN JOURNEY FROM DELHI TO KOLKATA FOR MEDICAL EXPENSES OF HER M OTHER. BUT DUE TO NON-AVAILABILITY OF SEAT IN THE TRAIN SHE COULD NOT TRAVEL WITH ASSESSEE, SH RI TERVINDER SINGH SETHI, WHO IS HER BROTHER, AND HANDED OVER CASH AFTER WITHDRAWAL FROM BANK TO HER BROTHER FOR EMERGENCY MEDICAL TREATMENT OF HER MOTHER. IT WAS ALSO STATED THAT S HE HAS WITHDRAWN THE CASH AND HANDED OVER TO HER BROTHER BECAUSE THERE WAS CONTINUOUS BANK HOLID AYS FOR FOUR DAYS FROM APRIL 13 TO APRIL 16, 2006. THE ADDL. CIT AS WELL AS CIT(A) DURING A PPELLATE STAGE HAS NOT ACCEPTED THE ABOVE REASON AS REASONABLE CAUSE. ON THAT PARTICULAR TRA NSACTION IT IS CLEAR THAT THERE IS REASONABLE CAUSE AND EVEN OTHERWISE THIS TRANSACTION IS BETWEE N BROTHER AND SISTER, IT CANNOT BE TREATED AS LOAN OR DEPOSIT IN STRICTER SENSE IN TERMS OF SECTI ON 269SS OF THE ACT OR FOR THAT PURPOSE FOR LEVY OF PENALTY U/S. 271D OF THE ACT. WE FIND THAT HONB LE GUJARAT HIGH COURT IN THE CASE OF CIT VS. NATVARLAL PURSHOTTAMDAS PAREKH (2008) 303 ITR 5 (GUJ) HAS NOTED THE FACT AND GIVEN FINDING THAT AMOUNTS, WHICH ARE MERE BOOK ENTRIES A ND TRANSACTIONS ON BEHALF OF FAMILY MEMBERS DOES NOT VIOLATE THE PROVISIONS OF SECTION 269SS AND 269T AND PENALTY CANNOT BE IMPOSED U/S. 271D OF THE ACT FOR VIOLATION OF SECTI ON 269SS & 269T OF THE ACT I.E. PENALTIES U/S. 271D AND 271E OF THE ACT. HONBLE GUJARAT HIG H COURT HAS CONFIRMED THE FINDING OF TRIBUNAL, WHEREIN TRIBUNAL HELD THAT ASSESSEE WAS P REVENTED BY 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 NOT VIOLATE THE PROVISIONS OF SECTIONS 269SS AND 269T OF THE ACT IF THE ASSESSEE RECEIVES AMOUNTS FROM THE FAMILY MEMBERS AND REPAYS TO DIFFERENT FAMILY MEMBERS. HONBLE GUJARA T HIGH COURT HAS CONFIRMED THAT THIS IS A REASONABLE CAUSE EVEN THOUGH ASSUMING THAT THERE WA S VIOLATION BY ASSESSEE UNDER SECTIONS 269SS AND 269T OF THE ACT. EVEN OTHERWISE SIMILARL Y, TRANSACTIONS AMONG SISTER CONCERNS WAS HELD TO BE OUT OF THE PURVIEW OF SECTION 269SS IN V IEW OF THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE CIT VS. IDHAYAM PUBLICATIONS LTD. (2006) 285 ITR 221 (MAD), WHEREIN 3 ITA 1074/K/2011 TERVINDER SINGH SETHI A.Y.07-08 HONBLE HIGH COURT HAS CONFIRMED THE FINDINGS OF T RIBUNAL AS THE TRIBUNAL FOUND THAT M, THE PROPRIETOR OF SISTER CONCERN WAS ONE OF THE DIRECTO RS OF THE COMPANY AND THERE WAS A RUNNING ACCOUNT IN HIS NAME AND IT DOES NOT ATTRACT PROVISI ONS 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 T HAT OF LOAN OR DEPOSIT AND IT WAS ONLY A CURRENT ACCOUNT IN NATURE AND NO INTEREST WAS BEING CHARGED IN THE ABOVE TRANSACTION. GOING THROUGH THE FACTS OF CASE BEFORE US, WE ARE OF THE VIEW THAT THE TRANSACTION BETWEEN ASSESSEE AND HIS SISTER NAMELY, MS NAYA SETHI FOR GIVING A SUPPO RT AND HELP AND NOT DENIED BY REVENUE, IN LAW WAS NOT A LOAN OR DEPOSIT IN STRICTER SENSE OF SECTION 269SS OF THE ACT AND IT WAS ONLY A FINANCIAL SUPPORT. ONCE THIS IS THE POSITION, THE TRANSACTION DOES NOT FALL IN THE AMBIT OF SECTION 269SS OF THE ACT. ACCORDINGLY, PENALTY LEVIED BY AD DL CIT AND SUSTAINED BY CIT(A) IS HEREBY DELETED. APPEAL OF ASSESSEE IS ALLOWED. 4. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED. 5. ORDER PRONOUNCED IN OPEN COURT. SD/- SD/- . . ! ' '' ' # # # # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED : 27 TH DECEMBER, 2011 '01 %23 4' JD.(SR.P.S.) . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT SHRI TERVINDER SINGH SETHI, P-13, DARGA ROAD, PARK CIRCUS, KOLKATA-700 017. 2 ,-*+ / RESPONDENT, ITO, WARD-32(4), KOLKATA. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . '> ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%?/ BY ORDER, #3 /ASSTT. REGISTRAR .