Shri Rajendra Suryavanshi, Solapur V. ACIT Range-1., Solapur

ITA 1078/PUN/2009

• Counselvise Citation: 107824514 RSA 2009
• Duration Of Justice: 1 year(s) 6 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 24-03-2011
• Assessment Year: 2003-2004
• Appeal Filed On: 10-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ABHAY DAMLE
• Keywords: Reasonable cause; Ignorance of law; Set aside
• Section: 273B; 143(3); 271D; 271E; 274; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER AND SHRI G.S. PANNU, ACCOUNTANT MEMBER I.T.A. NO. 1078/PN/09 (ASSTT. YEARS: 2003-04) RAJENDRA SURYAVANSHI, .. APPELLANT PROP. PARHT ENTERPRISES, A/P ANAWALI, PANDHARPUR, SOLAPUR. PAN AJWPS3707M VS. ASSTT. COMMISSIONER OF INCOME-TAX, R-1, SOLAPUR .. RESPONDENT APPELLANT BY: SHRI S N PURANIK RESPONDENT BY: SHRI ABHAY DAMLE ORDER PER G.S. PANNU, AM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-III, PUNE DATE D 27.7.2009 WHICH, IN TURN, HAS ARISEN FROM A PENALTY ORDER DATED 29.8.2008 PAS SED BY THE ASSESSING OFFICER UNDER SECTION 271D OF THE INCOME-TAX ACT, 1961 (IN SHORT THE ACT), PERTAINING TO THE ASSESSMENT YEAR 2003-04. 2. THE DISPUTE IN THIS APPEAL RELATES TO THE LEVY O F PENALTY UNDER SECTION 271D OF THE ACT FOR THE ASSESSMENT YEAR 2003-04. TH E RELEVANT FACTS, IN BRIEF, ARE THAT WHILE COMPLETING THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT IN THE CASE OF THE ASSESSEE, THE ASSESSING OFFICER OBSERVED THA T THE ASSESSEE HAD ACCEPTED LOANS OR DEPOSITS HAVING AGGREGATE AMOUNT OF RS 20,000/- OR MORE OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE/DRAFT, TO TALING TO RS 28,34,000/-, THUS CONTRAVENING THE PROVISIONS OF SECTION 269SS O F THE ACT. IN RESPONSE TO NOTICE UNDER SECTION 271D READ WITH SEC. 274 OF THE ACT ISSUED BY THE ADDITIONAL COMMISSIONER OF INCOME-TAX, THE ASSESSEE SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS, WHILE VERIFYING THE CURRENT ACCOUNT OF RAJENDRA SINGH ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 2 SURYAVANSHI HUF IN THE BOOKS OF RAJENDRA SINGH SURA VANSHI (INDIVIDUAL) AND VICE VERSA, THE GENUINENESS OF THE TRANSACTIONS WAS NOT DOUBTED BY THE ASSESSING OFFICER; THAT THE ACCOUNT OF HUF IN THE B OOKS OF INDIVIDUAL IS CURRENT ACCOUNT AND THE TRANSACTIONS WERE NEITHER LOAN NOR ADVANCE AND NO INTEREST WAS PAID/CHARGED IN THE SAID CURRENT ACCOUNT. HOWEVER, THE ASSESSEE COULD NOT PRODUCE THE BOOKS OF ACCOUNT OF THE TWO CONCERNS. A S PER THE ADDITIONAL COMMISSIONER OF INCOME-TAX, NEITHER THE GENUINENESS OF TRANSACTIONS WAS FREE FROM DOUBT NOR THERE WAS ANY REASONABLE CAUSE FOR B ORROWING IN CASH IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. HOLD ING THAT THE ASSESSEE HAD BREACHED THE PROVISIONS OF SECTION 269SS AND THUS M ADE ITSELF LIABLE FOR LEVY OF PENALTY UNDER SECTION 271D OF THE ACT, THE ADDITION AL COMMISSIONER OF INCOME- TAX LEVIED A PENALTY OF RS 31,78,500/- AGAINST WHIC H THE ASSESSEE PREFERRED AN APPEAL BEFORE THE COMMISSIONER OF INCOME-TAX (APPEA LS). 3. BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS), IT WAS FIRSTLY SUBMITTED BY THE ASSESSEE THAT HE WAS ASSESSED IN DUAL CAPACI TY VIZ. IN INDIVIDUAL CAPACITY AS WELL AS IN HUF CAPACITY; THE CASH OF INDIVIDUAL AND HUF WERE IN MIXED COFFERS AND WHENEVER REQUIRED, THE SAME WAS USED AND ENTRIE S WERE MADE IN THE BOOKS ACCORDINGLY. IT WAS THEN SUBMITTED THAT THE ASSESS EE WAS MANAGING TWO BUSINESSES SINGLE HANDEDLY AND WAS NOT AWARE THAT S UCH TRANSACTIONS COULD BE A SUBJECT MATTER OF PENALTY UNDER SECTION 271D OF THE ACT. RELIANCE WAS PLACED ON THE DECISION OF THE TRIBUNAL, BANGALORE BENCH IN TH E CASE OF ADDL. CIT V D SUDHAKAR & ANR 19 DTR 276 (BANG)(TRIB) TO CONTEND T HAT THERE MUST BE AT LEAST TWO PERSONS CASH PAYER AND RECIPIENT SO AS TO A TTRACT PENALTY UNDER SECTION 271D/271E. FURTHER IT WAS CONTENDED THAT THE PENALT Y ORDER SHOULD HAVE BEEN PASSED BEFORE 31.3.2008 OR BEFORE 31.8.2008, WHICHE VER IS LATER, IN TERMS OF SECTION 275(1)(C) AND THEREFORE, PENALTY ORDER WAS BAD IN LAW AS IT WAS PASSED AFTER THE PRESCRIBED TIME. THE ASSESSEE FURTHER SUB MITTED THAT THE PUNE BENCH IN THE CASE OF BHOJWANI BROTHERS & CONSULTANCY SERVICE S P. LTD. IN ITA NO 1009/PN/2002 HAD CANCELLED PENALTY HOLDING THAT THE EXPRESSION REASONABLE CAUSE HAD TO BE CONSIDERED PRAGMATICALLY AND IF TH E ASSESSEE HAD BONA FIDE ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 3 BELIEF THAT UTILIZATION OF FUNDS OF SISTER CONCERN BY IT WAS NOT COVERED BY THE PROVISIONS OF SECTION 269SS, PENALTY WILL NOT BE AT TRACTED, PROVIDED THE DEPOSITS WERE GENUINE AND WERE ACCEPTED IN THE REGULAR COURS E OF BUSINESS. IT WAS THEREFORE SUBMITTED THAT IN VIEW OF THE ABOVE JUDIC IAL PRONOUNCEMENTS AND FACTS OF THE CASE, PENALTY LEVIED BY THE ASSESSING OFFICE R UNDER SECTION 271D BE CANCELLED. 4. WITH REGARD TO THE CONTENTION OF THE ASSESSEE TH AT THERE HAS TO BE TRANSACTION BETWEEN TWO PERSONS SO AS TO ATTRACT PR OVISIONS OF SECTION 271D, THE COMMISSIONER OF INCOME-TAX (APPEALS) HELD THAT THE SAID REQUIREMENT WAS FULFILLED, AS THE TRANSACTIONS IN QUESTION WERE BET WEEN RAJENDRA SURVAVANSHI (INDIVIDUAL) AND RAJENDRA SURVAVANSHI (HUF). AS RE GARDS THE CONTENTION OF THE ASSESSEE THAT THE ORDER IMPOSING PENALTY WAS BARRED BY LIMITATION, THE COMMISSIONER OF INCOME-TAX (APPEALS) FOUND NO MERIT , AS ACCORDING TO HIM, PENALTY PROCEEDINGS CAN BE SAID TO BE VALIDLY INITI ATED ONLY WITH THE ISSUANCE OF THE PENALTY NOTICE AND IN THE INSTANT CASE, THE PEN ALTY NOTICE WAS ISSUED ON 25.2.2008 AND THE ORDER UNDER SECTION 271D WAS PASS ED BEFORE 31.8.2008, I.E. WITHIN THE PRESCRIBED TIME LIMIT OF SIX MONTHS. THE COMMISSIONER OF INCOME-TAX (APPEALS) FURTHER HELD THAT SINCE THERE WAS NO DENI AL OF THE FACT THAT THE ASSESSEE HAD ACCEPTED DEPOSITS IN CASH IN VIOLATION OF THE P ROVISIONS OF SEC. 269SS, PROVISIONS OF SEC. 271D WERE RIGHTLY INVOKED BY TH E ADDL. COMMISSIONER OF INCOME-TAX. THE COMMISSIONER OF INCOME-TAX (APPEALS ) REJECTED THE ASSESSEES PLEA REGARDING INFRINGEMENT OF THE PROVISIONS OF SE CTION 269SS OUT OF IGNORANCE OF LAW. IN VIEW OF THE ABOVE FINDINGS, THE COMMISSI ONER OF INCOME-TAX (APPEALS) ULTIMATELY HELD THAT THE ASSESSEE HAD DELIBERATELY AND CONSCIOUSLY CONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE ACT WITHOUT ANY REASONABLE CAUSE AND, THEREFORE, THE ADDL. COMMISSIONER WAS JUSTIFIED IN LEVYING THE IMPUGNED PENALTY UNDER SECTION 271D OF THE ACT. AGGRIEVED WITH THE S AME, ASSESSEE IS IN FURTHER APPEAL BEFORE US. ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 4 5. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE VEHEMENTLY SUBMITTED THAT THE IMPUGNED CASH TRANSACTIONS WERE BETWEEN PR OPRIETARY CONCERN OF THE ASSESSEE AND HIS HUF. IT HAS BEEN POINTED OUT THAT THE ASSESSMENT IN THE CASE OF THE ASSESSEE INDIVIDUAL AS WELL AS THE RESPECTIV E HUF HAS BEEN COMPLETED UNDER SECTION 143(3) OF THE ACT AND THE GENUINENESS OF THE TRANSACTIONS HAVE NOT BEEN DISBELIEVED. THE ASSESSEE RECEIVED CASH ON VAR IOUS OCCASIONS DURING THE YEAR FROM HIS HUF ENTITY, WHICH WAS IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. HOWEVER, NO PENALTY SHOULD BE IMP OSED SINCE THE BREACH OF THE PROVISION WAS ONLY TECHNICAL IN NATURE BECAUSE IN SUM AND SUBSTANCE THE ASSESSEE AS AN INDIVIDUAL PROPRIETOR AND THE KARTA OF HUF IS THE SAME PERSON AND ASSESSEE WAS UNDER A BONA FIDE BELIEF THAT SUCH TRANSACTIONS WOULD NOT ATTRACT THE PROVISIONS OF SECTION 269SS OF THE ACT. IN SUPPORT OF THE AFORESAID, THE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE FO LLOWING DECISIONS: (I) ADDL. CIT V D. SUDHAKAR & ANR. 19 DTR 276 (BO M)(TRIB), (II) ITO V. SUNIL M KASLIWAL 80TTJ1 (PUNE)(TM), (III) M/S BHOJWANI BROTHERS & CONSULTANCY SERVICES P.LTD V JT. CIT - ITA NO 1009/PN/02 DATED 30.04.2003 (IV) CANARA HOUSING DEVELOPMENT CO. V ADDL. CIT 30 DTR 232 (BANG)(TRIB). 6. APART FROM THE AFORESAID, REFERENCE WAS MADE TO THE JUDGMENT OF THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF OMEC EN GINEERS V CIT 294 ITR 599 (JHARKHAND) TO ARGUE THAT WHERE THE TRANSACTION S IN BREACH OF SECTION 269SS WERE GENUINE AND THE ASSESSEES RETURN WAS ACCEPTED UNDER SECTION 143(3) OF THE ACT, IMPOSITION OF PENALTY UNDER SECTION 271D W AS NOT JUSTIFIED BECAUSE SUCH A BREACH WAS ONLY TECHNICAL IN NATURE. IT WAS ALSO POINTED OUT THAT BONA FIDE BELIEF OF THE ASSESSEE THAT SECTION 269SS WAS NOT ATTRACTE D TO A PARTICULAR TRANSACTIONS WOULD CONSTITUTE A REASONABLE CAUSE FOR THE PURPOSE OF SECTION 271D READ WITH SECTION 273B OF THE ACT. 7. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE APPEARING FOR THE REVENUE HAS DEFENDED THE ORDERS OF THE AUTH ORITIES BELOW IN SUPPORT OF THE CASE OF THE REVENUE. THE LEARNED DEPARTMENTAL R EPRESENTATIVE POINTED OUT THAT THE ASSESSEE INDIVIDUAL AND HIS HUF ARE SEPARA TE ENTITIES IN THE EYES OF AW ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 5 AND, THEREFORE, IT COULD NOT BE SAID THAT THE TRANS ACTIONS IN QUESTION HAVE BEEN ENTERED INTO BY THE SAME PERSON. IN THIS CONNECTION , IT IS ALSO POINTED OUT THAT THE ADDL. COMMISSIONER OF INCOME-TAX HAS NOTICED THAT T HE AMOUNTS WERE RECEIVED IN CASH ON VARIOUS OCCASIONS AND AT EACH TIME THE ENTR Y IN THE BOOKS OF ACCOUNT WERE MADE FOR A SUM OF RS 19,500/- WITH A VIEW TO A VOID THE PROVISIONS OF SECTION 269SS OF THE ACT. IT WAS POINTED OUT THAT THE CONDU CT OF THE ASSESSEE SHOWED THAT THE ENTRIES IN THE BOOKS OF ACCOUNT WERE MADE IN SUCH A MANNER SO AS TO AVOID THE RIGORS OF SECTION 269SS OF THE ACT AND, T HEREFORE, IN SUCH A SITUATION, IT COULD NOT BE SAID THAT THE ASSESSEE ENTERTAINED A B ONA FIDE BELIEF THAT PROVISIONS OF SECTION 269SS WERE NOT ATTRACTED TO THE FACTS OF THE CASE. 8. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS. IN THIS CASE, THE SUM AND SUBSTANCE OF THE DISPUTE REVOLVES AROUND THE PR OVISIONS OF SECTION 269SS OF THE ACT, WHICH PROHIBIT AN ASSESSEE TO ACCEPT FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT EXCEEDING RS 20,000/- OR MORE OTHERWISE THA N BY AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE BANK DRAFT. IN THE PRESE NT CASE, THE CASE MADE OUT BY THE ASSESSING OFFICER IS THAT THE PROPRIETARY CO NCERN OF THE ASSESSEE M/S PARTH ENTERPRISES WAS MAINTAINING A CURRENT ACCOUNT OF RAJENDRA SURYAVANSHI (HUF) IN ITS BOOKS. IN SUCH CURRENT ACCOUNT OF THE HUF MAINTAINED IN THE BOOKS OF THE ASSESSEE INDIVIDUAL, ASSESSEE WAS FOUND TO H AVE RECEIVED AMOUNTS IN CASH ON SEVERAL OCCASIONS AND EACH TIME THE AMOUNT RECORDED TO HAVE BEEN RECEIVED WAS BELOW RS 20,000/-, THE THRESHOLD LIMIT PRESCRIBED UNDER SECTION 269SS OF THE ACT. BE THAT AS IT MAY, THE REVENUE HA S INFERRED THAT SUCH ACCEPTANCE OF CASH WAS IN VIOLATION OF PROVISIONS O F SECTION 269SS OF THE ACT. SECTION 271D OF THE ACT PRESCRIBES THAT IF A PERSON ACCEPTS ANY LOAN OR DEPOSIT IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACT, HE SHALL BE LIABLE TO PAY BY WAY OF PENALTY A SUM EQUAL TO THE AMOUNT OF SUCH LOAN OR DEPOSIT SO TAKEN OR ACCEPTED. INVOKING THE PROVISIONS OF SECTI ON 271D OF THE ACT FOR INSTANT BREACH, THE ADDL. COMMISSIONER OF INCOME-TAX HAS IM POSED A PENALTY AMOUNTING TO RS 31,78,500/-. ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 6 9. AT THIS STAGE, IT MAY ALSO BE NOTICED THAT SECTI ON 273B OF THE ACT PRESCRIBES THAT PENALTY SHALL NOT BE IMPOSABLE FOR ANY FAILURE REFERRED TO IN SECTION 271D OF THE ACT, IF THE ASSESSEE PROVES THA T THERE WAS REASONABLE CAUSE FOR SUCH FAILURE. THEREFORE, IN THE INSTANT CASE, W HAT IS REQUIRED TO BE EXAMINED IS AS TO WHETHER THE ASSESSEE INDIVIDUAL HAD A REASONA BLE CAUSE FOR HIS FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269SS READ WI TH SECTION 271D OF THE ACT. THE FIRST AND FOREMOST FEATURE OF THE INSTANT TRANS ACTION IS THAT THE GIVER OF THE AMOUNTS AND THE RECIPIENT ARE BOTH CONTROLLED BY TH E SAME INDIVIDUAL. ADMITTEDLY, THE ASSESSEE IS AN INDIVIDUAL AND THE AMOUNTS IN QU ESTION HAVE BEEN RECEIVED BY HIS PROPRIETARY CONCERN M/S PARTH ENTERPRISES FROM ANOTHER ENTITY NAMELY SHRI RAJENDRA SURYAVANSHI (HUF), WHICH IS THE HUF OF THE ASSESSEE. THE ASPECT AS TO WHETHER A TRANSACTION OF FUNDS OF A SISTER CONCE RN USED BY ANOTHER SISTER CONCERN WOULD AMOUNT TO A LOAN OR DEPOSIT WITHIN TH E MEANING OF SECTION 269SS OF THE ACT WAS A SUBJECT MATTER OF SEVERAL DECISION S OF THE BENCHES OF THE TRIBUNAL AS NOTED BY OUR CO-ORDINATE BENCH IN THE C ASE OF BHOJWANI BROTHERS & CONSULTANCY SERVICES P LTD. (SUPRA). THE BENCH IN T HE CASE OF BHOJWANI BROTHERS AND CONSULTANCY SERVICES P. LTD (SUPRA) NOTED CONFL ICTING DECISIONS OF THE TRIBUNAL, ONE SET OF DECISIONS SAYING THAT TRANSFER OF FUNDS FROM ONE SISTER CONCERN TO ANOTHER CONCERN DOES NOT ASSUME THE CHAR ACTER OF A LOAN IN THE CONTEXT OF SECTION 269SS OF THE ACT, WHILE A CONTRA RY DECISION NOTED THAT EVEN AMOUNTS RECEIVED FROM FAMILY MEMBERS, PARTNERS AND SISTER CONCERNS FELL WITHIN THE PARAMETERS OF SECTION 269SS OF THE ACT. IT WOU LD BE RELEVANT TO EXTRACT THE FOLLOWING OBSERVATIONS FROM THE DECISION OF OUR CO- ORDINATE BENCH IN THE CASE OF BHOJWANI BROTHERS & CONSULTANCY SERVICES P LTD. (SU PRA): 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND AL SO PERUSED THE RELEVANT MATERIAL ON RECORD. AS TO WHETHER A TRANSACTION OF UTILIZATION OF FUNDS OF A SISTER CONCERN BY ANOTHER SISTER CONCERN WOULD AMOUNT TO A LOAN OR NOT WAS A SUBJECT MATTER OF SEVERAL DECISIONS OF THE VARIOUS BENCHES OF THE TRIBUNAL. ON SUCH CASE IS THE DECISI ON OF THE COCHIN BENCH OF ITAT IN THE CASE OF MUTHOOT M. GEORGE BROS. V. ACIT 46ITD 10 RELIED UPO N BY THE LEARNED COUNSEL FOR THE ASSESSEE. IN THE SAID DECISION IT HAS BEEN HELD THAT TRANSFER OF FUNDS FROM ONE SISTER CONCERN TO ANOTHER CONCERN WILL NOT ASSUME THE CHARACTER OF A LOAN ESPECIALLY WHEN THE DECISION TO TAKE OUT FUNDS AND UTILIZE THE FUNDS IS TAKEN BY THE SAME GROUP OF INDIVIDUALS . THE SAID DECISION FURTHER LAYS DOWN THAT THERE SHOULD BE EVIDENCE ON RECORD TO SHOW THAT SUCH TRAN SACTIONS WERE OF THE CHARACTER OF A LOAN. IN THE PRESENT CASE, THE ASSESSEE HAD UTILIZED CASH BELON GING TO THE SISTER CONCERNS FOR ITS BUSINESS PURPOSES AND THE QUANTUM OF CASH SO UTILIZED WAS I N EXCESS OF THE LIMITS AID DOWN IN SECTION 269SS. ACCORDING TO THE ASSESSEE, THE UTILIZATION O F CASH OF SISTER CONCERN WAS TO MEET IT BUSINESS EXIGENCY. THE CASE OF THE ASSESSEE IS THAT IT IS I TS OWN JUDGE AS TO THE EXISTENCE OF THE BUSINESS EXIGENCY. THE GRIEVANCE ON RECORD SHOWS THAT THE AS SESSEE HAD REPAID THE AMOUNTS UTILIZED BY IT FROM SISTER CONCERNS BY CHEQUES. THE AMOUNT REPAID IS THE ACTUAL AMOUNT UTILIZED WITHOUT ANY ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 7 PAYMENT OF INTEREST WHICH IS A USUAL PRACTICE IN TH E CASE OF A LOAN. THERE IS HOWEVER CONTRARY DECISION OF THE MUMBAI BENCH OF ITAT RELIED UPON TH E LEARNED DR IN THE CASE OF UNIQUE CONSTRUCTIONS V DCIT 52 TTJ 96 (BOM) WHEREIN IT HAS BEEN HELD THAT EVEN AMOUNTS RECEIVE FROM FAMILY MEMBERS, PARTNERS AND SISTER CONCERNS FELL W ITHIN THE PARAMETERS OF SECTION 269SS. AT THIS JUNCTURE, WITHOUT GOING INTO THE MERITS OF THIS ASP ECT, SUFFICE IT TO NOTE THAT THE ASSESSEE COMPANY HAD ENTERTAINED A STRONG BELIEF THAT THE AMOUNT IN QUESTION HAVING BEEN RECEIVED FROM ITS SISTER CONCERNS ONLY, THE PROVISIONS OF SECTION 269SS DEAL ING WITH THE LOANS ACCEPTED FROM ANY OTHER PERSONS ARE NOT APPLICABLE TO SUCH TRANSACTIONS CO NSIDERING THAT THE IMPUGNED TRANSACTIONS WERE NOT IN THE NATURE OF LOANS IN STRICT SENSE AND MO REOVER THE SAME WERE RECEIVED FROM THE SISTER CONCERNS. IN THIS REGARD, A USEFUL REFERENCE CAN BE MADE TO THE DECISION OF HYDERABAD BENCH OF ITAT IN THE CASE OF DILLU CINE ENTERPRISES (P) LTD V ACIT (SUPRA) WHEREIN THE CONTENTION OF THE ASSESSEE THAT THE WORDS ANY OTHER PERSON DID NOT DENOTE THE DIRECTOR OF THE COMPANY WAS FOUND TO BE ACCEPTABLE BY THE TRIBUNAL IN VIEW OF THE LEG ISLATIVE INTENTION EXPLAINED IN BOARDS CIRCULAR NO 387, DATED 6.9.94 AND RELYING ON THE SAME, THE TRIB UNAL PROCEEDED FURTHER TO OBSERVE THAT THE TERM ANY OTHER PERSON IN THE CONTEXT OF INTRODUCTION O F SECTION 269SS MEANS PERSONS WHO ARE NOT VERY INTIMATELY OR VERY CLOSELY CONNECTED TO THE ASSESSE E. ACCORDINGLY TO US, THESE OBSERVATION OF THE TRIBUNAL, WITHOUT CONSIDERING THEIR FATE ON MERITS, ARE GOOD ENOUGH TO SHOW THAT THE VIEW OF THE ASSESSEE COMPANY THAT UTILIZATION OF FUNDS OF SISTE R CONCERNS BY IT WAS NOT COVERED BY THE PROVISIONS OF SECTION 269SS WAS A POSSIBLE OR CONCE IVABLE VIEW AND THE BELIEF ENTERTAINED BY IT ON THE BASIS OF SUCH WAS A BONA FIDE BELIEF. 10. IN THE PRESENT CASE, IT IS NOT IN DISPUTE THAT THE ASSESSEE AND THE OTHER CONCERNS LENDING THE AMOUNTS IN QUESTION WERE OWNED BY MEMBERS OF TH E SAME FAMILY. IN OTHER WORDS THE GIVING AND TAKING OF CASH WAS BETWEEN MEMBERS OF THE SAME FAMI LY AND WAS IN KEEPING WITH THE NECESSITY OF FIRMS FOR BUSINESS O THE ASSESSEE. IN THESE CIRCUMS TANCES AND HAVING REGARD TO THE FORGOING DISCUSSION, IT IS QUITE EVIDENT THAT THE ASSESSEE C OMPANY WAS OF THE STRONG BELIEF THAT THE PROVISIONS OF SECTION 269SS WERE NOT ATTRACTED TO THE TRANSACTION INVOLVING UTILIZATION OF CASH OF SISTER CONCERNS BY IT AND ALTHOUGH SUCH BELIEF TURN ED OUT TO BE A MISTAKEN BELIEF IN THE FINAL ANALYSIS, IT WAS BASED ON THE POSSIBLE VIEWS ARISIN G FROM THE INTERPRETATION OF THE RELEVANT PROVISIONS IN THE LIGHT OF LEGISLATIVE INTENTION BE HIND ENACTING THE SAME AND IN THAT SENSE, THERE WAS A MISCONCEPTION OF LAW WHICH THE AUTHORITIES BELOW, IN OUR OPINION, FAILED TO APPRECIATE IN THE RIGHT PERSPECTIVE. IN THE CASE OF FARID KOT-BATHINDA KSHE TRIYA GRAMIN BANK V JCIT (SUPRA), THE AMRITSAR BENCH OF ITAT HAS HELD THAT THE BONA FIDE BELIEF AR ISING OUT OF IGNORANCE OF LAW COUPLED WITH GENUINENESS OF TRANSACTIONS WOULD CONSTITUTE A REAS ONABLE CAUSE FOR NOT INVOKING THE PENAL PROVISIONS OF SECTION 271E, WHICH ARE ALMOST IDENTI CAL TO THE PROVISIONS OF SECTION 271D. IN THE CASE OF CIT V EETACHI AGENCIES (SUPRA) THE HONBLE BOMBA Y HIGH COURT UPHELD THE ORDER OF THE TRIBUNAL DELETING THE PENALTY IMPOSED U/S 271E OBSERVING THA T THE ASSESSEE ACTED UNDER THE GENUINE BELIEF THAT SECTION 269T HAS NO APPLICATION TO THE DEPOSIT S AND IT ONLY APPLY TO LOANS. IN THE CASE OF MUTHOOT M GEORGE BANKERS V ACIT (SUPRA), THE COCHIN BENCH OF ITAT HAS HELD THAT THE ACTION OF THE ASSESSEE FIRM IN ACCEPTING THE LOANS/DEPOSITS I N CASH AS WELL AS MAKING THE REPAYMENTS OF THE SAME IN CASH COULD BE ASCRIBED TO ITS BONA FIDE BEL IEF THAT WOULD NOT ATTRACT THE PROVISIONS OF SECTION 269SS OR SECTION 269T GIVEN THE NATURE OF T HE TRANSACTIONS AND CIRCUMSTANCES OF ITS CASE AND SUCH BONA FIDE BELIEF COUPLED WITH THE GENUINEN ESS OF THE TRANSACTIONS CONSTITUTE A REASONABLE CAUSE FOR NOT INVOKING THE PROVISIONS OF SECTION 27 1D AND 271E. TO THE SIMILAR EFFECT IS THE DECISION OF JAIPUR BENCH OF ITAT IN THE CASE OF CHANDRA CEME NT LTD. V DCIT REPORTED IN 68 TTJ 35. IN THE CASE OF SREENATH BUILDERS V DCIT (SUPRA), THE AHMED ABAD BENCH OF ITAT HAS HELD THAT ORDINARILY A PLEA AS TO THE IGNORANCE OF LAW CANNOT SUPPORT THE BREACH OF A STATUTORY PROVISIONS, BUT THE FACT OF SUCH AN INNOCENT MISTAKE DUE TO IGNORANCE OF THE RE LEVANT PROVISIONS OF LAW COUPLED WITH THE FACT THAT THE TRANSACTION IN QUESTION ARE GENUINE AND BO NA FIDE TRANSACTIONS AND WERE UNDERTAKEN DURING THE REGULAR COURSE OF ITS BUSINESS, WILL CONSTITUTE A REASONABLE CAUSE. 11. IT IS A RIGHT LAW THAT THE EXPRESSION REASONAB LE CAUSE HAS TO BE CONSIDERED PRAGMATICALLY AND IF THE FACTS OF THE PRESENT CASE ARE EXAMINED K EEPING THIS LEGISLATIVE SPIRIT IN MIND, WE FIND THA T THERE WERE ENOUGH CIRCUMSTANCES TO SHOW THAT THE AS SESSEE COMPANY HAD ENTERTAINED BONA FIDE BELIEF THAT THE UTILIZATION OF FUNDS OF ITS SISTER CONCERNS BY IT WAS NOT COVERED BY THE PROVISIONS OF SECTION 269SS AND THIS BONA FIDE BELIEF COUPLED WIT H THE FACT THAT THE DEPOSITS WERE GENUINE AND WERE ALSO ACCEPTED IN THE REGULAR COURSE OF BUSINES S, IN OUR OPINION, CONSTITUTE A REASONABLE CAUSE FOR ITS FAILURE IN COMPLYING WITH THE REQUIREMENTS OF SECTION 269SS. IN THAT VIEW OF THE MATTER, WE FIND NO JUSTIFICATION IN THE ACTION OF THE LD CIT ( A) IN CONFIRMING THE PENALTY IMPOSED U/S 271D AND REVERSING HIS IMPUGNED ORDER, WE CANCEL THE PENALTY SO IMPOSED. IN FACT, THE EXPRESSION ANY OTHER PERSON APPEARIN G IN SECTION 269SS OF THE ACT IS RELEVANT TO UNDERSTAND THE PURPORT OF SECTION 26 9SS OF THE ACT. QUITE CLEARLY, SECTION 269SS OF THE ACT HAS BEEN INTRODUCED WITH T HE OBJECT OF UNEARTHING TRANSACTIONS OF UNACCOUNTED MONEY BETWEEN TWO PERSO NS. IT IS PLAUSIBLE TO DEDUCE THAT THE EXPRESSION ANY OTHER PERSON IN SECTION 269SS OF THE ACT DENOTES A PERSON NOT CLOSELY CONNECTED TO THE ASSES SEE. IT IS ALSO TRUE, AS NOTED ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 8 BY THE BANGALORE BENCH OF THE TRIBUNAL IN THE CASE OF CANARA HOUSING DEVELOPMENT CO. (SUPRA), THAT THE PROVISIONS OF SE CTION 269T, (WHICH ARE PARI MATERIA WITH SECTION 269SS) DO NOT EXPRESSLY CONFER ANY EXEMPTION FOR TRANSACTIONS BETWEEN CONNECTED PARTIES OR SISTER CO NCERNS. WITHOUT GOING INTO THE CONTROVERSY AS TO WHETHER THE TRANSACTIONS WITH SISTER CONCERNS ARE STRICTLY COVERED BY PROVISIONS OF SECTION 269SS OR NOT, IN O UR VIEW, IT WOULD BE ENOUGH TO SEE WHETHER THE ASSESSEE CAN BE SAID TO ENTERTAIN A BONA FIDE BELIEF THAT TRANSACTIONS BETWEEN SISTER CONCERNS ARE NOT HIT BY THE PROHIBITION CONTAINED IN SECTION 269SS OF THE ACT. THE BANGALORE BENCH OF TH E TRIBUNAL IN CANARA HOUSING DEVELOPMENT CO. (SUPRA) OBSERVED THAT A DIF FERENCE OF OPINION ON THIS POINT BETWEEN DIFFERENT ORDERS OF THE TRIBUNAL, SHO WED THAT THE ASSESSEE WAS JUSTIFIED IN HAVING A POSSIBLE VIEW AND IF SUCH A B ELIEF IS ENTERTAINED IN A BONA FIDE MANNER, IT WOULD SERVE AS A MITIGATING FACTOR TO AV OID THE RIGORS OF SECTION 271D READ WITH SECTION 273B OF THE ACT. IN FACT, IN THE CASE OF CIT V IDHAYAM PUBLICATIONS LTD. 285 ITR 221 (MAD), THE HONBLE HI GH COURT OBSERVED THAT ANY PAYMENTS OR REPAYMENTS MADE PURSUANT TO A CURRENT A CCOUNT MAINTAINED BETWEEN THE PARTIES, COULD NOT BE CONSIDERED AS A VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. THEREFORE, IF THE ASSESSEE IN THE PRESENT CASE HAD A BONA FIDE BELIEF THAT THE CASH TRANSACTIONS IN THE CURRENT ACCOUNT MAINTAINED WITH HIS HUF WERE NOT HIT BY SECTION 269SS, THE SAME IS IN LINE WITH THE PARITY OF REASONING ARTICULATED BY THE HONBLE MADRAS HIGH CO URT IN THE CASE OF IDHAYAM PUBLICATIONS LTD. (SUPRA) AND THE SAME, IN OUR CONSIDERED OPINION, WO ULD CONSTITUTE A REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT SO AS TO MITIGATE THE PENALTY IMPOSED UNDER SECTION 27 1D OF THE ACT. FACTUALLY SPEAKING, IN THIS CASE THE ADDL. COMMISSIONER OF IN COME-TAX HAS NOTED THAT THE IMPUGNED AMOUNTS IN CASH HAVE BEEN RECEIVED BY THE ASSESSEE ON SEVERAL OCCASIONS AND IT HAS ALSO BEEN NOTED THAT SUCH AMOU NTS HAVE ALSO BEEN ADJUSTED AGAINST RENT RECEIPT. ACCORDING TO THE ADD L. COMMISSIONER OF INCOME- TAX, THE ASSESSEE HAD NOT SHOWN THE URGENCY TO RECE IVE AMOUNT IN CASH. IN OUR CONSIDERED OPINION, THE FACTUM OF THE ASSESSEE HAVI NG RECEIVED AMOUNTS ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 9 EXCEEDING THE PRESCRIBED LIMIT FROM AN ENTITY CONTR OLLED BY HIMSELF, IS NOT IN DISPUTE. THERE IS ALSO NO MATERIAL ON RECORD TO EST ABLISH THAT THE TRANSACTIONS HAVE BEEN AIMED AT CAMOUFLAGING ANY UNACCOUNTED MON EY AND THERE IS ALSO NO REBUTTAL TO THE ASSERTION OF THE ASSESSEE THAT SUCH TRANSACTIONS HAVE BEEN ACCEPTED UNDER SECTION 143(3) OF THE ACT AFTER SCRU TINY AND, THEREFORE, IN VIEW OF THE JUDGMENT OF THE HONBLE JHARKHAND HIGH COURT IN THE CASE OF OMEC ENGINEERS (SUPRA), PENALTY UNDER SECTION 271D OF TH E ACT IS NOT SUSTAINABLE. 10. IN THE RESULT, AFTER CONSIDERING THE TOTALITY O F CIRCUMSTANCES, NAMELY, THE BONA FIDE BELIEF OF THE ASSESSEE THAT THE TRANSACTI ONS WERE EXEMPT FROM THE REQUIREMENTS OF SECTION 269SS OF THE ACT, BEING BET WEEN TWO ENTITIES CONTROLLED BY SAME PERSON; AND, THERE BEING NO MATERIAL TO SHO W THAT THE TRANSACTIONS HAVE BEEN CARRIED OUT WITH ANY INTENTION TO AVOID OR EVA DE TAXES, IN OUR OPINION, THE ASSESSEE HAS BEEN SUCCESSFUL IN SHOWING THAT THERE WAS A REASONABLE CAUSE FOR HIS FAILURE TO COMPLY WITH THE PROVISIONS OF SECTIO N 269SS OF THE ACT. ACCORDINGLY, THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEAL S) IS SET ASIDE AND THE ADDL. COMMISSIONER OF INCOME-TAX IS DIRECTED TO DELETE TH E PENALTY IMPOSED UNDER SECTION 271D OF THE ACT. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. DECISION PRONOUNCED IN THE OPEN COURT ON THIS 8TH DAY OF APRIL 2011. SD/- SD/- (SHAILENDRA KUMAR YADAV) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER PUNE: DATED: 8 TH APRIL, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. RAJENDRA SURYAVANSHI, SOLAPUR 2. ACIT R-1 SOLAPUR 3. THE CIT(A)-III, PUNE 4. THE CIT-V PUNE 5. THE D.R, A BENCH, PUNE TRUE COPY BY ORDER ASSISTANT REGISTRAR ITAT, PUNE BENCHES, PUNE ITA NO 1078/PN/09 RAJENDR A SURYAVANSHI, SOLAPUR 10