M/s P.V. Beverages (P) Ltd., New Delhi V. Addl. CIT, New Delhi

ITA 1081/DEL/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4110 (ITAT-DELHI)
• Duration Of Justice: 1 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 28-04-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 01-03-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAVI RAMA CHANDRAN SENIOR
• Keywords: Bonafide belief; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH F : NEW DELHI) SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI B.C. MEENA, ACCOUNTANT MEMBER ITA NOS.1081 & 1082/DEL./2011 (ASSESSMENT YEAR : 2007-08) M/S. P.V. BEVERAGES (P) LIMITED, VS. ADDL.CIT, RAN GE 14, 515, ANSAL CHAMBER II, NEW DELHI. BHIKAJI CAMA PLACE, NEW DELHI. (PAN : AADCP2639J) (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI RANJAN CHOPRA, CA REVENUE BY : SHRI RAVI RAMA CHANDRAN, SENIOR DR ORDER PER B.C. MEENA, ACCOUNTANT MEMBER : BOTH THE APPEALS FILED BY THE ASSESSEE ARISE OUT O F THE TWO DIFFERENT ORDERS OF CIT (APPEALS)-XVII, NEW DELHI DATED 28.1.2011. WE DISPOSE OF BOTH THE APPEALS BY THIS COMMON ORDER AS THE FACTS AND CIRCUMSTANCES ARE SIMILAR. 2. IN ITA NO.1081/DEL/2011, THE ASSESSEE HAS PLEADE D TO DELETE THE PENALTY IMPOSED U/S 271D OF RS.50,000/- WHICH HAS BEEN CONF IRMED BY THE CIT (A) AND IN ITA NO.1081/DEL/2011, THE ASSESSEE HAS PLEADED TO D ELETE THE PENALTY IMPOSED U/S 271E OF RS.20,000/- WHICH HAS BEEN CONFIRMED BY THE CIT (A). ITA NOS.1081 & 1082/DEL/2011 2 3. FIRST, WE TAKE UP ITA NO.1081/DEL/2011. THE ASS ESSEE COMPANY IS ENGAGED IN THE BUSINESS OF IMPORTING AND WHOLESALING OF AN ENERGY DRINK PHANTOM ENERGY DRINK. SHRI PRAVEEN VATS AND SMT. VANITA VATS HOLD S 50% SHARE EACH. DURING THE RELEVANT PERIOD, THE ASSESSEE COMPANY HAS RECEIVED A CASH LOAN OF RS.70,000/- FROM M/S. P.V. CARGO CARRIERS (P) LTD., A SISTER CONCERN OF THE ASSESSEE. LEARNED AR PLEADED THAT THIS AMOUNT WAS RECEIVED ON DIFFERENT DATES. HE ALSO PLEADED THAT THE ASSESSEE WAS UNDER A BONAFIDE BELIEF THAT THE CASH LOANS OF MORE THAN RS.20,000/- ATTRACTS THE PROVISIONS OF SECTION 269SS AND BEING THE SMALL AMOUNT OF LOAN, THE ASSESSEE SHOULD NOT BE VISITED BY THE PENALTY U/S 2 71D. HE ALSO PLEADED THAT THERE WAS A REASONABLE CAUSE FOR THE FAILURE TO COMPLY WI TH THE PROVISIONS OF SECTION 269SS, THEREFORE, PENALTY SHOULD NOT BE IMPOSED UPO N THE ASSESSEE. HE PLEADED THAT THERE WAS URGENT BUSINESS REQUIREMENTS FOR THE REPA YMENT OF THE CAR LOAN AND DEPOSIT OF TDS ON 1.6.2006. ASSESSEE RECEIVED CASH LOAN OF RS.15,000/- AND SAME WAS DEPOSITED IN VIJAYA BANK. SIMILARLY, ON 21.8.2 006, TO CLEAR THE URGENT BILL OF CROSS SECTION PUBLICATION (P) LTD FOR ADVERTISEMENT EXPENSES, THE ASSESSEE RECEIVED CASH LOAN OF RS.20,000/- AND SIMILARLY LOAN OF RS.1 7,500/- RECEIVED AND DEPOSITED IN BANK ON 25.10.2006 AND THE SAME AMOUNT ON 30.10.200 6 FOR PAYMENT OF THE CUSTOMS DUTY. THUS, THESE DEPOSITS WERE MADE ON DI FFERENT DATES AND TO MEET THE EMERGENCY BUSINESS NEEDS. HE ALSO PLEADED THAT THE SE WERE TEMPORARY ADVANCES, THEREFORE, THESE ARE OUT OF THE PURVIEW OF SECTION 269SS OF THE INCOME-TAX ACT. THE TEMPORARY ADVANCES SHOULD NOT BE CONSIDERED AS LOAN AND DEPOSIT. FINALLY, HE VEHEMENTLY PLEADED THAT THE ASSESSEE WAS UNDER THE BONAFIDE BELIEF THAT THE LOAN OR ITA NOS.1081 & 1082/DEL/2011 3 FUNDS OF RS.20,000/- OR LESS CAN BE TRANSACTED FROM ONES CONCERN TO THE SISTER CONCERN BY WAY OF CASH. ASSESSEE WAS UNDER BONAFID E BELIEF THAT ONLY LOAN ABOVE RS.20,000/- SHOULD BE TRANSACTED THROUGH BANKING CH ANNELS. HE ALSO PLEADED THAT THE ASSESSEES FAILURE NOT TO COMPLY WITH THE PROVI SIONS OF SECTION 269SS WAS DUE TO BONAFIDE BELIEF THAT ONLY TRANSACTIONS ABOVE RS.20, 000/- NEEDS TO BE CHANNELISED THROUGH BANKS. BY THIS BONAFIDE BELIEF, ASSESSEE V IOLATED THE PROVISIONS. THESE WERE SMALL AMOUNTS. IT WAS SUBMITTED THAT THERE WER E REASONABLE CIRCUMSTANCES IN WHICH ASSESSEE COMMITTED THE MISTAKE. THE ACT OF T HE ASSESSEE CAN REASONABLY BE SAID TO BE CAUSED BY BONAFIDE BELIEF ABOUT THE PROV ISIONS OF LAW. THEREFORE, THE ASSESSEE SHOULD NOT BE VISITED WITH THE PENALTY U/S 271D. 4. ON THE OTHER HAND, THE LEARNED DR RELIED ON THE ORDER OF THE AUTHORITIES BELOW. 5. AFTER HEARING BOTH THE SIDES, WE FIND THAT THE A SSESSEE HAS RECEIVED SMALL CASH LOANS OF RS.20,000/- OR BELOW ON FOUR OCCASION S FROM SISTER CONCERN. THE LOANS WERE TAKEN FROM SISTER CONCERN WHICH IS ALSO ASSESSED TO INCOME-TAX. THE GENUINENESS OF LOAN IS NOT IN QUESTION. THE REASON S FOR THE CASH LOAN WERE OF URGENT IN NATURE. FURTHER, THE LOANS WERE OF SMALL AMOUNT THAT TOO ON TEMPORARY BASIS. SMALL LOAN OF RS.20,000/- OR BELOW FROM SISTER CONC ERN ON FEW OCCASIONS FOR GENUINE BUSINESS URGENCY UNDER THE BONAFIDE BELIEF THAT PROVISIONS OF SECTION 269SS ARE ATTRACTED ONLY ON CASH LOANS OF MORE THAN RS.20 ,000/- APPEARS TO BE A REASONABLE EXPLANATION. CONSIDERING THE TOTALITY OF THE FACTS AND CIRCUMSTANCES, WE HOLD THAT THE VIOLATION OF THE PROVISIONS BY THE ASSESSEE ON FEW OCCASIONS WAS DUE TO BONAFIDE ITA NOS.1081 & 1082/DEL/2011 4 BELIEF THAT PROVISIONS ARE ATTRACTED ONLY WHEN AMOU NT IS MORE THAN RS.20,000/-. THUS, ASSESSEE WAS ABLE TO DEMONSTRATE THE REASONAB LE CAUSE FOR THE FAILURE. THEREFORE, WE SET ASIDE THE ORDERS OF AUTHORITIES B ELOW AND DIRECT TO DELETE THE PENALTY. 6. IN ITA NO.1082/DEL/2011, ON THE SAME REASONS, TH E PENALTY U/S 271E WAS CONFIRMED BY THE CIT (A) ON THE REPAYMENT OF THIS L OAN OF RS.20,000/- BY CASH. THE VIOLATION IN THE REPAYMENT WAS ONLY ONCE IN THE YEAR. IT WAS ALSO ON ACCOUNT OF BONAFIDE BELIEF THAT PROVISIONS ARE ATTRACTED ONLY WHEN AMOUNT IS MORE THAN RS.20,000/-. HENCE, FOLLOWING OUR REASONING AS ABO VE IN ITA NO.1081/DEL/2011, WE ALSO DELETE THE PENALTY U/S 271E. 7. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF APRIL, 2011. SD/- SD/- (R.P. TOLANI) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : THE 29 TH DAY OF APRIL, 2011 TS COPY FORWARDED TO: 1.APPELLANT 2.RESPONDENT 3.CIT 4.CIT (A)-XVII, NEW DELHI. 5.CIT(ITAT), NEW DELHI. AR, ITAT, NEW DELHI.