ACIT, CC -IV, Kolkata, Kolkata V. Sri Mansur Ali Laskar, Kolkata

ITA 1094/KOL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54771 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2007-2008
• Appeal Filed On: 12-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K PARAMANIK
• Assessee Lawyers: S L KOCHAR
• Keywords: Reasonable cause; Tax effect

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. 1094/KOL/2011 %& ''( %& ''( %& ''( %& ''(/ // / ASSESSMENT YEAR: 2007-08 ASSISTANT COMMISSIONER OF INCOME-TAX, VS. SRI MA NSUR ALI LASKAR C.C. IV, KOLKATA. (PAN:ABAPL 2197 A) (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING: 29.12.2011 DATE OF PRONOUNCEMENT: 30.12.2011 FOR THE APPELLANT: SHRI A. K. PARAMANIK FOR THE RESPONDENT: SHRI S. L. KOCHAR . / ORDER PER MAHAVIR SINGH, JM ( ' # ' # ' # ' #, , , , ! ! ! ! ) THIS APPEAL BY REVENUE IS ARISING OUT OF ORDER OF C IT(A), CETRAL-1, KOLKATA IN APPEAL NO.106/ADDL.CIT,R-1/CIT(A),(C)-I/10-11 DATED 16.05. 2011. PENALTY IN DISPUTE WAS LEVIED BY ADDL. CIT, RANGE-1(C), KOLKATA U/S. 271D OF THE ACT VIDE HIS ORDER DATED 14.09.2010. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) DELETING THE PENALTY LEVIED U/S. 271D OF THE ACT. FOR THIS, REV ENUE HAS RAISED FOLLOWING TWO GROUNDS: 1) THAT ON THE FACTS AND CIRCUMSTANCES AND IN LAW LD. CIT(A) HAS ERRED IN CANCELLING THE PENALTY ORDER PASSED U/S. 271D. 2) THAT ON THE FACTS AND CIRCUMSTANCES AND IN LAW L D. CIT(A) HAS NOT CONSIDERED THE RATIO OF DECISION IN THE CASES OF KASI CONSULTANT CORPORA TION VS. DCIT (2009) 311 ITR 419 (MAD) AND THENAMAL CHHAJJER VS. JCIT (2005) 96 ITD 210 (CHENNAI) WHICH ARE IN FAVOUR OF DEPARTMENT. 3. BRIEF FACTS ARE THAT DURING THE COURSE OF ASSESS MENT PROCEEDINGS ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS RECEIVED LOANS FROM F OLLOWING FIFTEEN PERSONS, WHO ARE RELATIVES, IN CASH: 2 ITA 1094/K/2011 MANSUR ALI LASKAR A.Y.07-08 THE ADDL. CIT, RANGE-1, CENTRAL, KOLKATA ISSUED SHO W CAUSE NOTICE AS TO WHY PENALTY U/S. 271D OF THE ACT SHOULD NOT BE LEVIED ON THE ASSESSE E FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. THE ASSESSEE REPLIED THAT ALL TH E PERSONS WHOSE NAMES HAVE BEEN STATED, ARE ASSESSEES FAMILY MEMBERS AND ASSESSEE BEING HEAD O F THE FAMILY, CASH BALANCE BELONGING TO THESE MEMBERS ARE KEPT IN ONE SAFE UNDER HIS CONTRO L AND RECORDS, THE AMOUNT AND NAMES ARE ALSO RECORDED IN ASSESSEES BOOKS OF ACCOUNT. ACCO RDING TO ASSESSEE, THESE TRUNCATIONS ARE NEITHER LOANS NOR DEPOSITS AND PURELY A FAMILY SYST EM OF KEEPING MONEY, OBVIOUSLY, NECESSARY REQUIREMENTS FOR SAFETY OF FAMILY MEMBERS AMOUNT. IT WAS CONTENDED THAT THIS IS PURELY FOR THE PURPOSE OF RECORDS ONLY. THE ASSESSEE ALSO RAISED TECHNICAL OBJECTIONS AS REASONABLE CAUSE BUT 3 ITA 1094/K/2011 MANSUR ALI LASKAR A.Y.07-08 ADDL. CIT HAS NOT ACCEPTED THE EXPLANATION OF THE A SSESSEE AND LEVIED PENALTY BY GIVING FOLLOWING FINDING: FROM THE ABOVE IT IS CLEAR THAT THE MAIN EXPLANATI ON THAT THE CASH WERE KEPT BY THE FAMILY MEMBERS FOR SAFE KEEPING BY THE ASSESSEES IS CLEARL Y AN AFTERTHOUGHT. THE OTHER SUBMISSIONS OF THE ASSESSEE ARE ALSO NOT REASONABLE AS DISCUSSED ABOVE. THE ACTUAL PURPOSE AS PER RECORD IS TAKING LOANS BY THE ASSESS EE FOR HIS OWN REQUIREMENT FOR MAKING INVESTMENTS AS REFLECTED IN THE BALANCE SHEET OF TH E ASSESSEE. IN VIEW OF THE ABOVE, THE EXPLANATIONS OF THE ASSES SEE ARE NOT AT ALL REASONABLE AND AS SUCH, I AM SATISFIED THAT THIS IS A FIT CASE FOR IM POSITION OF PENALTY U/S. 271D OF THE ACT FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS AND AC CORDINGLY, IMPOSE A PENALTY OF RS.10,07,360/-, WHICH IS EQUAL TO THE TOTAL AMOUNT OF LOANS RECEIVED I.E. RS.10,07,360/- IN SUCH VIOLATIONS. 4. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT( A), WHO CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND DELETED THE PENALTY VIDE PARA 3 .4 OF HIS APPELLATE ORDER, WHICH IS AS UNDER: 3.4. HENCE CONSIDERING ABOVE FACTS, SUBMISSION OF THE LD. A.R AND RELYING UPON THE JUDGMENT RENDERED BY THE PUNJAB AND HARYANA HIGH CO URT IN CIT V. SAINI MEDICAL STORE (2005) 277 ITR 420 (2006) 150 TAXMAN 246, IT IS HEL D THAT BONA FIDES AND GENUINENESS OF THE TRANSACTION WOULD CONSTITUTE A REASONABLE CAUS E FOR NOT INVOKING THE PROVISIONS OF SECTION 271D AND THE ASSESSEE HAD BEEN SUCCESSFUL T O SHOW REASONABLE CAUSE. ACCORDINGLY THE ACCEPTANCE OF PAYMENTS BY WAY OF CA SH AT THE HANDS OF THE ASSESEE FROM THE FAMILY MEMBERS CARRYING BUSINESS FROM THE SAME PREMISES OUGHT TO BE OVERLOOKED IN THE FACTS AND CIRCUMSTANCES OF THE CASE. AS NO PRE JUDICE WAS CAUSED TO THE REVENUE INASMUCH AS THE ASSESSEE DID NOT ATTEMPT BY THE IMP UGNED ACT TO AVOID ANY TAX LIABILITY. FURTHERMORE, A FAMILY TRANSACTION BETWEEN TWO INDEP ENDENT ASSESSEES BASED ON AN ACT OF CASUALNESS, SPECIALLY IN A CASE WHERE THE DISCLOSUR E THEREOF IS CONTAINED IN THE COMPILATION OF ACCOUNTS AND WHICH HAS NO TAX EFFECT ESTABLISHES REASONABLE CAUSE UNDER SECTION 273B. SINCE THE ASSESSEE HAD SATISFACTORILY ESTABLISHED REASONABLE CAUSE UNDER SECTION 273B, HE MUST BE DEEMED TO HAVE ESTABLISHED SUFFICIENT CAUSE FOR NOT INVOKING THE PENAL PROVISIONS OF SECTIONS 271D AGAINST HIM. ACCORDINGLY THE PENALTY ORDER PASSED UNDER SECTION 271D OF THE I. T. ACT IS CANCELLED. AGGRIEVED, NOW REVENUE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND, PARTICULARLY FROM THE ABOVE CHART, THAT AS SESSEE HAS RECEIVED THESE AMOUNTS FROM VARIOUS MEMBERS OF HIS FAMILY AND THE EXPLANATION O F THE ASSESSEE FROM THE VERY BEGINNING WAS THAT THIS CASH BALANCE BELONGING TO DIFFERENT FAMIL Y MEMBERS AND KEPT IN ONE SAFE UNDER ASSESSEES CONTROL, BEING HEAD OF THE FAMILY AND RE CORDED THESE AMOUNTS AND NAMES IN ASSESSEES BOOKS OF ACCOUNT FOR THE PURPOSE OF RECO RD. THE ASSESSING OFFICER AS WELL AS ADDL. CIT COULD NOT PROVE THAT THESE WERE LOANS AND UTILI SED BY THE ASSESSEE FOR HIS BUSINESS PURPOSE AND EVEN OTHERWISE THESE TRANSACTIONS ARE AMONG FAM ILY MEMBERS. WHETHER THIS CAN BE CALLED 4 ITA 1094/K/2011 MANSUR ALI LASKAR A.Y.07-08 LOANS OR DEPOSITS WITHIN THE MEANING OF SECTION 269 SS OF THE ACT OR NOT, THIS HAS BEEN ANSWERED BY COORDINATE BENCH DECISION IN THE CASE OF TERVIND ER SINGH SETHI VS. INCOME-TAX OFFICER, ITA NO. 1074/K/2011 ASSESSMENT YEAR 2007-08 ORDER D ATED 27.12.2011, WHEREIN IT HAS BEEN HELD AS UNDER: WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH F ACTS 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 LAC S FROM MS NAYA SETHI OUT OF WHICH LOAN OF RS. 1 LAC WAS ACCEPTED IN CASH DURING THE FY 200 6-07. THE ASSESSING OFFICER SENT A PROPOSAL TO ADDL. CIT, RANGE-32, KOLKATA FOR INITIA TING PENALTY PROCEEDINGS U/S. 271D OF THE ACT FOR VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT FOR ACCEPTING LOAN EXCEEDING RS.20,000/- I.E. RS. 1 LAC AS ON 12.4.200 6. DURING THE PENALTY PROCEEDINGS BEFORE ADDL. CIT, THE ASSESSEE CONTENDED THAT MS NA YA SETHI CERTIFIED GIVING LOAN OF RS. 1 LAC IN CASH AFTER WITHDRAWING MONEY FROM SYNDICATE BANK VIDE CHEQUE NO.554274 DATED 12.04.2006. BEFORE ADDL. CIT ASSESSEE ALSO CONTEND ED THAT HE HAS ACCEPTED LOAN FROM HIS SISTER MS NAYA SETHI FOR URGENT RETURN JOURNEY FROM DELHI TO KOLKATA FOR MEDICAL EXPENSES OF HER MOTHER. BUT DUE TO NON-AVAILABILITY OF SEAT IN THE TRAIN SHE COULD NOT TRAVEL WITH ASSESSEE, SHRI TERVINDER SINGH SETHI, WHO IS HER BR OTHER, AND HANDED OVER CASH AFTER WITHDRAWAL FROM BANK TO HER BROTHER FOR EMERGENCY M EDICAL TREATMENT OF HER MOTHER. IT WAS ALSO STATED THAT SHE HAS WITHDRAWN THE CASH AND HANDED OVER TO HER BROTHER BECAUSE THERE WAS CONTINUOUS BANK HOLIDAYS FOR FOUR DAYS FR OM APRIL 13 TO APRIL 16, 2006. THE ADDL. CIT AS WELL AS CIT(A) DURING APPELLATE STAGE HAS NOT ACCEPTED THE ABOVE REASON AS REASONABLE CAUSE. ON THAT PARTICULAR TRANSACTION I T IS CLEAR THAT THERE IS REASONABLE CAUSE AND EVEN OTHERWISE THIS TRANSACTION IS BETWEEN BROT HER 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 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 S ECTION 269SS AND 269T AND PENALTY CANNOT BE IMPOSED U/S. 271D OF THE ACT FOR VIOLATIO N OF SECTION 269SS & 269T OF THE ACT I.E. PENALTIES U/S. 271D AND 271E OF THE ACT. HON BLE GUJARAT HIGH COURT HAS CONFIRMED THE FINDING OF TRIBUNAL, WHEREIN TRIBUNAL HELD THAT ASSESSEE WAS PREVENTED 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 OPIN ED THAT THE ASSESSEE WOULD NOT VIOLATE THE PROVISIONS OF SECTIONS 269SS AND 269T OF THE AC T IF THE ASSESSEE RECEIVES AMOUNTS FROM THE FAMILY MEMBERS AND REPAYS TO DIFFERENT FAMILY M EMBERS. HONBLE GUJARAT HIGH COURT 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, TRANSACTIONS AMONG SISTER CONCERNS WAS HELD TO BE O UT OF THE PURVIEW OF SECTION 269SS IN VIEW OF THE DECISION OF HONBLE MADRAS HIGH COURT I N THE CASE CIT VS. IDHAYAM PUBLICATIONS LTD. (2006) 285 ITR 221 (MAD), WHEREIN HONBLE HIGH COURT HAS CONFIRMED THE FINDINGS OF TRIBUNAL AS THE TRIBUNAL FOUND THAT M, THE PROPRIETOR OF SISTER CONCERN WAS ONE OF THE DIRECTORS OF THE COMPANY 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 O R 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 G IVING A SUPPORT 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 5 ITA 1094/K/2011 MANSUR ALI LASKAR A.Y.07-08 NOT FALL IN THE AMBIT OF SECTION 269SS OF THE ACT. ACCORDINGLY, PENALTY LEVIED BY ADDL CIT AND SUSTAINED BY CIT(A) IS HEREBY DELETED. APPEAL OF ASSESSEE IS ALLOWED. IN VIEW OF ABOVE FACTS AND CIRCUMSTANCES OF THE CAS E, AND FOLLOWING THE DECISION OF COORDINATE BENCH CITED SUPRA, WE UPHOLD THE ACTION OF CIT(A) A ND DISMISS THE APPEAL OF THE REVENUE. 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. 7. ORDER PRONOUNCED IN OPEN COURT ON 30.12.2011. SD/- SD/- . . ! ' '' ' # # # # , ! (S. V. MEHROTRA) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED: 30TH DECEMBER, 2011 '01 %23 4' JD.(SR.P.S.) . 5 ,6 76'8- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT ACIT, CC-IV, KOLKATA. 2 ,-*+ / RESPONDENT, SHRI MANSUR ALI LASKAR, V-168, KARBAL A ROAD, KOLKATA- 700 018.. 3 . .% ( )/ THE CIT(A), KOLKATA 4. .% / CIT, KOLKATA 5 . '> ,% / DR, KOLKATA BENCHES, KOLKATA -6 ,/ TRUE COPY, .%?/ BY ORDER, #3 /ASSTT. REGISTRAR .