Abdul Karim, Kolkata V. ITO, Ward - 32(1), Kolkata, Kolkata

ITA 1099/KOL/2011

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7932 (ITAT-KOLKATA)
• Duration Of Justice: 3 year(s) 1 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2014
• Appeal Filed By: Assessee
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 18-08-2011
• Court: TRIBUNAL
• Department Lawyers: SNEHATPAL DUTTA
• Assessee Lawyers: S D VERMA
• Keywords: Reasonable cause
• Section: 273B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH C , KOLKATA [BEFORE HONBLE SRI MAHAVIR SINGH, JM & HONBLE S RI SHAMIM YAHYA, AM ] ITA NOS.10 99/KOL/2011 & 1100/KOL/2011 ASSESSMENT YEAR : 2005-06 ( APPELLANT ) (RESPONDENT) ABDUL KARIM -VS- I.T.O., WARD-32(1), KOLKATA KOLKATA (PAN:AFRPK 4799 Q) FOR THE APPELLANT SHRI S.D.VERMA, ADVOCATE FOR THE RESPONDENT SHRI SNEHATPAL DUTTA, JCIT, SR.DR DATE OF HEARING : 29.09.2014 DATE OF PRONOUNCEMENT : 14. 10.2014. ORDER PER SHRI SHAMIM YAHYA, AM THESE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AG AINST ORDER OF LD. C.I.T.(A)- XIX, KOLKATA CONFIRMING LEVY OF PENALTY U/S 271D AN D 271E OF THE I.T.ACT RESPECTIVELY AND PERTAINS TO A.YR.2005-06. ITA NO.1099/KOL/2011 : 2. UNDER THIS APPEAL THE ASSESSEE HAS RAISED THE GR OUND THAT LD. CIT(A) ERRED IN CONFIRMING PENALTY OF RS.4,95,850/- LEVIED BY AO U/ S 271D OF THE IT ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E HAS FILED HIS RETURN OF INCOME FOR A.Y.2005-06 ON 02.03.2006. THE ASSESSMENT WAS C OMPLETED U/S 147/143(3 ) OF THE ACT ON 30.12.2009. DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON PERUSAL OF LOAN CONFIRMATIONS IT WAS OBSERVED BY THE AO THAT THE AS SESSEE HAD ACCEPTED LOAN AGGREGATING TO RS.4,95,850/- IN CASH IN CONTRAVENTI ON TO PROVISION OF SECTION 269SS OF THE ACT. THE LOAN OF RS.61,350/- WAS RECEIVED FROM MISS MEHRUNESSA, LOAN OF RS.34,500/- WAS RECEIVED FROM SRI RAKESH JHA AND LO AN OF RS.4,00,000/- WAS RECEIVED FROM MD.ASHFAQUE. ALL THE ABOVE LOANS WERE ACCEPTED BY THE ASSESSEE IN CASH DURING THE RELEVANT PREVIOUS YEAR. THE ADDL.CIT, RANGE32, KOLKATA INITIATED THE PENALTY ITA NOS.10 99&1100/KOL/2011 ABDUL KARIM A.YR.2005- 06 2 PROCEEDINGS U/S 271D OF THE ACT AND A SHOW CAUSE LE TTER WAS ISSUED TO THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY U/S 271D SHOULD NOT BE IM POSED BECAUSE THE ASSESSEE HAS ACCEPTED THE LOAN IN CASH IN VIOLATION OF SECTION 2 69SS OF THE ACT. IN RESPONSE IT WAS SUBMITTED BY THE ASSESSEE THAT ALL THE LOAN TRANSAC TIONS ARE GENUINE AND BONA FIDE AND THE LOANS WERE ACCEPTED IN CASH DUE TO URGENCY OF M ONEY AND BANKING HOUR TRANSACTIONS WERE OVER. HOWEVER, THE CONTENTION OF THE ASSESSEE WAS NOT ACCEPTED BY THE AO FOR THE REASON THAT SUCH INCIDENCE CAN HAPPE N ONCE BUT NOT FIVE TIMES. IT WAS HELD BY THE ADDL.CIT THAT THE ASSESSEE HAS TAKEN CA SH LOANS IN CONTRAVENTION TO SECTION 269SS AND HENCE THE PENALTY IS A LEVIABLE U/S 271D OF THE ACT. ACCORDINGLY, HE IMPOSED THE PENALTY OF RS.4,95,850/-. 4. BEFORE LD.CIT(A) ASSESSEE REITERATED THE SUBMISS IONS MADE BEFORE THE AO. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE WAS IN URGE NT NEED OF MONEY FOR THE PURPOSE OF HIS BUSINESS AND SUFFICIENT CASH WAS NOT AVAILAB LE, THEREFORE, HE RECEIVED DEPOSITS FROM THE PERSONS CONCERNED IN CASH. IT WAS FURTHER SUBMITTED THAT DURING THE ASSESSMENT PROCEEDINGS THE AO DID NOT RAISE ANY OBJ ECTION ABOUT THE LOANS TAKEN AND HE DID NOT DOUBT TO THE GENUINENESS OF THE LOAN. IN VIEW OF ABOVE IT WAS PLEADED BY THE ASSESSEE THAT THE PENALTY IMPOSED U/S 271D MAY BE D IRECTED TO BE DELETED BECAUSE THERE IS NO LOSS OF REVENUE BY ACCEPTING THE LOAN I N CASH BY THE ASSESSEE. ASSESSEE FURTHER PLACED RELIANCE ON THE DECISION OF OMEC ENG INEERS VS CIT 294 ITR 599 (JHARKHAND). THE LD. CIT(A) DID NOT ACCEPT THE ABOV E CONTENTIONS. HE HELD THAT THE ASSESSEE HAS FAILED TO PROVE THE URGENCY OF MONEY. HE FURTHER HELD THAT MAY BE FOR THE REASON THAT AO HAS HELD THE TRANSACTIONS AS GENUINE , IT DOES NOT MEAN THAT THE ASSESSEE WOULD ACT IN VIOLATION OF PROVISION OF SECTION 269S S. AGAINST THE ABOVE THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PER USED THE RECORDS. WE FIND THAT THE ASSESSEE IN THIS CASE HAS RECEIVED THREE CASH L OANS EACH EXCEEDING RS.20,000/- THESE LOANS ARE FROM HIS MOTHER, FRIEND AND COUSIN. THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS UNABLE TO LOOK AFTE R HIS BUSINESS DAY TO DAY DUE TO ITA NOS.10 99&1100/KOL/2011 ABDUL KARIM A.YR.2005- 06 3 HIGH DIABETIC PROBLEM WHICH RESULTED IN AMPUTATION OF THREE TOES OF LEFT FOOT. HE SUBMITTED THAT HE WAS EDUCATED ONLY UPTO CLASS-IX S TANDARD AND HE WAS IGNORANT ABOUT COMPLEXITIES OF INCOME TAX LAW. BECAUSE OF EX IGENCY IN THE BUSINESS THE CASH WAS REQUIRED ON AN URGENT BASIS. MOST OF THE LOAN W AS TAKEN FROM HIS MOTHER AND COUSIN BROTHER. IT WAS FURTHER SUBMITTED THAT THE A O HAS NOT DOUBTED THE GENUINENESS AND BONA FIDE OF THE LOAN. 5.1. WE HAVE CAREFULLY CONSIDERED THE ISSUE. WE FIN D THAT ASSESSEE IS AN UNEDUCATED PERSON HAVING A VERY BAD HEALTH CONDITION. HE HAS P LEADED THAT MONEY WAS REQUIRED ON AN URGENET BASIS. HENCE THE LOAN WAS TAKEN IN CA SH. THE ASSESSEES PLEA THAT THE MONEY WAS REQUIRED ON AN URGENT BASIS HAS NOT BEEN ACCEPTED BY THE AUTHORITIES BELOW. WE FIND THAT SECTION 271D OF THE ACT WAS INT RODUCED BY THE LEGISLATURE TO DISCOURAGE THE MENACE OF BLACK MONEY. SINCE THESE T RANSACTIONS ARE GENUINE, THE ELEMENT OF BLACK MONEY IS TOTALLY RULED OUT. THE AS SESSEE HAS GIVEN AN EXPLANATION WHICH IS NOT UNREASONABLE AND IS BASED ON BUSINESS EXIGENCY. UNDER THE CIRCUMSTANCES WE ARE OF THE VIEW THAT THE TRANSACTIONS BEING GENU INE AND THE ASSESSEE HAVING OFFERED REASONABLE EXPLANATION JUSTIFYING HIS TRANSACTIONS, PENALTY LEVIED U/S 271D OF THE ACT IS NOT LEVIABLE. IN THIS CONNECTION THE CASE LAW RE LIED UPON BY THE LD. COUNSEL OF THE ASSESSEE IN THE CASE OF SMT. KUSUM DHAMANI VS. ADDL .CIT VIDE IT APPEAL NO.847 OF 2011 OF ITAT JAIPUR DATED 13 TH JUNE, 2014 IS ALSO GERMANE AND SUPPORTS THE CASE O F THE ASSESSEE. WE FURTHER FIND THAT THE LD. CIT(A) H AS NOT DEALT WITH THE DECISION OF THE HONBLE JHARKHAND HIGH COURT RELIED UPON BEFORE HIM IN THE CASE OF OMEC ENGINEERS VS CIT 294 ITR 599. THIS CASE LAW ALSO CO MES TO THE RESCUE OF THE ASSESSEE. IN THE AFORESAID DECISION IT HAS BEEN HELD THAT HELD, THAT THERE WAS NO FINDING OF THE ASSESSING A UTHORITY, THE APPELLATE AUTHORITY OR THE TRIBUNAL THAT THE TRANSACTION MADE BY THE ASSES SEE IN BREACH OF THE PROVISIONS OF SECTION 269 SS WAS NOT A GENUINE TRANSACTION. ON TH E CONTRARY, THE RETURN FILED BY THE ASSESSEE WAS ACCEPTED AFTER SCRUTINY UNDER SECTION 143(3) OF THE ACT. FURTHER, THERE WAS NO FINDING OF THE APPELLATE AUTHORITY THAT THE TRAN SACTION IN BREACH OF THE AFORESAID PROVISIONS MADE BY THE ASSESSEE WAS ACCEPTED AFTER SCRUTINY UNDER SECTION 143(3) OF THE ACT. FURTHER, THERE WAS NO FINDING OF THE APPELLATE AUTHORITY THAT THE TRANSACTION IN BREACH OF THE AFORESAID PROVISIONS MADE BY THE ASSE SSEE WAS MALA FIDE AND WITH THE SOLE OBJECT TO CONCEAL MONEY. CONSEQUENTLY, PENALTY IMPO SED UNDER SECTION 271D MERELY ON TECHNICAL MISTAKE COMMITTED BY THE ASSESSEE, WHICH HAD NOT RESULTED IN ANY LOSS OF REVENUE, WAS HARSH AND COULD NOT BE SUSTAINED IN LA W. ITA NOS.10 99&1100/KOL/2011 ABDUL KARIM A.YR.2005- 06 4 5.2. WE FURTHER NOTE THAT HONBLE PUNJAB AND HARYAN A HIGH COURT IN THE CASE OF CIT VS SAINI MEDICAL STORE [2005] 277 ITR 420 HAS H ELD AS UNDER :- 6.2. AS POINTED OUT EARLIER, THERE IS NO DOUBT ABO UT THE GENUINENESS OF THE TRANSACTIONS WHICH HAVE BEEN FULLY ACCEPTED IN THE ASSESSMENT MADE FOR THE YEAR UNDER CONSIDERATION. EVEN IF, THERE IS ANY IGNORANC E, WHICH RESULTED IN THE INFRACTION OF LAW, THE DEFAULT IS TECHNICAL OR VENI AL WHICH DID NOT PREJUDICE THE INTERESTS OF THE REVENUE AS NO TAX AVOIDANCE OR TAX EVASION WAS INVOLVED. TO MY MIND, BONA FIDE BELIEF COUPLED WITH THE GENUINENESS OF THE TRANSACTIONS WOULD CONSTITUTE REASONABLE CAUSE U/S 273B FOR NOT INVOKI NG THE PROVISIONS OF SECTION 271E OF THE ACT. THE IMPUGNED ORDER OF PENALTY IS C ANCELLED. 5.3. IN THE BACKGROUND OF AFORESAID DISCUSSION AND PRECEDENTS WE HOLD THAT THE ASSESSEE WAS NOT LIABLE FOR PENALTY U/S 271D. HENCE WE DIRECT THAT THE PENALTY BE DELETED. ITA NO.1100/KOL/2011 6. THE ASSESSEE CHALLENGES THE ORDER OF THE LD. CIT (A) DATED 24.05.2011 WHEREIN THE LEVY OF PENALTY OF RS.78,000/- U/S 271E OF THE ACT HAS BEEN CONFIRMED. 7. THE BRIEF FACTS OF THE CASE ARE AS UNDER :- DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS OBSERVED BY THE AO THAT DURING THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAD REPAID LOAN AMOUNT OF RS.78,000/- TO SAYED NASIM AHMED IN CASH. SINCE THE ASSESSEE HAS R EPAID LOAN IN CASH IN VIOLATION TO PROVISION OF SECTION 269T, THEREFORE THE ADDL.CIT, RANGE-32, KOLKATA HAS INITIATED PENALTY PROCEEDINGS U/S 271E OF THE ACT. A SHOW CAU SE NOTICE WAS ISSUED TO THE ASSESSEE TO EXPLAIN AS TO WHY PENALTY SHOULD NOT BE IMPOSED U/S 271E OF THE ACT. IN RESPONSE IT WAS SUBMITTED BY THE ASSESSEE THAT THE LOAN TRANSACTIONS WAS GENUINE AND BONAFIDE AND HE HAS REPAID THE LOAN IN CASH DUE TO URGENCY AND BECAUSE OF THE REASON THAT THE BANKING HOUR WERE OVER. HOWEVER, THE CONTE NTION OF THE ASSESSEE WERE NOT ACCEPTED BY THE AO AND HE IMPOSED PENALTY OF RS.78, 000/- U/S 271E OF THE ACT. 8. UPON ASSESSEES APPEAL THE LD. CIT(A) CONFIRMED THE LEVY OF PENALTY ON THE GROUND THAT THE ASSESSEE HAS FAILED TO EXPLAIN AND SUBSTANTIATE THE REASONS FOR WHICH THE LOAN WAS PAID IN CASH IN VIOLATION OF PROVISION OF SECTION 269T OF THE ACT. ITA NOS.10 99&1100/KOL/2011 ABDUL KARIM A.YR.2005- 06 5 AGAINST THE ABOVE ORDER THE ASSESSEE IS IN APPEAL B EFORE US. 9. WE HAVE HEARD BOTH THE COUNSEL AND CAREFULLY PER USED THE RECORDS. WE FIND THAT THE ASSESSEE HAS REPAID THE LOAN IN CASH AMOUNTING TO RS.78,000/- . THE LD. COUNSEL OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE WAS UNABLE TO LOOK AFTER HIS BUSINESS DAY TO DAY DUE TO HIGH DIABETIC PROBLEM WHICH RESULTED IN AMPUTATION OF THREE TOES OF LEFT FOOT. HE SUBMITTED THAT HE WAS EDUCATED ONLY UPTO C LASS-IX STANDARD AND HE WAS IGNORANT ABOUT COMPLEXITIES OF INCOME TAX LAW. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTED THAT THE PAYMENT OF CASH WAS MADE AT THE REQUEST OF THE LENDER UNDER THE BONA FIDE BELIEF. WE FIND THAT THE ASSESSEE HAS SUBMITTED THAT THE LOAN WAS REPAID IN CASH ON THE REQUEST OF THE LENDER AND THE ASSESS EE WAS UNDER BONA FIDE BELIE THAT REPAYMENTS UNDER SUCH REQUEST CAN BE MADE IN CASH. WE FIND THAT SECTION 273B OF THE ACT PROVIDES THAT NO PENALTY SHALL BE IMPOSED IF AS SESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAILURE. WE FIND THAT IN THIS CASE THE ASSESSEE IS AN UNEDUCATED PERSON STUDIED ONLY UPTO CLASS-IX STANDA RD AND WAS HAVING A BAD HEALTH CONDITION WITH AMPUTATION OF HIS TOES. HE WAS UNDER BONA FIDE BELIEF THAT THE REPAYMENTS OF LOAN IN CASH ON THE REQUEST OF THE LE NDER IS PERMISSIBLE. WE FURTHER NOTE THAT THERE IS NO ALLEGATION THAT REPAYMENT WAS NOT GENUINE. UNDER THESE CIRCUMSTANCES WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSEE SHOULD NOT BE VISITED WITH THE LEVY OF PENALTY U./S 271E OF THE ACT. IN T HIS CONNECTION WE ALSO NOTE THAT THE CASE LAWS REFERRED IN OUR ADJUDICATION IN ITA NO.10 99/KOL/2011 ABOVE ALSO COME TO THE RESCUE OF THE ASSESSEE. ACCORDINGLY WE HOLD TH AT WE DIRECT THAT LEVY OF PENALTY U/S 271E OF THE ACT BE DELETED. 10. IN THE RESULT BOTH THE APPEALS OF THE ASSESSEE STAND ALLOWED. ORDER PRONOUNCED IN THE COURT ON 14.10.2014. SD/- SD/- [ MAHAVIR SINGH ] [SHAMIM YAHYA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATE: 14.10.2014. R.G.(.P.S.) ITA NOS.10 99&1100/KOL/2011 ABDUL KARIM A.YR.2005- 06 6 COPY OF THE ORDER FORWARDED TO: 1. ABDUL KARIM, 25A, CAMAC STREET, SHOP NO.G53, KOLKAT A-700016. 2 I.T.O., WARD-32(1), KOLKATA 3 . CIT(A)-XIX, KOLKATA 4. CIT - KOLKATA. 5. CIT-DR, KOLKATA BENCHES, KOLKATA TRUE COPY, BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES