JCIT, V. Sri Sushil Kr. Agarwal,

ITA 11/PAT/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 1191 (ITAT-PATNA)
• Duration Of Justice: 6 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-08-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 11-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K VERMA
• Assessee Lawyers: S K RASTOGI
• Keywords: Question of law
• Section: 273B; 27

Judgement Text

1 ITA NOS. 11 & 12/PAT/2016. IN THE INCOME TAX APPELLATE TRIBUNAL, PATNA BENCH, PATNA. BEFORE SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER. (S.M.C.) I.T.A. NOS. 11 & 12/PAT/2016. ASSESSMENT YEAR : 2010 - 11. JOINT COMMISSIONER OF INCOME - TAX, SHRI SUSHIL KUMAR AGARWAL, RANGE - 3, PURNIA. VS. SAHARSA. APPELLANT. RESPONDENT. APPELLANT BY : SHRI S.K. VERMA. RESPONDENT BY : SHRI S.K. RASTOGI. DAT E OF HEARING : 05 - 08 - 2016 DATE OF PRONOUNCEMENT : 22 ND AUGUST, 2016 O R D E R TH ESE ARE APPEALS BY THE REVENUE AGAINST THE ORDER S OF LEARNED CIT(APPEALS) FOR ASSESSMENT YEAR 2010 - 11 CHALLENGING THE ORDERS PASSED U/S 271D AND 271E RESPECTIVELY. 2. ITA NO. 11/PAT/2016: GROUNDS OF APPEAL READ AS UNDER : 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), BHAGALPUR HAS FAILED TO APPRECIATE THE FACT THAT THE LOANS TAKEN BY THE ASSESSEE IS IN VIOLATION OF THE PROVISION OF SECTION 269SS OF T HE INCOME - TAX ACT,1961. 2. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), BHAGALPUR HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE NEITHER INFORMED THE ASSESSING OFFICER DURING THE ASSESSMENT STAGE ABOUT PROPOSED PARTITION OF HUF NOR DURI NG THE PENALTY HEARING STAGE, PRODUCED ANY SUBSTANTIAL EVIDENCE TO SUSTAIN HIS CLAIM OF PROPOSED 2 ITA NOS. 11 & 12/PAT/2016. PARTITION OF HUF AND HOW THE ACCEP0TING OF SUCH LOANS WERE RELATED WITH THE PARTITION OF HUF. 3. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), BHAGALPUR HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COULD NOT EXPLAINED THAT THERE WAS A REAL EXIGENCY THAT COMPELLED HIM TO ACCEPT THE LOAN BY WAY OF PASSING JOURNAL ENTRIES. 4. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), BHAGALP UR HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE HAS NOT TAKEN LOAN FROM ANY SINGLE HUF BUT FROM THE INDIVIDUALS AND FIVE HUFS. THE ASSESSEE HAS NOT FILED ANY SUBSTANTIAL EVIDENCE/DOCUMENT TO SHOW IN HOW MANY HUFS HE IS A MEMBER AND IN WHICH HUF THER E WAS A PROPOSED PARTITION. 3. IN THIS CASE THE AO FOUND THAT THE ASSESSEE HAS ACCEPTED AN AMOUNT OF RS.17,42,791/ - FROM NAND KISHORE AGRAWAL & SONS BY WAY OF JOURNAL ENTRIES. THE AO TREATED THIS ACCEPTANCE OF LOAN AS V IOLATION OF PROVISIONS OF SECTION 26 9SS OF THE I.T. ACT AND ACCORDINGLY PENALTY U/S 271D WAS IMPOSED AMOUNTING TO RS.17,42,791/ - . 4. BEFORE THE LEARNED CIT(APPEALS) ALSO THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS NOT ACCEPTED OR REPAID ANY LOAN IN CASH. IT WAS SUBMITTED THAT BOOKS OF ACCOU NTS OF THE ASSESSEE CLEARLY INDICATE THAT CREDIT ENTRY IN THE NAME OF HUF (NAND KISHORE AGRAWAL & SONS) AMOUNTING TO RS.17,42,791/ - WAS DEBITED WITH CORRESPONDING CREDIT IN THE NAMES OF THE INDIVIDUALS WHO ARE MEMBERS OF HUF. HENCE IT WAS STATED THAT THER E IS NO INVOLVEMENT OF CASH EITHER BY MAKING REPAYMENT AND/OR ACCEPTING THE LOAN. THE ASSESSEE ALSO PLACED RELIANCE UPON THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. WORLDWIDE TOWNSHIP PROJECTS LTD. 367 ITR 433. CONSIDERING THE ABOVE, LE ARNED CIT(APPEALS) HELD AS UNDER : (1) THE APPELLANT HAS NOT ACCEPTED ANY LOAN BY WAY OF CASH ABOVE OF RS.20,000/ - . THE RECEIPT OF LOAN OF 17,42,791/ - NOTED BY THE AO IS BY WAY OF JOURNAL ENTRY. THE LOANS WERE APPEARING IN THE BOOKS OF THE APPELLANT FROM SEVERAL INDIVIDUALS AND HUFS TOTALLING TO RS.17,42,791/ - AND THIS 3 ITA NOS. 11 & 12/PAT/2016. AMOUNT WAS SHSIFTED IN THE BOOK AS HAVING BEEN RECEIVED FROM NAND KISHORE AGARWAL & SONS HUF BY WAY OF JOURNAL ENTRY. (2) IN THE PENALTY PROCEEDINGS THE APPELLANT HAD CONTENDED THAT THE CI RCUMSTANCES NECESSITATING THE REPAYMENT OF LOAN THROUGH JOURNAL ENTRIES WERE EXPLAINED AND ACCORDINGLY, THE PENALTY SHOULD NOT HAVE BEEN LEVIED AS PER PROVISION OF SECTION 273B OF THE INCOME TAX ACT, 1961. (3) THE DECISION OF HONBLE HIGH COURT DIS CUSSED A BOVE IS DIRECTLY APPLICABLE TO THE FACTS OF THIS CASE. 5. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. 6. I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT IN THE PRESENT APPEAL THERE IS NO CASE OF ASSESSEE ACCEPTING OR REPAYING ANY LOAN IN CASH OR OTHERWISE. THIS IS A CASE OF JOURNAL ENTRY WHEREIN CREDIT/LOAN OF RS.17,42,791/ - APPEARING IN THE NAME OF THE HUF NAND KISHORE AGRAWAL & SONS WHICH WAS COMING FROM EARLIER YEAR HAS BE EN SQUARED OF BY DEBITING THE AMOUNTS TO VARIOUS MEMBERS OF THE HUF. SO THIS IS A SIMPLE CASE OF CREDIT ENTRY WHICH WAS COMING FROM EARLIER YEAR IN THE NAME OF ONE PARTY AND HUF NOW STANDING IN THE NAME OF VARIOUS MEMBERS OF THE HUF THROUGH THE JOURNAL E NTRY. THERE IS A LACK OF PROPER APPRECIATION OF BOOK KEEPING BY THE AO. I FIND THAT THE LEARNED CIT(APPEALS) IS QUITE CORRECT IN HIS APPELLATE ORDER THAT PROVISIONS OF SECTION 269SS ARE NOT ATTRACTED AND HENCE THERE IS NO QUESTION OF LEVY OF PENALTY U/S 27 1D OF THE I.T. ACT. IN THIS REGARD THE DECISION OF HONBLE DELHI HIGH COURT REFERRED BY THE LEARNED CIT(APPEALS) DULY SUPPORTS THE CASE OF THE ASSESSEE. I MAY GAINFULLY REFER TO THE EXPOSITION FROM HONBLE DELHI HIGH COURT IN THE ABOVE SAID CASE AS UNDER : WHILE HOLDING THAT PROVISIONS OF SECTION 269SS OF THE ACT WERE NO T ATTRACTED, THE TRIBUNAL HAS NOTICED THAT: (I) IN THE INSTANT CASE, THE TRANSACTION WAS BY AN ACCOUNT PAYEE CHEQUE, (II) NO PAYMENT ON ACCOUNT WAS MADE CASH EITHER BY THE ASSESSEE OR ON ITS BEHALF, (III) NO LOAN WAS ACCEPTED BY THE ASSESSEE IN CASH, AND (IV) THE PAYMENT OF RS.4.85 CRORES MADE BY THE ASSESSEE THROUGH IL&FS, WHICH HOLDS MORE THAN 30 PER CENT 4 ITA NOS. 11 & 12/PAT/2016. OF THE PAID - UP CAPITAL OF THE ASSESSEE, BY JOURNAL ENTRY IN THE BOOKS OF ACCOUNT OF THE ASSESSED BY CREDITING THE ACCOUNT OF IL&FS. HAVING REGARD TO T HE AFORESAID NOTED FINDINGS, WHICH ARE ESSENTIALLY FINDINGS OF FACT, WE ARE A COMPLETE AGREEMENT WITH THE TRIBUNAL THAT THE PROVISIONS OF SECTION 269SS WERE NOT ATTRACTED ON THE FACTS OF THE CASE. ADMITTEDLY, NEITHER THE ASSESSEE NOR IL&FS HAD MADE ANY PA YMENT IN CASH. THE ORDER OF THE TRIBUNAL DOES NOT GIVE RISE TO ANY QUESTION OF LAW MUC H LESS A SUBSTANTIAL QUESTION OF LAW. WE ACCORDINGLY DECLINE TO ENTERTAIN THE APPEAL. DISMISSED. 7. ACCORDINGLY RESPECTFULLY FOLLOWING THE PRECEDENT AS ABOVE, I UPHO LD THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY THE REVENUES APPEAL STANDS DISMISSED. 8. ITA NO.12/PAT/2016: GROUNDS OF APPEAL READ AS UNDER : 1) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), BHAGALPUR HAS FAILED TO APPRECIATE THE FACT THAT THE LOANS REPAID BY THE ASSESSEE IS IN VIOLATION OF THE PROVISION OF SECTION 269T OF THE INCOME TAX ACT, 1961. 2) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), BHAGALPUR HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE COULD NOT EXPL AINED THAT THERE WAS A REAL EXIGENCY THAT COMPELLED HIM TO REPAY THE LOAN BY PASSING JOURNAL ENTRY. 3) UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A), BHAGALPUR HAS FAILED TO APPRECIATE THE FACT THAT THE ASSESSEE NEITHER INFORMED THE ASSESSING OFFICER DURING THE ASSESSMENT STAGE ABOUT PROPOSED PARTITION OF HUF NOR DURING THE PENALTY HEARING STAGE, ANY SUBSTANTIAL EVIDENCE TO SUSTAIN HIS CLAIM OF PROPOSED PARTITION OF HUF AND HOW THE REPAYMENT OF SUCH LOANS WERE RELATED WITH THE PARTITION OF HUF. 9. THIS APPEAL IS RELATED TO THE A PPEAL DEALT WITH ABOVE. IN THE PENALTY ORDER THE AO STATED THAT THE ASSESSEE HAS REPAID AN AMOUNT OF RS.17,42,791/ - TO NAND KISHORE AGRAWAL & SONS BY WAY OF JOURNAL ENTRIES. THE AO TREATED THE SAME AS 5 ITA NOS. 11 & 12/PAT/2016. VIOLATION OF PROVIS IONS OF SECTION 269T. ACCORDINGLY PENALTY U/S 271E AMOUNTING TO RS.17,42,791/ - WAS IMPOSED. 10. ON SIMILAR REASONING AS IN THE APPEAL PERTAINING TO PENALTY U/S 271D, LEARNED CIT(APPEALS) DELETED THE PENALTY HOLDING AS UNDER : AFTER CONSIDERING THE FINDING OF THE AO IN PENALTY ORDER AND SUBMISSION OF THE APPELLANT I FIND THAT : (1) THE APPELLANT HAS NOT REPAID ANY LOAN BY WAY OF CASH ABOVE OF RS.20,000/ - . (2) IN THE PENALTY PROCEEDINGS THE APPELLANT HAD CONTENDED THAT THE CIRCUMSTANCES NECESSITATING THE REP AYMENT OF LOAN THROUGH JOURNAL ENTRIES WERE EXPLAINED AND ACCORDINGLY, THE PENALTY SHOULD NOT HAVE BEEN LEVIED AS PER PROVISION OF SECTION 273B OF THE INCOME TAX ACT, 1961. (3) THE DECISION OF HONBLE DELHI HIGH COURT DISCUSSED ABOVE IS DIRECTLY APPLICABLE TO THE FACTS OF THIS CASE. 11. AGAINST THE ABOVE ORDER, REVENUE IS IN APPEAL BEFORE THE ITAT. 12, I HAVE HEARD BOTH THE COUNSEL AND PERUSED THE RECORDS. I FIND THAT THIS PENALTY LEVIED IS ALSO IN CONNECTION WITH THE SAME JOURNAL ENTRIES WHICH HAVE BEEN REFE RRED AND DISCUSSED IN ITA NO. 11/PAT/2016 ABOVE. ON THE BASIS OF THE SAME REASONING AS IN THE ADJUDICATION OF THE AFORESAID APPEAL, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(APPEALS). ACCORDINGLY I UPHOLD THE SAME. 13. IN THE RESULT, BOTH TH ESE APPEALS OF THE REVENUE STAND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 22 ND DAY OF AUGUST, 2016. SD/ - ( SHAMIM YAHYA) ACCOUNTANT MEMBER. DATED: 22 ND AUGUST, 2016. 6 ITA NOS. 11 & 12/PAT/2016. COPY FORWARDED TO : 1. SHRI SUSHIL KUMAR AGARWAL, PROP. M/S SHIV SHANKAR TRADING CO., DURGASTHAN ROAD, SAHARSA. 2. J.C.I.T., RANGE - 3, SAHARSA. 3. C.I.T. - , PATNA. 4. CIT(APPEALS), - , PATNA. 5. D.R., ITAT, PATNA. 6. GUARD FILE TRUE COPY BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, NAGPUR BENCH, NAGPUR. WAKODE.