M/s Lakhpat Singh Contractors, Gwalior V. Asstt. C.I.T., Range-3, Gwalior

ITA 12/AGR/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 56900 (ITAT-AGRA)
• Duration Of Justice: 1 year(s) 1 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 01-03-2012
• Assessment Year: 2005-2006
• Appeal Filed On: 10-01-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K SHARMA
• Assessee Lawyers: RAVI AGARWAL
• Keywords: Bonafide belief; Reasonable cause; Assessment record

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, AGRA BENCH, AGRA BEFORE : SHRI BHAVNESH SAINI, JUDICIAL MEMBER & SHRI A. L. GEHLOT, ACCOUNTANT MEMBER ITA NO. 12/AGRA/2011 ASST. YEAR : 2005-06 M/S. LAKHPAT SINGH CONTRACTORS, VS. A.C.I.T., RAN GE-3, 39, SHIVAJI NAGAR, THATIPUR, GWALIOR. GWALIOR (PAN : AAAFL 6483 G) (APPELLANT) (RESPONDENT) FOR ASSESSEE : SHRI RAVI AGARWAL, ADVOCATE. FOR REVENUE : SHRI A.K. SHARMA, JR. D.R. DATE OF HEARING : 01.03.2012 DATE OF PRONOUNCEMENT : 02.03.2012 ORDER PER BHAVNESH SAINI, J.M. : THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF LD. CIT(A), GWALIOR DATED 15.11.2010 FOR THE ASSESSMENT YEAR 20 05-06, CHALLENGING THE LEVY OF PENALTY U/S. 271E OF THE INCOME-TAX ACT. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE IS ENGAGED IN THE BUSINESS OF CIVIL CONTRACTS WITH GOVERNMENT AND SEMI-GOVERNM ENT DEPARTMENTS. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED TH AT THE APPELLANT HAD MADE REPAYMENT OF UNSECURED LOAN OF RS.2,00,000/- IN CAS H TO M/S. J.P. ENTERPRISES ON DIFFERENT DATES IN THE MONTH OF JULY, 2004. THE ASS ESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271E OF THE IT ACT. AFTER CONSIDER ING ASSESSEES REPLY TO SHOW ITA NO. 12/AGRA/2011 2 CAUSE NOTICE AS UNSATISFACTORY, THE ASSESSING OFFIC ER IMPOSED A PENALTY OF RS.2,00,000/- AGAINST THE ASSESSEE U/S. 271E OF THE IT ACT. THE PENALTY ORDER WAS ASSAILED IN APPEAL BEFORE THE LD. CIT(A) WHEN THE A SSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO AND PLACED RELIANCE ON THE CASE LAWS, WHICH WERE RELIED BEFORE THE AO. IT WAS SUBMITTED THAT THE REP AYMENT OF LOAN WAS MADE IN CASH UNDER PRESSURE OF THE LENDER FIRM AND PARTNERS OF T HE FIRM INSISTED TO MAKE CASH PAYMENT, AS THE REPAYMENT OF LOAN WAS ALREADY OVERD UE SINCE LAST YEAR. IT WAS ALSO SUBMITTED THAT THE ASSESSEE WAS UNDER THE BONA FIDE BELIEF AND IMPRESSION THAT SUCH REPAYMENTS CAN BE MADE IN CASH WHEREAS LOANS AND DE POSITS ARE TO BE ACCEPTED ONLY THROUGH ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT. 3. THE LD. CIT(A) CONSIDERING THE SUBMISSIONS OF TH E ASSESSEE IN THE LIGHT OF THE MATERIAL ON RECORD CONFIRMED THE PENALTY AND DI SMISSED THE APPEAL OF THE ASSESSEE. HIS FINDINGS IN THE APPELLATE ORDER IN PA RA 4 & 5 ARE REPRODUCED AS UNDER : 4. APPELLANTS SUBMISSIONS ALONG WITH PENALTY ORDE R HAVE BEEN CONSIDERED CAREFULLY. ASSESSMENT RECORDS HAVE ALSO BEEN PERUSED. THE APPELLANT HAS MAINLY RELIED ON THE FACT THAT TRANSA CTIONS ARE GENUINE AND CASH REPAYMENTS HAVE BEEN MADE UNDER BONA FIDE BELIEF. ON PERUSAL OF RECORDS, IT IS SEEN THAT THE APPELLANT F IRM HAS TAKEN A LOAN OF RS.6,00,000/- ON 24.03.2003 FROM M/S. J.P. ENTER PRISES, GWALIOR. DURING A.Y. 2004-05, VARIOUS TRANSACTION HAVE BEEN CARRIED OUT WITH THE SAME PARTY BY THE APPELLANT FIRM AND CONSEQUENT LY CLOSING BALANCE OF RS.2,52,500/- HAS BEEN SHOWN IN ITS BOOS OF ACCO UNTS. THIS INCLUDES INTEREST AMOUNT ALSO. ALL THE TRANSACTIONS DURING T HE SAID PERIOD HAVE BEEN MADE BY ISSUE OF CHEQUES ONLY, WHICH HAVE MOST LY BEEN ISSUED FROM SBI, GWALIOR A/C NO. 60285. HOWEVER, DURING TH E ASSESSMENT YEAR UNDER CONSIDERATION THE APPELLANT HAS CHOSEN, FOR THE REASONS ITA NO. 12/AGRA/2011 3 BEST KNOWN TO IT, TO MAKE BALANCE REPAYMENT OF THE OUTSTANDING LOAN IN CASH ONLY ON DIFFERENT DATES IN THE MONTH OF JUL Y, 2004, EACH AMOUNT EXCEEDING RS.20,000/-. THE APPELLANT FIRM HA S ALSO STATED TO HAVE REGULAR BUSINESS TRANSACTIONS WITH THE SAID M/ S. J.P. ENTERPRISES EVEN IN EARLIER AND SUBSEQUENT YEARS. THUS, THERE W AS NO REASON FOR IT TO INSIST REPAYMENT OFRS.2,00,000/- ONLY OUT OF THE TOTAL LOAN AMOUNT OF RS.6,00,000/- TO BE MADE IN CASH. THE APPELLANT HAS ALSO FAILED TO GIVE ANY EVIDENCE SUPPORTING THIS SUBMISSION. THE O THER CONTENTION OF THE APPELLANT THAT THE CASH REPAYMENT OF LOAN HAS B EEN MADE UNDER BONAFIDE BELIEF IS ALSO NOT BORNE OUT FROM THE INTE NTION AND CONDUCT OF THE TRANSACTING PARTIES. FURTHER, THE FACTS OF THE CASE LAWS RELIED ON BY THE APPELLANT ARE ALSO FOUND DIFFERENT FROM THE FAC TS IN THE APPELLANTS CASE. THUS, THE APPELLANT HAS FAILED TO PROVE, WITH REASONABLE CAUSE, THE REASON FOR NON-COMPLIANCE AND CONTRAVENTION OF PROVISIONS OF SECTION 269T OF THE IT ACT. ALSO THE RELIANCE PLACE D BY THE APPELLANT ON THE LEGISLATIVE HISTORY OF SECTION 269S AND 269T EXPLAINED BY THE CBDT AT THE TIME OF INTRODUCTION OF THESE SECTIONS IS ALSO OF NO HELP TO IT AS IT HAS FAILED TO EXPLAIN THE REASONABLE CAUSE AND URGENCY OF BUSINESS NECESSITIES FORCING HIM TO MAKE PART REPAY MENT OF UNSECURED LOAN OTHERWISE THAN THROUGH AN ACCOUNT PAYEE CHEQUE OR AN ACCOUNT PAYEE BANK DRAFT. THUS, THE APPELLANT HAS INDEED CO MMITTED DEFAULT AND IS FOUND LIABLE FOR PENALTY U/S. 271E OF THE IT ACT. AO HAS RIGHTLY IMPOSED PENALTY OF RS.2,00,000/- WHICH IS EQUAL TO THE AMOUNT OF REPAYMENT OF LOAN/DEPOSIT MADE BY THE APPELLANT DUR ING THE RELEVANT PERIOD IN CONTRAVENTION OF PROVISIONS OF SECTION 26 9T. THE SAME IS, HEREBY CONFIRMED ACCORDINGLY. 5. IN THE RESULT, THE APPEAL IS DISMISSED. 4. THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND REFERRED TO PAGE 6 OF THE PAP ER BOOK, WHICH IS REPLY BEFORE THE ASSESSING OFFICER, IN WHICH IT WAS EXPLAINED TH AT THE ASSESSEE FIRM HAS SHOWN REPAYMENT IN THE BOOKS OF ACCOUNT ON THE SAME DATES AS SHOWN BY THE RECIPIENT. THEREFORE, THE TRANSACTIONS BETWEEN THE ASSESSEE AN D THE RECIPIENT ARE GENUINE. COPY OF ACCOUNT IS ALSO FILED AT PAGE 10 OF THE PAP ER BOOK. IT WAS ALSO EXPLAINED ITA NO. 12/AGRA/2011 4 THAT THE RECIPIENT HAD INSISTED TO MAKE CASH PAYMEN T. THEREFORE, THE ASSESSEE WAS UNDER BONA FIDE BELIEF TO MAKE PAYMENT IN CASH. HE HAS SUBMITTED THAT THE ASSESSEE HAS REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF LAW. HE HAS RELIED UPON THE DECISION OF HONBLE SUPREME COURT IN THE C ASE OF HINDUSTAN STEELS LTD. VS. STATE OF ORISSA, 83 ITR 26(SC) AND THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF ITO VS. SAINI MEDICAL STO RE, 277 ITR 420, IN WHICH IT WAS HELD THAT IF THE ASSESSEE HAS SHOWN REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF LAW, PENALTY SHOULD NOT BE IMPOSE D. 5. ON THE OTHER HAND, THE LD. DR RELIED UPON THE OR DERS OF THE AUTHORITIES BELOW AND THE DECISION OF HONBLE ALLAHABAD HIGH COURT IN THE CASE OF CHAUBEY OVERSEAS CORPN. VS. CIT, 303 ITR 9, IN WHICH IT WAS HELD THA T APPLICABILITY OF SECTION 269T IS NOT DEPENDENT ON FACTS AS TO WHETHER TRANSACTION IS GENUINE OR OF DOUBTFUL CHARACTER. THE GENUINE DEPOSITS ARE ALSO COVERED U/ S. 269T OF THE IT ACT. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND DO NOT FIND ANY JUSTIFICATION TO INTERFERE IN THE ORDER OF THE LD. CIT(A). THE FA CTS NOTED BY THE LD. CIT(A) IN THE IMPUGNED ORDER HAVE NOT BEEN DISPUTED BY THE ASSESS EE. THE LD. CIT(A) ON FACTS FOUND THAT LOAN WAS TAKEN IN EARLIER YEAR AND TRANS ACTIONS HAVE BEEN CARRIED OUT BETWEEN THE PARTIES IN EARLIER AS WELL AS SUBSEQUEN T YEAR. THE LD. CIT(A) ALSO FOUND THAT INTEREST WAS ALSO INCLUDED IN THE AMOUNT AND THAT SUBSTANTIAL TRANSACTIONS HAVE BEEN CARRIED BY ISSUING OF CHEQUES ONLY. ONLY PART PAYMENTS HAVE BEEN MADE IN CASH ON DIFFERENT DATES. THE ASSESSEE TOOK THE PLEA THAT SINCE THE PARTY INSISTED FOR ITA NO. 12/AGRA/2011 5 CASH PAYMENT, THEREFORE, CASH PAYMENT WAS MADE, BUT SUCH CONTENTION OF THE ASSESSEE WAS NOT SUPPORTED THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. EVEN BEFORE US, NO EVIDENCE IS FILED TO SUPPORT THE CONT ENTION SO RAISED BEFORE THE AUTHORITIES BELOW. IN THE ABSENCE OF ANY EVIDENCE T O SUPPORT THE CONTENTION OF THE ASSESSEE, WE DO NOT FIND ANY JUSTIFICATION TO INTER FERE WITH THE ORDER OF LD. CIT(A). THE FINDING OF FACT RECORDED BY THE LD. CIT(A) IS, THEREFORE, CONFIRMED. SINCE NO EVIDENCE IS FILED IN SUPPORT OF THE EXPLANATION, TH EREFORE, THE DECISIONS CITED BY THE LD. COUNSEL FOR THE ASSESSEE WOULD NOT SUPPORT THE CASE OF THE ASSESSEE. IN VIEW OF THE ABOVE FACTS, WE DO NOT FIND ANY MERIT IN APPEAL OF THE ASSESSEE. THE SAME IS ACCORDINGLY DISMISSED. 7. IN THE RESULT, THE APPEAL IS DISMISSED. SD/- SD/- (A.L. GEHLOT) (BHAVNESH SAINI) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 ND MARCH, 2012 *AKS/- COPY OF THE ORDER FORWARDED TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A), CONCERNED BY ORDER 4. CIT, CONCERNED 5. DR, ITAT, AGRA 6. GUARD FILE ASSISTANT REGISTRAR TRUE COPY