SHRI BHOWMICK RAJ SINGH, BHILAI(CG) V. THE JOINT COMMISSIONER OF INCOME TAX, BHILAI(CG)

ITA 128/BIL/2016

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7955 (ITAT-RAIPUR)
• Duration Of Justice: 5 year(s) 8 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2022
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2010-2011
• Appeal Filed On: 25-05-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Keywords: Reasonable cause
• Section: 43B; 273B; 143(3); 271D; 250; 143(2); 139(1); 13

Judgement Text

ITAT-Raipur Page 1 of 11 आयकर अपीलीय Ɋायािधकरण, Ɋायपीठ रायपुर मŐ। IN THE INCOME TAX APPELLATE TRIBUNAL, RAIPUR BENCH, RAIPUR (Through Virtual Court at Pune) BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER AND SHRI JAMLAPPA D. BATTULL, ACCOUNTANT MEMBER आयकर अपील सं. / ITA No. 128/RPR/2016 िनधाŊरण वषŊ / Assessment Year : 2010-2011 Shri Bhowmick Raj Singh MIG-2323, M.P. Housing Board Industrial Estate, Bhilai (C.G) PAN : ATQPS6332L .......अपीलाथŎ / Appellant बनाम / V/s. Joint Commissioner of Income Tax Bhilai Range, Bhilai C. G ......ŮȑथŎ / Respondent Appearances Assessee by : None for the assessee Revenue by : Shri G. N. Singh सुनवाई की तारीख / Date of conclusive Hearing : 09/02/2022 घोषणा की तारीख / Date of Pronouncement : 25/02/2022 आदेश / ORDER PER JAMLAPPA D. BATTULL, AM; The present appeal of an assessee against the first appellate order of Commissioner of Income Tax – Appeals-II, Raipur [for short “CIT(A)”] passed u/s 250 vide order dt 26/02/2016, which in turn dove out of a penalty order [for short “PO”] dt 31/10/2013 passed for assessment year [for short “AY”] 2010-2011 by the Joint Commissioner of Income Tax, Range - Bhilai [for short “JCIT”] u/s 271D of the Income-tax Act, 1961 [for short “the Act”]. ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 2 of 11 2. The short controversy under this appeal relates whether the transaction of acceptance of cash trading advances violative of provisions of section 269SS and attracts the penal action u/s 271D of the Act. 3. Before advancing the matter on facts for adjudication, it is essential to reproduce grounds assailed by the appellant are as under; “1. That on the facts and circumstances of the case the learned Assessing Officer has erred grossly and not justified in:- A] Imposing penalty of Rs. 2700000/- u/s 271D of the IT Act 1961 for violating the provision of sec 269SS by accepting cash deposit for more than Rs. 200000/- from the parties.” B] The order of the Ld CIT(A) is erroneous in facts. C] Any Other Ground that may be abducted at the time of hearing” 4. Now its turn to state the facts of the case briefly are; 4.1 The assessee is an individual and proprietor of M/s Rajshree Traders engaged in wholesale trading of Gutka, Pan masala and separately engaged in sale of various products of Reliance Telecom. For the AY 2010-2011, the appellant filed his return of income [for short “ROI/ITR”] on 30/09/2010 with a returned income of ₹21,08,410/-. The regular scrutiny assessment u/s 143(3) was completed on 25/03/2013 determining the total income at ₹34,73,630/- as against the returned income, after making an addition u/s 43B for ₹13,65,220/- on account of non-payment of VAT expense before the due date of filing ITR u/s 139(1). During the course of aforesaid assessment, Ld assessing officer [for short “AO”] observed that the assessee received cash deposits in violation of provisions of section 269SS, consequently referred the matter for separate penal action u/s 271D to the jurisdictional assessing officer. ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 3 of 11 4.2 During the course of penalty proceedings, a show cause notice was served and considering of submission filed by Shri Amit Rai CA, the representative of the assessee [for short “AR”], the Ld JCIT imposed the penalty u/s 271D equivalent to the amount of cash deposit accepted in violation of provisions of section 269SS of the Act. 4.3 In an appeal before CIT(A), the assessee through his authorised representative Shri Amit Rai CA, made representation submitting that, such cash was received as advance towards sales from the prospective buyer of trading goods on behalf of principal supplier and deposited into his account for bank transfer, however this proposal did not yield any relief to the assessee, consequently Ld CIT(A) confirmed the order of penalty. 4.4 Aggrieved by the aforesaid order of tax authorities, the appellant assessee is before this final-fact-finding authority as a forum of last resort assailing the hardship caused by the penalty proceedings. 5. The case was posted for hearing on various occasion and for the reasons stated in the order-sheet, hearing was adjourned from time-to-time. On this date of hearing, none appeared for the assessee. Recording the fact that, considerable time has been lapsed from the date of filing this appeal and the assessee opted to remain absent, the bench thought fit to proceed the matter on the basis of material placed on records in the absence of assessee of his representative, with no objection from the Ld departmental representative [for short “DR”]. ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 4 of 11 6. We heard the Ld DR; perused material placed on record and duly considered the facts of the case in the light of legal position. On judicious consideration of records of regular scrutiny assessment as well as the penalty proceeding, it has transpired that; 6.1 In response to ITR filed by the appellant, after obtaining approval from the Ld. JCIT, Range Bhilai, a notice u/s 143(2) served on the assessee on 28/09/2011. During the course of assessment proceedings, the Ld AO on a verification of Balance-sheet submitted by the AR, observed an outstanding net liability towards the State Value Added Tax [for short “VAT”] for sum of ₹13,65,220/-which remained unpaid within the due date of filing return of income u/s 139(1) of the Act. The said VAT liability was arrived considering gross liability of ₹22,54,506/-, VAT credit of ₹82,981/- and the ₹8,06,305/- payment of VAT made. Considering aforementioned facts, the Ld AO u/s 43B proposed to disallow the unpaid amount for failure to make good by the due date of filing ITR. The written submission on behalf of the appellant was made by the AR and the accountant of the assessee Shri Ganga Rao, which were considered and finally the assessment was culminated determining total income at ₹34,73,630/- with the following information to the jurisdictional Joint Commissioner on the subject matter of violation of section 269SS; Sr Name of the BuyersDate of Cash Receipt Amount Rs i Bansilal and SonsStarts 01/12/20095,00,000 ii Choudhari EnterprisesStarts 01/12/20097,00,000 iii Dhapriya Trading CoStarts 21/12/20095,00,000 iv Hariom TradersStarts 01/12/20095,00,000 v H P & SonsStarts 01/04/2009 5,00,000 27,00,000Total ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 5 of 11 6.2 Upon the information from the assessing officer, the Ld JCIT, Range - Bhilai assuming the jurisdiction initiated the penalty proceeding u/s 271D by issue of show cause notice [for short “SCN”] dt 07/06/2013 which was served and in response to such SCN, multiple written submissions were made by Shri Amit Rai, CA on behalf of the appellant, contending that such was the single instance of cash receipt against trading advances and actual sales were effected to the depositors, the same was reproduce by the Ld JCIT at para 4 on page 2 of his order as; “That the assessee accepted advance against order from M/s Banshi Lal & Sons Rs. 5.00 Lacs; M/s Choudhary Enterprises Rs. 7.00 Lacs; M/s Dhapriya Tradings Rs. 5.00 Lacs; M/s Hari Om Traders Rs. 5.00 Lacs; M/s H.P. Sons Rs. 5.00 Lacs {the parties} during the year, which was deposited in bank and transferred to the principal for supplying material. This advance was received only once from these parties. On receipt of material from the principal it was sold to the parties thereby settling their accounts. Thus, the amount received from the parties was not of the nature of loan rather it was advance against order.” 6.3 Considering the submissions & explanations of the assessee, Ld JCIT rejected the claim to hold such cash deposits as trading advances on the basis of his categorical findings as deduced in the penalty order to the effect that; a. Receipt of cash from five parties totalling to ₹27.00 Lakhs is indeed an unusual feature having regards to nature of assessee’s business which occurred first-time and lone during the previous year relevant to the AY 2010-2011. The trading goods namely the “Gutkha & Pan Masala” was easily available in the open market and there was no shortage or scarcity during the period under consideration. The amount received in cash has been ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 6 of 11 appropriated against actual sale of trading good much after the date of actual receipt of cash deposits. b. Such type of cash receipts / advances was never occasioned to have received in past and this was the solitary year in which cash deposits were accepted and found to have deposited for transfer to principal trader etc. and whereas the assessee admittedly trades in the products on month cash sales basis over the counter and no such occasion of cash acceptance from buyers / customers was witnessed in the past. 6.4 Consequently, the matter of imposition of penalty carried before first appellate authority under an appeal by the aggrieved assessee, wherein Ld CIT(A) prima-facie considering the facts and submissions in the light of explanation tendered during the appellate proceedings, has pragmatically noted that, a. The appellant was into the business for 2-4 years and admittedly were in receipt of deposits in cash for the urgent need of principal, consequently such deposits were transferred to principal immediately upon their receipt. b. There was no business circumstances or expediency which necessitated the acceptance of deposit in cash and assessee did not lay any material to prove the urgency or urgent necessities arising during the course of his business. c. The assessee even laid no material to substantiate his claim that such deposits were accepted under a contractual obligation. d. The contention of assessee as to such deposits are trading advances against the future sales lacks justification vis-a-via nexus in the absence of any evidential material in substantiating the claim such as copies of sales ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 7 of 11 invoices, copies of delivery challans, vouchers and other corroborating statement or records etc. e. The copies of account of parties laid were deficient so for as basic information of lenders / prospective buyer is concern such as PAN, complete address details & details of sale of goods / material etc 6.5 In the light of aforesaid conclusions, the Ld CIT(A) confirmed the levy penalty following catena of judicial precedents including; R K Singhal Vs CIT 221 CTR 412 (Raj), Nandi Dhall Mills Vs CIT 61 Taxmann.com 97 (Mad), Auto Piston Mfg Co Pvt Ltd Vs CIT 37 Taxmann.com 61 (Punjab&Haryana), ITO Vs Nandi Promoters 13 Taxmann.com 213 (Delhi) etc. 7. The levy of penalty arises on the sole violation of provisions of section 269SS and unless we touch upon the prime code which gives birth to penalty it would serve no purpose, hence the provision of 269SS is reproduced for ready reference; 269SS Mode of taking or accepting certain loans, deposits and specified sum. No person shall take or accept from any other person (herein referred to as the depositor), any loan or deposit or any specified sum, otherwise than by an account payee cheque or account payee bank draft or use of electronic clearing system through a bank account [or through such other electronic mode as may be prescribed], if,— (a) the amount of such loan or deposit or specified sum or the aggregate amount of such loan, deposit and specified sum; or (b) on the date of taking or accepting such loan or deposit or specified sum, any loan or deposit or specified sum taken or accepted earlier by such person from the depositor is remaining unpaid (whether repayment has fallen due or not), the amount or the aggregate amount remaining unpaid; or (c) the amount or the aggregate amount referred to in clause (a) together with the amount or the aggregate amount referred to in clause (b), is twenty thousand rupees or more: ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 8 of 11 Provided that the provisions of this section shall not apply to any loan or deposit or specified sum taken or accepted from, or any loan or deposit or specified sum taken or accepted by,— (a) the Government; (b) any banking company, post office savings bank or co-operative bank; (c) any corporation established by a Central, State or Provincial Act; (d) any Government company as defined in clause (45) of section 2 of the Companies Act, 2013 (18 of 2013); (e) such other institution, association or body or class of institutions, associations or bodies which the Central Government may, for reasons to be recorded in writing, notify in this behalf in the Official Gazette: Provided further that the provisions of this section shall not apply to any loan or deposit or specified sum, where the person from whom the loan or deposit or specified sum is taken or accepted and the person by whom the loan or deposit or specified sum is taken or accepted, are both having agricultural income and neither of them has any income chargeable to tax under this Act. Explanation. For the purposes of this section, (i) "banking company" means a company to which the provisions of the Banking Regulation Act, 1949 (10 of 1949) applies and includes any bank or banking institution referred to in section 51 of that Act; (ii) "co-operative bank" shall have the same meaning as assigned to it in Part V of the Banking Regulation Act, 1949 (10 of 1949); (iii) "loan or deposit" means loan or deposit of money; (iv) "specified sum" means any sum of money receivable, whether as advance or otherwise, in relation to transfer of an immovable property, whether or not the transfer takes place. 8. On a bare reading of provision of section 269SS reveals that, it does not per-se restrict any person from accepting loans or deposit exceeding ceiling, but it strictly mandates the mode of acceptance of loans or deposit exclusively through banking channels as an anti-tax evasion means or tools. However, the legislature in his wisdom provided for certain exclusion for the removal of hardship while transacting with Government, banking institution, state or central corporations and transaction between agriculturist with reasonable restrictions. Except the foregoing exception, there finds no goby in the provision except through the evince of reasonability envisaged in section 273B, hence if any transaction does not fall within the ambit of exception so carved out, or the reasonable cause behind such ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 9 of 11 violation, shall transaction shall be violative of this restrictive provision of section 269SS. 9. In the instance case, the assessee also pleaded that the part of the transaction has been effected through banking channel and thereby establishes the genuineness thereof for not bring into the ambit of 269SS is not acceptable in the light of the decision rendered by the Hon’ble Apex Court in the case of ADI Vs Kum A B Shanti (2002) reported at 255 ITR 258, wherein the Lordships have held that, existence of genuine or bonafide transaction is not sufficient to attract relief u/s 273B of the Act and it has to be established clearly on records that on account of some bonafide reasons the assessee could not get loan/deposit by account payee cheque or account payee bank draft. 10. Holding so, in the instant case, it is undisputed fact the assessee during the course of his regular business found accepted deposit in cash from five persons and transferred for the urgency of his principal, however the assessee dejectedly failed to establish vis-à-vis substantiate his proposition such receipts were trading advances in the light of evidential material such as sales invoices, delivery challans and vouchers etc. Further the appellant also remained unsuccessful in proving any of the intractable circumstances which leads to acceptance of deposit in cash or even demonstrate his case falling within the realm of exceptions laid in the provision or evince of reasonable cause of led such violation, consequently we obstinate with the findings of tax authorities below. Once the violation of provisions of section 269SS is manifested, it inevitably triggers penalty provision as laid in section 271D unless the sheltered within the umbrella of 273B of the Act. ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 10 of 11 11. The Hon’ble High Court of Judicature at Bombay in a similar circumstance in Manish Nitin Wadikar Vs ACIT (ITA/434/2017) held that, where the assessee failed on a given sufficient opportunities to establish any reasonable cause of violation of provisions of section 269SS, per contra makes mere assertion against the proposition of tax authorities without any supporting material in substantiating such assertion, is essentially sufficient to draw conclusion against the assertion made by the assessee, consequently the penal provision shall follow. 12. On a similar circumstance the special bench of Hon’ble Tribunal had occasioned to considered the correctness of levy of penalty u/s 271D for the violation of provisions of section 269SS triggered out of bonafide transaction but in the absence of any reasonable cause as contemplated in section 273B in the case of Deepak Sales & Properties Pvt Ltd Vs ACIT (ITA/6304/Mum/2012), considering the ADI Vs Kum A B Shanti (Supra) held that the penalty u/s 271D is invincible in the absence of reasonable cause. (Empasis supplied) 13. Considering the entire conspectus of case, we find no illegality in the penalty order; consequently, we upholding the order of Ld JCIT with no infirmity. 14. Resultantly, the appeal of the assessee is dismissed, with no order as to cost. Order pronounced on this Friday 25 th day of February, 2022. Sd/- Sd/- (RAVISH SOOD) (JAMLAPPA D. BATTULL) JUDICIAL MEMBER ACCOUNTANT MEMBER रायपुर / RAIPUR ; िदनांक / Dated : 25 th February, 2022 ITA No. 128/RPR/2016 AY 2010-2011 ITAT-Raipur Page 11 of 11 आदेश की Ůितिलिप अŤेिषत / Copy of the Order forwarded to : 1. अपीलाथŎ / The Appellant. 2. ŮȑथŎ / The Respondent. 3. The CIT (Appeals), Raipur(C.G) 4. The Pr. CIT, Raipur (C.G) 5. िवभागीय Ůितिनिध,आयकरअपीलीय Ɋायािधकरण, रायपुर बŐच, रायपुर / DR, ITAT, Raipur Bench, Raipur 6. गाडŊफ़ाइल / Guard File. आदेशानुसार / BY ORDER, िनजीसिचव / Private Secretary आयकरअपीलीय Ɋायािधकरण, रायपुर / ITAT, Raipur. Sr Event Occurrence Date Attributes 1 Draft dictated on 09/02/2022 Sr.PS/PS 2 Draft placed before author 15/02/0222 Sr.PS/PS 3 Draft proposed and placed before the second Member 16/02/2022 Ld JM 4 Draft discussed/approved by second Member 17/02/2022 Ld JM 5 Approved draft comes to the Sr. PS/PS 22/02/2022 Sr.PS/PS 6 Kept for pronouncement on 25/02/2022 Sr.PS/PS 7 Date of uploading of order Sr.PS/PS 8 File sent to Bench Clerk Sr.PS/PS 9 Date on which the file goes to the Head Clerk 10 Date on which file goes to the Asstt Registrar 11 Date of dispatch of order