ARUN KUMAR SAHA HUF, MUMBAI V. JT CIT RG 23(1), MUMBAI

ITA 1303/MUM/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0570 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-05-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 23-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR YADAV
• Assessee Lawyers: D V LAKHANI
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, INCOME-TAX APPELLATE TRIBUNAL -ABENCH MUMBAI , , BEFORE S/SH.RAJENDRA,ACCOUNTANT MEMBER AND AMARJIT SINGH,JUDICIAL MEMBER ./I.T.A./1303/MUM/2017, / ASSESSMENT YEAR: 2012-13 ARUN KUMAR SAHA (HUF) 601, 602, GREEN ACRES, 61-B, PALI HILL, NARGIS DUTT ROAD BANDRA (W),MUMBAI-400 050. PAN:AAKHA 1070 J VS. JT.CIT , RANGE-23 (1) 105, MATRU MANDIR, GRANT ROAD MUMBAI-400 007. ( /APPELLANT ) ( / RESPONDENT) / REVENUE BY: SHRI RAJESH KUMAR YADAV /ASSESSEE BY: SHRI D.V. LAKHANI / DATE OF HEARING: 27/04/2017 / DATE OF PRONOUNCEMENT: 24.05.2017 PER RAJENDRA, AM - CHALLENGING THE ORDER,DATED 27/01/2017 OF THE CIT(A )-32,MUMBAI THE ASSESSEE HAS FILED THE PRESENT APPEAL.ASSESSEE-HUF FILED ITS RETURN OF INC OME ON 29/07/2012, DECLARING INCOME OF RS. 3,475/-. THE EFFECTIVE GROUND OF APPEAL IS ABOU T LEVY OF PENALTY U/S.271D OF THE ACT. 2. DURING THE ASSESSMENT PROCEEDINGS,THE AO OBSERVED T HAT VERIFICATION OF THE BOOKS OF ACCOUNTS AND ENTRIES REVEALED THAT A SUM OF RS. 29. 92 LAKHS WAS PAID FROM THE ACCOUNT OF AKS (INDIVIDUAL) TO A BUILDER, THAT THE AMOUNT IN Q UESTION WAS SHOWN AS LOAN IN THE BOOKS OF THE ASSESSEE THROUGH PASSING OF ACCOUNTING ENTRIES. HE HELD THAT ACCEPTANCE OF LOAN BY THE ASSESSEE WAS CONTRAVENTION OF SECTION 269SS. HE LEV IED A PENALTY OF RS. 29, 92, 488/-, U/S.271D OF THE ACT. 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREF ERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY (FAA)AND MADE ELABORATE SUBMISS IONS. IT ALSO RELIED UPON CERTAIN CASE LAWS. AFTER CONSIDERING THE AVAILABLE MATERIAL, THE FAA HELD THAT THE LOAN OF RS. 29.92 LAKH WAS RECEIVED BY WAY OF JOURNAL ENTRY, THAT THERE WA S NO GENUINE REASON FOR CONTRAVENING THE PROVISIONS OF SECTION 269SS, THAT THE FACT THAT ASS ESSEE DID NOT HAVE ADEQUATE BALANCE IN THE BANK ACCOUNT CANNOT BE TREATED AS REASONABLE CAUSE, THAT THERE WAS NO URGENCY TO MAKE THE SAID PAYMENT. FINALLY HE HELD THAT ASSESSEE HAD REC EIVED LOAN/DEPOSIT ABOVE RS. 20,000 OTHERWISE THAN BY ACCOUNT PAYEE CHEQUE, THAT THE AO WAS JUSTIFIED IN LIVING THE PENALTY. 4. BEFORE US, THE AUTHORISED REPRESENTATIVE ARGUED THA T THERE WAS REASONABLE CAUSE FOR MAKING THE PAYMENT TO THE BUILDER, THAT THE ASSESSEE WAS N OT HAVING SUFFICIENT BALANCE IN THE BANK ACCOUNT, THAT TRANSACTION BETWEEN THE ASSESSEE AND THE INDIVIDUAL WAS TRANSACTION BETWEEN THE 1303/M/17-(12-13) ARUN KUMAR SAHA(HUF) 2 SAME PERSON, THAT THE INDIVIDUAL WAS ACTING AS A KA RTA OF HUF ALSO, THAT THERE WERE NO TWO SEPARATE INDIVIDUALS, THAT THE SAME INDIVIDUAL WAS ACTING IN DUAL CAPACITY,THAT FOR REGISTRATION PURPOSES OF THE DOCUMENTS IT WAS NECESSARY THAT THE STAMP DUTY WAS PAID AND THAT THERE WAS AN OBLIGATION TO MAKE THE PAYMENT OF VAT.HE RELIED UPON THE CASE OF LODHA BUILDERS (P) LTD. (163 TTJ 778). THE DEPARTMENTAL REPRESENTATIVE SUPP ORTED THE ORDER OF THE FAA.. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL BEFORE US.IT IS SAID THAT LEVY OF PENALTIES U/S.271D/272 OF THE ACT,IS NOT AUTOMAT IC. IN ORDER TO BRING IN APPLICATION OF THOSE SECTIONS IN THE BACKDROP OF THE OVERRIDING NON OBST ANTE CLAUSE IN SECTION 273B , ABSENCE OF REASONABLE CAUSE, EXISTENCE OF WHICH HAS TO BE ESTA BLISHED, IS A SINE QUA NON. BEFORE LEVYING PENALTY, THE AO IS REQUIRED TO FIND OUT THAT EVEN I F THERE WAS ANY OMISSION OR COMMISSION ON PART OF AN ASSESSEE,THE SAME WAS WITHOUT REASONABLE CAUSE.THE INITIAL BURDEN IS ON THE ASSESSEE TO SHOW THAT THERE EXISTED A REASONABLE CA USE FOR THE FAILURE.THEREAFTER,AO HAS TO CONSIDER WHETHER THE EXPLANATION OFFERED BY THE ASS ESSEE OR OTHER PERSON AS REGARDS THE REASON FOR FAILURE, WAS ON ACCOUNT OF REASONABLE CAUSE.REA SONABLENESS OF A CAUSE DEPENDS ON THE FACTS AND CIRCUMSTANCES OF EACH CASE,THOUGH THE PHR ASE SIGNIFIES EXISTENCE OF A CAUSE THAT WOULD CONVINCE EVEN A COMMON MAN THAT THERE WAS ABN ORMAL SITUATION THAT COMPELLED THE PERSON TO COMMIT DEFAULT.IT IS NOT A CASE OF NON CO NTRAVENTION OF PROVISION OF LAW,BUT PRESENCE OF SOME REASON THAT EXPLAINS THE INFRINGEM ENT.IN THE CASE UNDER CONSIDERATION THE ASSESSEE WAS NOT HAVING SUFFICIENT FUND IN THE BANK AND IT HAD TO MAKE PAYMENTS FOR REGISTRATION AND OTHER CHARGES WITH REGARD TO PURCH ASE OF AN IMMOVABLE PROPERTY.IT IS ALSO A FACT THAT THE INDIVIDUAL HAD MADE PAYMENT ON BEHALF OF THE HUF AND THAT THE SAME INDIVIDUAL IS ALSO KARTA OF THE ASSESSEE-HUF.THE FAA HAS MENTI ONED THAT ALLEGED LOAN WAS TAKEN BY PASSING JOURNAL ENTRIES.THUS, THE GENUINENESS OF TH E TRANSACTION IS NOT IN DOUBT.HERE, WE WOULD LIKE TO REFER TO THE MATTER OF LODHA BUILDERS (SUPRA) WHEREIN THE TRIBUNAL HAS HELD AS UNDER: (II) THAT THERE WAS NO FINDING OF THE ASSESSING OFF ICER DURING THE ASSESSMENT PROCEEDINGS THAT THE TRANSACTIONS CONSTITUTED UNACCOUNTED MONEY AND WERE NOT BONA FIDE OR NOT GENUINE. THE TRANSACTIONS BY WAY OF JOURNAL ENTRIES WERE AIM ED AT THE EXTINGUISHMENT OF MUTUAL LIABILITIES BETWEEN THE ASSESSEES AND THE SISTER CO NCERNS OF THE GROUP AND SUCH REASONS CONSTITUTED A REASONABLE CAUSE. THE CAUSE SHOWN BY THE ASSESSEE FOR RECEIVING OR REPAYMENT OF THE LOAN OR DEPOSIT OTHERWISE THAN BY ACCOUNT-PA YEE CHEQUE OR BANK DRAFT, WAS ON ACCOUNT OF ALTERNATE MODE OF RAISING FUNDS, ASSIGNMENT OF R ECEIVABLES, SQUARING UP TRANSACTIONS, OPERATIONAL EFFICIENCIES, CONSOLIDATION OF FAMILY M EMBERS DEBTS, CORRECTION OF ERRORS, AND LOANS TAKEN IN CASE. ALL THESE REASONS WERE COMMERC IAL IN NATURE AND COULD NOT BE DESCRIBED AS NON-BUSINESS BY ANY MEANS. FURTHER, THERE WAS NO POINT IN ISSUING HUNDREDS OF ACCOUNT PAYEE CHEQUES OR ACCOUNT PAYEE BANK DRAFTS BETWEEN CONCERNS OF THE GROUP, WHEN TRANSACTIONS COULD BE ACCOUNTED IN BOOKS USING JOUR NAL ENTRIES, WHICH WAS ALSO AN ACCEPTED MODE OF ACCOUNTING. THE ASSESSING OFFICER HAD NOT M ADE OUT IN THE ASSESSMENT THAT THE 1303/M/17-(12-13) ARUN KUMAR SAHA(HUF) 3 TRANSACTIONS WERE AIMED AT NON COMMERCIAL REASONS A ND OUTSIDE THE NORMAL BUSINESS OPERATIONS.THEREFORE, THE PROVISIONS OF SECTIONS 26 9SS AND 269T OF THE ACT WERE NOT ATTRACTED WHERE THERE WAS NO INVOLVEMENT OF UNACCOUNTED MONEY . THOUGH THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 269SS OR 269T OF THE ACT IN R ESPECT OF JOURNAL ENTRIES, THE ASSESSEE HAD SHOWN REASONABLE CAUSE AND PENALTY IMPOSED U/S.271 OR 271D OF THE ACT WAS NOT SUSTAINABLE. CONSIDERING THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE AND RESPECTFULLY FOLLOWING THE ABOVE REFERRED ORDER OF THE TRIBUNAL, WE HOLD THAT ORDER OF THE FAA CANNOT BE ENDORSED. REVERSING THE SAME,WE DECIDE THE EFFECTIVE GROUND O F APPEAL IN FAVOUR OF THE ASSESSEE. AS A RESULT, APPEAL FILED BY THE ASSESSE STANDS ALLOWED. ! ' #$%&'() . ORDER PRONOUNCED IN THE OPEN COURT ON 24 TH MAY , 2017. 24 , 2017 SD/- SD/- ( / AMARJIT SINGH ) ( / RAJENDRA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER MUMBAI; /DATED : 24.05.2017. JV.SR.PS. / COPY OF THE ORDER FORWARDED TO : 1. APPELLANT / 2. RESPONDENT / 3. THE CONCERNED CIT(A)/ , 4. THE CONCERNED CIT / 5. DR A BENCH, ITAT, MUMBAI / , , . . . 6. GUARD FILE/ //TRUE COPY// / BY ORDER, / DY./ASST. REGISTRAR , /ITAT, MUMBAI.