M/s Kumar Engineering Company., Bijapur V. The Joint Commissioner of Income Tax, Bijapur Range., Bijapur

ITA 134/PAN/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93491 (ITAT-PANAJI)
• Duration Of Justice: 1 year(s) 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 08-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 17-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BANGARI LD
• Assessee Lawyers: A SHANKAR
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PANAJI BENCH, PANAJI BEFORE SHRI GEORGE MATHAN , HONBLE JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, HON'BLE ACCOUNTANT MEMBER ITA N O . 134 /PNJ/2 014 : (A.Y 2006 - 07 ) M/S. KUMAR ENGINEERING COMPANY, HUBLI ROAD, MUDHOL 587 313. PAN : AAGFK8083M ( APPELLANT) VS. JCIT, BIJAPUR RANGE, BIJAPUR (RESPONDENT) ASSESSEE BY : A. SHANKAR, ADV. REVENUE BY : M.R. BANGARI, LD. DR DATE OF HEARING : 08 / 06 /201 5 DATE OF PRONOUNCEMENT : 08 / 06 /201 5 O R D E R PER GEORGE MATHAN : 1. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), BELGAUM IN APPEAL NO. 36/BGM/2012 - 13 DT. 16.1.2014 FOR A.Y 2006 - 07 AGAINST CONFIRMATION OF LEVY OF PENALTY U/S 271D OF THE ACT. SHRI A. SHANKAR, ADVOCATE REPRESENTED ON BEHALF OF THE ASSESSEE AND SHRI M.R. BANGARI, LD. DR REPRESENTED ON BEHALF OF THE REVENUE. 2. IT WAS THE SUBMISSION BY THE LD. AR ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE IS IN THE BUSINESS OF DEALING IN SPARE PARTS FOR TRACTORS AND HERO HONDA. IT WAS THE SUBMISSION THAT THE ASSESSEE IS A PARTNERSHIP FIRM HAVING 3 PARTNERS. IT WAS THE SUBMISSION THAT IN THE COURSE OF THE ASSESSMENT IT WAS NOTICED THAT THE ASSESSEE HAD RECEIVED CASH TO AN EXTENT OF RS. 42,95,500/ - F ROM ONE OF THE PARTNERS BEING SHRI SHASHIKUMAR DESAI. IT WAS THE SUBMISSION THAT THE CASH WAS BROUGHT IN AS THERE WAS URGENT REQUIREMENT OF CASH ON THE SPECIFIED 2 ITA NO. 134/PNJ/2014 (A.Y : 2006 - 07) DATES. IT WAS THE SUBMISSION THAT CHEQUES WOULD TAKE 2 - 3 DAYS TIME FOR CLEARING AND AS THE P AYMENTS WERE REQUIRED TO BE MADE TOWARDS SALARY TO THE STAFF AND PAYMENT TO SUPPLIERS, CASH HAD BEEN BROUGHT IN. IT WAS THE SUBMISSION THAT, HOWEVER, THE ACCOUNTANT OF THE FIRM HAD MISTAKENLY RECORDED THE SAME AS CREDITORS IN THE NAME OF THE PROPRIETARY C ONCERN OF THE PARTNER OF THE FIRM. IT WAS THE SUBMISSION THAT NO INTEREST HAS BEEN PAID ON THE SAID AMOUNT AND WHEN THE MISTAKE WAS IDENTIFIED, IMMEDIATELY THE CORRECTIONS HAVE BEEN DONE AND THE AMOUNT HAS BEEN CREDITED TO THE CAPITAL ACCOUNT OF THE PARTN ER, SHRI SHASHIKUMAR DESAI. IT WAS THE SUBMISSION THAT THOUGH THE ASSESSMENT WAS COMPLETED ON 31.10.2008 WITHOUT MAKING ANY ADDITIONS ON THIS COUNT, PENALTY U/S 271D CAME TO BE INITIATED BY SHOW CAUSE LETTER DT. 24.2.2012 AND 2.7.2012 AND THE PENALTY CAME TO BE LEVIED VIDE ORDER DT. 10.8.2012. IT WAS THE SUBMISSION THAT THE FIRM AND THE PARTNERS ARE NOT DIFFERENT ENTITIES AND THE PAYMENT FROM THE PARTNERS IN CASH WAS NOT HIT BY THE PROVISIONS OF SEC. 271D. FOR THIS PREPOSITION, HE PLACED RELIANCE ON THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF MUTHOOT FINANCIERS REPORTED IN 371 ITR 408, DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF LOKHPAT FILM EXCHANGE (CINEMA) REPORTED IN 304 ITR 172 AS ALSO THE DECISION OF THE HON'BLE MADRA S HIGH COURT IN THE CASE OF V. SIVAKUMAR REPORTED IN 354 ITR 9. 3. IN REPLY, THE LD. DR VEHEMENTLY SUPPORTED THE ORDER OF THE LD. AO AND LD. CIT(A). IT WAS THE SUBMISSION THAT THERE WAS NO NECESSITY FOR INTRODUCING THE CASH EVEN THOUGH FROM THE PARTNER S. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS. A PERUSAL OF THE ASSESSMENT ORDER SHOWS THAT THERE IS NO ADDITION ON ACCOUNT OF THIS INTRODUCTION OF CAPITAL. CONSEQUENTLY, IT MUST BE ACCEPTED THAT INTRODUCTION OF THE CAPITAL, MORE SO, THE CASH INTRODUCED I NTO THE PARTNERSHIP FIRM ARE GENUINE TRANSACTIONS. THE URGENCY IN REQUIRING THE CASH FOR HIS BUSINESS IS SOMETHING ONLY THE BUSINESSMAN WOULD 3 ITA NO. 134/PNJ/2014 (A.Y : 2006 - 07) KNOW. THEREFORE, THE ARGUMENT THAT THERE WAS NO NECESSITY TO INTRODUCE THE CASH WOULD BE DEPENDENT UPON THE FACT S OF EACH CASE. AS HAS BEEN CLEARLY SHOWN BY THE LD. AR, THE CASH HAS BEEN INTRODUCED AND ON THAT DAY ITSELF SALARIES AND PAYMENTS TO SUPPLIERS HAVE ALSO BEEN MADE. FACTUALLY, THIS CLAIM OF THE ASSESSEE STANDS SUPPORTED BY DOCUMENTS, MORE SO, HIS ACCOUNT S BEING HIS CASH BOOK. COMING TO THE LEGALITY OF THE ISSUE, ADMITTEDLY THE FIRM AND ITS PARTNERS ARE NOT TWO DIFFERENT ENTITIES. CONSEQUENTLY, IT CANNOT BE SAID THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SEC. 269SS LEA D ING TO LEVY OF PENALTY U/S 27 1D, ESPECIALLY IN VIEW OF THE DECISION OF THE HON'BLE MADRAS HIGH COU R T IN THE CASE OF V. SIVAKUMAR REFERRED TO SUPRA, HON'BLE RAJASTHAN HIGH COURT IN THE CASE OF LOKHPAT FILM EXCHANGE (CINEMA) REFERRED TO SUPRA AND THE DECISION OF THE HON'BLE DELHI HIGH C OURT IN THE CASE OF MUTHOOT FINANCIERS REFERRED TO SUPRA. IN THE CIRCUMSTANCES, AS IT IS ALSO NOTICED THAT NO INTEREST HAS BEEN PAID BY THE PARTNERSHIP FIRM ON THE CASH CREDITS WHICH HAVE BEEN INTRODUCED BY THE PARTNER OF THE ASSESSEE FIRM AND WHICH HAS S UBSEQUENTLY BEEN RECORDED TO THE CAPITAL ACCOUNT OF THE SAID PARTNER, RESPECTFULLY FOLLOWING THE DECISIONS OF THE HON'BLE MADRAS HIGH COURT, THE HON'BLE RAJASTHAN HIGH COURT AND THE HON'BLE DELHI HIGH COURT IN THE CASE OF V. SIVAKUMAR, LOKHPAT FILM EXCHANG E (CINEMA) AND MUTHOOT FINANCIERS RESPECTIVELY THE PENALTY LEVIED U/S 271D STANDS DELETED. 5. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/06/2015. S D / - (N.K. BILLAIYA) ACCOUNTANT MEMBER S D / - ( GEORGE MATHAN ) JUDICIAL MEMBER PLACE : PANAJI / GOA DATED : 0 9 /06/ 201 5 *SSL* 4 ITA NO. 134/PNJ/2014 (A.Y : 2006 - 07) COPY TO : (1) APPELLANT (2) RESPONDENT (3) CIT(A) CONCERNED (4) CIT CONCERNED (5) D.R (6) GUARD FILE TRUE COPY, BY ORDER , 5 ITA NO. 134/PNJ/2014 (A.Y : 2006 - 07) DATE INITIAL ORIGINAL DICTATION PAD & DRAFT ORDER ARE ENCLOSED IN THE FILE 1. DRAFT DICTATED ON 08/06/2015 SR.PS 2. DRAFT PLACED BEFORE AUTHOR 09/06/2015 SR.PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER /06/2015 JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER /06/2015 JM/AM 5. APPROVED DRAFT COMES TO THE SR.PS/PS 0 9 /06/2015 SR.PS 6. DATE OF PRONOUNCEMENT 08 /06/2015 SR.PS 7. FILE SENT TO THE BENCH CLERK 0 9 /06/2015 SR.PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK 9. DATE OF DISPATCH OF ORDER