M/s. Natvarlal Chunilal & Sons, Bharuch V. The Addl.CIT, Bharuch Range, Bharuch

ITA 1425/AHD/2007

• Counselvise Citation: 142520514 RSA 2007
• Duration Of Justice: 4 year(s) 7 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2011
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 29-11-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 09-04-2007
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAMES KURAIR
• Assessee Lawyers: ANIL R SHAH
• Keywords: Gift; Additional evidence; Reasonable cause
• Section: 273B

Judgement Text

- 1 - IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE S/SHRI D.K.TYAGI, JM AND A. K. GARODIA AM. M/S NATVARLAL CHUNILAL & SONS, NANAVATI ESTATE, NR. BHARTI CINEMA, STATION ROAD, BHARUCH. VS. ADDL. CIT, BHARUCH CIRCLE, BHARUCH. (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI ANIL R. SHAH, AR RESPONDENT BY:- SHRI JAMES KURAIR, DR DATE OF HEARING :29/11/2011 DATE OF PRONOUNCEMENT : 30/11/11. O R D E R PER D. K. TYAGI, JUDICIAL MEMBER . THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A) DATED 18.12.2006 WHEREIN FOLLOWING GROUNDS H AVE BEEN RAISED :- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW, THE HONBLE CIT APPEALS-VI, BARODA, HAS ERRED AS UNDER : (A) THE HONBLE CIT(A)-VI, BARODA HAS ERRED IN LAW AND IN FACTS LEVYING PENALTY U/S 271E IN RESPECT OF PAYMENT IN CONTRAVENTION TO SECTION 269T: NAME AMOUNT TUSHAR KANSUPDA 152611 MADHURI KANSUPDA 152611 ITA NO.1425/AHD/2007 ASST. YEAR :2004-05 ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 2 2. DURING THE PENALTY PROCEEDINGS IT WAS MENTIONED BY THE ASSESSEE THAT THE REPAYMENT TO TUSHAR K. KANSUPDA AND MURARI K. KANSUPDA TOTALING TO RS.305,222/- WAS MADE IN CASH ON VARIOU S DATES IN DECEMBER, 2003, JANUARY, 2004 AND FEBRUARY, 2004 AND THAT THE RE WAS REASONABLE CAUSE FOR MAKING SUCH PAYMENTS. THE REASONABLE CAUS E BEING THAT THE CREDITORS WERE NRIS AND VISITED INDIA TO ATTEND MAR RIAGE CEREMONY OF NEAR RELATIVE AND AS THEY DID NOT HAVE ANY BANK ACC OUNT IN INDIA THE APPELLANT REPAID THE AMOUNT IN CASH. THE AO ON THE OTHER HAND WAS OF THE VIEW THAT IT WAS NOT IMPOSSIBLE TO OPEN BANK ACCOUN T IN THE NAME OF THESE PERSONS WHEN THEY CAME TO INDIA AND THE REPAYMENTS WERE MADE FROM DECEMBER, 2003 TO FEBRUARY, 2004 WHEREAS THE MARRIA GE WAS HELD ON 22.2.2004. THUS THE DATES OF REPAYMENTS WERE FAR RE MOVED FROM THE DATE OF MARRIAGE. THEREFORE, THE REASONABLE CAUSE WAS NO T ACCEPTED BY THE AO AND THE AMOUNT OF RS.3,05,222/- WAS HELD TO BE EXIG IBLE FOR PENALTY U/S 271E. 3. IN APPEAL THE ASSESSEE REQUESTED FOR FILING OF T HE FOLLOWING ADDITIONAL EVIDENCES: I) GIFT DEED/DECLARATION OF VARIOUS PERSONS II) COPY OF PASSPORTS OF NON-RESIDENT INDIANS WHO HAD G IVEN GIFT TO MANISH KNSUPDA. III) AGREEMENT WITH MRS. JYOTSANA B. KANSUPDA AND THE APPELLANT FIRM FOR TAKING LOAN IN THE NAME OF MRS. JYOTSANA B. KANSUPDA. ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 3 IV) FAMILY CHART OF KANSUPDA FAMILY IT WAS PLEADED THAT THE ASSESSEE WAS PREVENTED BY S UFFICIENT CAUSE FROM PRODUCING THE DOCUMENTS BEFORE THE AO AND THE EVIDE NCES ARE RELEVANT FOR GROUNDS OF APPEAL AND THAT THEY BE CONSIDERED U NDER RULE 46A IN THE INTEREST OF JUSTICE. 3.1 THE SAID DOCUMENTS WERE REFERRED TO THE AO FOR HIS COMMENTS. VIDE REPORT DATED 26.9.2006 IT WAS REPLIED BY THE A O THAT THE ASSESSEES CASE DID NOT FALL UNDER ANY OF THE CONDITIONS UNDER RULE 46A AND THAT BEFORE THE AO THE ASSESSEE HAD ASKED FOR FURTHER TI ME FOR PRODUCTION OF REQUISITE EVIDENCES AND THAT THE SAME COULD NOT BE PRODUCED BY THE APPELLANT. FURTHER IT WAS MENTIONED THAT DURING THE REMAND PROCEEDINGS THE ASSESSEE WAS ASKED TO PRODUCE THE BOOKS OF ACCO UNTS FOR FINANCIAL YEAR 2003-04 FOR VERIFICATION AND ALSO THE DETAILED ITENARY OF THE DONORS OF THEIR VISIT TO INDIA AND ALSO COPY OF AIR TICKETS A ND PASSPORT. IT WAS OBSERVED THAT THE ASSESSEE DID NOT PRODUCE THE BOOK S OF ACCOUNT FOR VERIFICATION AND ALSO THAT THE PERUSAL OF GIFT DEED S REVEALED THAT THE STAMP PAPERS WERE BROUGHT NEITHER IN THE NAME OF DONEES N OR DONORS. FURTHER NO ITENARY OF DONORS ALONG WITH THEIR TICKETS AND PASS PORT WERE FURNISHED AND THUS IT WAS STATED THAT THE AO WAS RIGHT IN IMP OSING THE PENALTY U/S 271E. ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 4 3.2 IN RESPONSE TO THE REMAND REPORT, THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AO. THE LD. CIT(A) CONS IDERED THE CONTENTIONS OF THE AO AND THE SUBMISSIONS OF ASSESS EE AND FINALLY OBSERVED AS UNDER :- 6. I HAVE GONE THROUGH THE CONTENTIONS OF THE APPE LLANT, THE REMAND REPORT AND THE PENALTY ORDER. SECTION 269T OF THE I NCOME-TAX ACT READS AS UNDER :- NO BRANCH OF A BANKING COMPANY OR A CO-OPERATIVE BA NK AND NO OTHER COMPANY OR CO-OPERATIVE SOCIETY AND NO FIRM OR OTHE R PERSON SHALL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DRAWN IN THE NAM E OF THE PERSON WHO HAS MADE THE LOAN OR DEPOSIT IF - (A) THE AMOUNT OF THE LOAN OR DEPOSIT TOGETHER WITH THE INTEREST, IF ANY, PAYABLE THEREON, OR (B) THE AGGREGATE AMOUNT OF THE LOANS OR DEPOSITS HELD BY SUCH PERSON WITH THE BRANCH OF THE BANKING COMPANY OR CO-OPERAT IVE BANK OR, AS THE CASE MAY BE, THE OTHER COMPANY OR CO-OPERATI VE SOCIETY OR THE FIRM, OR OTHER PERSON EITHER IN HIS OWN NAME OR JOINTLY WITH ANY OTHER PERSON ON THE DATE OF SUCH REPAYMENT TOGETHER WITH THE INTEREST, IF ANY, PAYABLE ON SUCH LOANS OR DEPOSITS , IS TWENTY THOUSAND RUPEES OR MORE: PROVIDED THAT WHERE THE REPAYMENT IS BY A BRANCH OF A BANKING COMPANY OR CO-OPERATIVE BANK, SUCH REPAYMENT MAY AL SO BE MADE BY CREDITING THE AMOUNT OF SUCH LOAN OR DEPOSIT TO THE SAVINGS BANK ACCOUNT OR THE CURRENT ACCOUNT (IF ANY) WITH SUCH B RANCH OF THE PERSON TO WHOM SUCH LOAN OR DEPOSIT HAS TO BE REPAI D. PROVIDED FURTHER THAT NOTHING CONTAINED IN THIS SEC TION SHALL APPLY TO REPAYMENT OF ANY LOAN OR DEPOSIT TAKEN OR ACCEPT ED FROM (I) GOVERNMENT; (II) ANY BANKING COMPANY, POST OFFICE SAVINGS BANK OR CO - OPERATIE BANK; (III) ANY CORPORATION ESTABLISHED BY A CENTRAL, STATE OR PROVINCIAL ACT; ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 5 (IV) ANY GOVERNMENT COMPANY AS DEFINED IN SECTION 617 OF THE COMPANIES ACT, 1956 (1 OF 1956); (V) SUCH OTHER INSTITUTION, ASSOCIATION OR BODY OR CLAS S OF INSTITUTIONS, ASSOCIATIONS OR BODIES WHICH THE CENT RAL GOVERNMENT MAY, FOR REASONS TO BE RECORDED IN WRITI NG, NOTIFY IN THIS BEHALF IN THE OFFICIAL GAZETTE. EXPLANATION FOR THE PURPOSES OF THIS SECTION - (I) BANKING COMPANY SHALL HAVE THE MEANING ASSIGNED T O IT IN CLAUSE (I) OF THE EXPLANATION TO SECTION 269SS; (II) CO-OPERATIVE BANK SHALL HAVE THE MEANING ASSIGNED TO IT IN PART V OF THE BANKING REGULATION ACT, 1949 (10 OF 1 949); (III) LOAN OR DEPOSIT MEANS ANY LOAN OR DEPOSIT OF MONE Y WHICH IS REPAYABLE AFTER NOTICE OR REPAYABLE AFTER A PERI OD AND, IN THE CASE OF A PERSON OTHER THAN A COMPANY, INCLUDES LOAN OR DEPOSIT OF ANY NATURE. 6.1 PARA 2.1 AND 2.2 OF THE CIRCULAR 345 DATED 28.6 .1982 EXPLAINING THE SCOPE OF SECTION 269T IS ALSO REPRODUCED BELOW : 2.1 THE PROLIFERATION OF BLACK MONEY POSES A SERIO US THREAT TO THE NATIONAL ECONOMY AND IT WAS CONSIDERED NECESSARY TO TAKE EFFECTIVE STEPS TO CONTAIN AND COUNTER THIS MAJOR ECONOMIC EVIL. TH E GOVERNMENT HAVE, IN RECENT PAST, TAKEN SEVERAL LEGISLATIVE AND ADMIN ISTRATIVE MEASURES TO UNEARTH BLACK MONEY. THE INCOME-TAX (SECOND AMENDME NT) ACT, 1981 (HEREINAFTER REFERRED TO AS THE AMENDING ACT), REPR ESENTS ANOTHER STEP IN THE SAME DIRECTION. 2.2 IT CAME TO GOVERNMENTS NOTICE THAT A SUBSTANTI AL AMOUNT OF BLACK MONEY WAS DEPOSITED BY TAX EVADERS WITH BANKS, COMP ANIES, CO-OPERATIVE SOCIETIES AND PARTNERSHIP FIRMS EITHER IN THEIR OWN NAMES OR IN BENAMI NAMES. THE INCOME-TAX (SECOND AMENDMENT) ACT, 1981, SEEKS TO COUNTER ATTEMPTS TO CIRCULATE BLACK MONEY IN THIS MANNER. 6.2 IN THE INSTANT CASE CASH PAYMENT OF RS.1,52,611 /- WAS MADE TO TUSHAR K. KANSUPDA BETWEEN 16.12.2003 TO 5.1.2004. THE REASONABLE CAUSE MADE OUT DOES NOT APPEAR TO BE CREDIBLE AS IT WAS CLAIMED THAT THE REPAYMENT WAS MADE WHEN THE DEPOSITOR VISITED INDIA TO ATTEND THE MARRIAGE WHICH WAS HELD ON 22.2.2004. THE LAST PAYM ENT TO TUSHAR K. KANSUPDA WAS MADE ON 5.1.2004. IN OTHER WORDS THERE DOES NOT APPEAR TO BE ANY REASONABLE CAUSE IN THIS CASE AS DATE OF MARRIAGE AND DATE OF ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 6 PAYMENTS ARE FAR REMOVED. THE AMOUNT OF RS.1,52,611 /- IS THEREFORE EXIGIBLE FOR THE PURPOSE OF PENALTY U/S 271E. 6.3 IN RESPECT OF MURARI K. KANSUPDA THE CASH PAYME NTS AMOUNTING TO RS.1,52,611/- WERE MADE BETWEEN 21/.2.2004 TO 27.2. 2004. IT IS NOTICED THAT NEITHER DURING PENALTY PROCEEDINGS NOR IN APPE LLATE PROCEEDINGS OR REMAND PROCEEDINGS THE DETAILS OF PASSPORT OF MURAR I K.KANSUPDA OR HIS ITENARY WAS PRODUCED. IN THE EVENT THE PLEA THAT TH E PAYMENT WAS MADE ON THE VISIT OF MURARI K. KANSUPDA TO ATTEND THE WEDDI NG FUNCTION IS NOT ESTABLISHED AND IT IS NOT HELD TO BE THE REASONABLE CAUSE. THE AMOUNT OF RS.1,52,611/- IS ALSO EXIGIBLE FOR PENALTY U/S 271E . AGAINST THIS ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE REITE RATED THE SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES AND IN SUPPORT OF THIS, FILED AN AFFIDAVIT OF DR.KHUSHVADAN KANSUPADA, FATHER OF HARDIK K. KAN SUPADA, DURING WHOSE MARRIAGE PAYMENT OF IMPUGNED AMOUNT HAS BEEN CLAIMED TO BE MADE. HE FURTHER SUBMITTED THAT AS PER SECTION 273B PENALTY NOT TO BE IMPOSED IN CASES WHERE THERE IS REASONABLE CAUSE OR IT WITHOUT THE EXISTENCE OF CULPABLE MENTAL STATE. REASONABLE CAUS E, AS APPLIED TO HUMAN ACTION IS THAT WHICH WOULD CONSTRAIN A PERSON OF AV ERAGE INTELLIGENCE AND ORDINARY PRUDENCE. THE EXPRESSION REASONABLE IS NOT SUSCEPTIBLE OF A CLEAR AND PRECISE DEFINITION FOR AN ATTEMPT TO GIVE A SPE CIFIC MEANING TO THE WORD REASONABLE IS TRYING TO COUNT WHAT IS NOT NU MBER AND MEASURE WHAT IS NOT SPACE. IT CAN BE DESCRIBED AS RATIONAL ACCORDING TO THE DICTATES OF REASON AND IS NOT EXCESSIVE OR IMMODERATE. THE W ORD REASONABLE HAS IN LAW THE PRIMA FACIE MEANING OF REASONABLE WITH R EGARD TO THOSE ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 7 CIRCUMSTANCES OF WHICH THE ACTOR, CALLED ON TO ACT REASONABLY, KNOWS OR OUGHT TO KNOW. IN THE PRESENT CASE THE ASSESSEE DID NOT WANT TO HIDE ANYTHING FROM THE DEPARTMENT AND THE AMOUNT WAS PAI D DUE TO URGENCY AND TO MAINTAIN THE RELATION WITHIN THE FAMILY. IN THIS CONNECTION HE ALSO RELIED ON THE FOLLOWING CASE LAWS :- (1) ASSTT. DIRECTOR OF INSPECTION (INV) VS. KUM A.B. SHANTI 255 ITR 258 (SC) (2) ITO VS. GANESH WOODEN INDUSTRIES 12 SOT 44 (AHD) (3) PREMIER ART SILK PROCESSORS (P) LTD. VS. DY. CIT 88 TTJ 375 (AHD) (4) SHREENATH BUILDERS VS. DY. CIT 66 TTJ 113 AND SUBMITTED THAT THE LOWER AUTHORITIES WERE NOT J USTIFIED IN LEVYING THE PENALTY AND CONFIRMING THE SAME. THEREFORE, THE ORD ER OF LD. CIT(A) BE SET ASIDE AND THE IMPUGNED PENALTY BE DELETED. 5. ON THE OTHER HAND THE LD. DR SUPPORTED THE ORDER S OF LOWER AUTHORITIES AND SUBMITTED THAT AT ANY STAGE THE ASS ESSEE WAS NOT ABLE TO ESTABLISH REASONABLE CAUSE AND IT WAS NOT IMPOSSIBL E TO OPEN BANK ACCOUNT IN THE NAME OF THESE PERSONS WHEN THEY CAME TO INDIA AND THE REPAYMENTS WERE MADE FROM DECEMBER, 2003 TO FEBRUAR Y, 2004 WHEREAS THE MARRIAGE WAS HELD ON 22.2.2004. THUS THE DATES OF REPAYMENTS WERE FAR REMOTE FROM THE DATE OF MARRIAGE. ACCORDINGLY T HE AO RIGHTLY DENIED THE ACCEPTANCE OF REASONABLE CAUSE. THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT THE REASONABLE CAUSE MADE OUT DOES NOT APPEAR TO BE CREDIBLE AS IT ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 8 WAS CLAIMED THAT THE REPAYMENT WAS MADE WHEN THE DE POSITOR VISITED INDIA TO ATTEND THE MARRIAGE WHICH WAS HELD ON 22.2 .2004. THE LAST PAYMENT TO TUSHAR K. KANSUPDA WAS MADE ON 5.1.2004. IN OTHER WORDS THERE DOES NOT APPEAR TO BE ANY REASONABLE CAUSE IN THIS CASE AS THE DATE OF MARRIAGE AND DATE OF PAYMENTS ARE FOR REMOTE. IN THE CASE OF MORARI K. KANSUPDA, THE LD. CIT(A) OBSERVED THAT NEITHER DURI NG THE PENALTY PROCEEDINGS NOR IN APPELLATE PROCEEDINGS OR REMAND PROCEEDINGS THE DETAILS OF PASS PORT OF MORARI K. KANSUPDA OR HIS I TINERARY WAS PRODUCED. THE LD. CIT(A) WAS JUSTIFIED IN CONFIRMING THE PENA LTY. THEREFORE, THE ORDER OF LD. CIT(A) BE CONFIRMED. 6. AFTER CONSIDERING THE RIVAL SUBMISSIONS, GOING T HROUGH THE MATERIAL ON RECORD AND TAKING INTO CONSIDERATION THE CASE LA WS RELIED ON BY THE LD. COUNSEL OF THE ASSESSEE, WE FIND THAT THE REPAYMENT TO TUSHAR K. KANSUPDA AND MORARI K. KANSUPDA TOTALING TO RS.3,05 ,222/- WAS MADE IN CASH ON VARIOUS DATES IN DECEMBER, 2003 TO FEBRUARY , 2004. IT WAS NOT IMPOSSIBLE TO OPEN BANK ACCOUNT IN THE NAME OF THES E PERSONS WHEN THEY CAME TO INDIA AND THE REPAYMENTS WERE MADE FROM DEC EMBER, 2003 TO FEBRUARY 2004 WHEREAS THE MARRIAGE WAS HELD ON 22.2 .2004. THE LD. CIT(A) HAS OBSERVED THAT NEITHER DURING PENALTY PRO CEEDINGS NOR IN APPELLATE PROCEEDINGS OR REMAND PROCEEDINGS THE DET AILS OF PASSPORT OF MORARI K. KANSUPDA OR HIS ITINERARY WAS PRODUCED. W E FURTHER FIND THAT IN ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 9 THE CASE OF SHRI TUSHAR K. KANSUPDA THOUGH THE COPY OF PASSPORT HAS BEEN FILED BEFORE US BUT THE ITINERARY PORTION OF T HE PASSPORT HAS NOT BEEN FILED. THUS EVEN BEFORE US ALSO NO EVIDENCES IN RES PECT OF VISIT TO INDIA BY THESE PERSONS WERE PRODUCED. AS FAR AS THE AFFIDAVI T OF DR.KHUSHVADAN KANSUPADA IS CONCERNED, NO COGENT MATERIAL HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE TO SUPPORT THE CONTENTS OF THIS AFF IDAVIT. ACCORDINGLY, IT HAS NO EVIDENTIARY VALUE. THEREFORE, WE ARE OF THE CONSIDERED OPINION THAT THE LD. CIT(A) HAS RIGHTLY OBSERVED THAT THE R EASONABLE CAUSE WAS NOT ESTABLISHED AND ACCORDINGLY BE HAS CONFIRMED THE PE NALTY. THERE IS NO INFIRMITY IN HIS ORDER. WE CONFIRM THE SAME. THE AP PEAL FILED BY THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER WAS PRONOUNCED IN OPEN COURT ON 30.11.11. SD/- SD/- (A. K. GARODIA) (D.K. TYAGI) ACCOUNTANT MEMBER JUDICI AL MEMBER AHMEDABAD, MAHATA/- ITA NO.1425/AHD/2007 ASST. YEAR 2004-05 10 COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)- 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD 1.DATE OF DICTATION 28/11/2010. 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER.OTHER MEMBER 30/11/2011 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT.. 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER..