Sri Hiranmoy Gon, Kolkata V. JCIT, Range - 9, Kolkata , Kolkata

ITA 143/KOL/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 3972 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 02-09-2019
• Assessment Year: 2010-2011
• Appeal Filed On: 01-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH JCIT LD
• Assessee Lawyers: CHIRANJIT GOSWAMI FCA LD
• Keywords: Reasonable cause; Tax effect
• Section: 273B; 271D

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, A BENCH, KOLKATA BEFORE SHRI S.S.GODARA , JM & DR. A.L. SAINI, AM ITA NO. 143 /KOL/201 8 A.Y 20 1 0 11 SRI HIRANMOY GON PAN: A DOPG9812 F VS. J.C.I.T, RANGE 9, KOLKATA ( / APPELLANT) .. ( / RESPONDENT) APPELLANT BY : SHRI CHIRANJIT GOSWAMI, FCA, LD.AR RESPONDENT BY : SHRI C.J. SINGH, JCIT, LD.SR.DR / DATE OF HEARING : 0 2 09 2019 \ / DATE OF PRONOUNCEMENT: 08 11 2019 / O R D E R PER DR. A. L. SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE , PERTAINING TO ASSESSMENT YEAR 20 1 0 11 , IS DIRECTED AGAINST THE ORDER DATED 28 11 2017 PASSED BY THE COMMISSIONER OF INCOME TAX , APPEALS 3, KOLKATA I N APPEAL NO. 1979/CIT(A) 3/RANGE 9/KOL/14 15 , WHICH IN TURN ARISES OUT OF A PENALTY ORDER PASSED BY THE ASSESSING OFFICER (JCIT,RANGE 9, KOLKATA ) U/S. 271D OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 29 08 2014 . 2 . B RIEF FACTS QUA THE ISSUE ARE THAT DURING THE SCRUTINY PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE RECEIVED A SUM OF RS 9,65,208 ON VARIOUS DATES IN THE FINANCIAL YEAR 2009 10 FROM HIS WIFE SMT. SUDIPA GON. THE TRANSACTION HAS BEEN EXPLAINED BY THE ASSESSEE BEFORE THE AO, AS AN ' ACCOMMODATION ADVANCE' FOR REASON OF URGENT BUSINESS COMMITMENTS AND THE SAME WAS DULY REFLECTED IN THE CASH ACCOUNT OF THE ASSESSEE AND COPIES OF THE SAME WAS FURNISHED IN THE COURSE OF THE SCRUTINY ASSESSMENT PROCEEDINGS AS WELL AS PENALTY PROCEEDING. T HE ASSESSEE SUBMITTED ITA NO. 14 3/KOL/2018 SRI HIRANMOY GON 2 BEFORE AO THAT THE SAID CASH TRANSACTIONS WERE STRICTLY WITHIN THE FAMILY AND ARE DUE, TO BUSINESS EXIGENCY. IT WAS ARGUED BY ASSESSEE DURING THE PENALTY PROCEEDINGS THAT A FAMILY TRANSACTION BETWEEN TWO INDEPENDENT ASSESSE S BASED O N AN ACT OF CASUALNESS, ESPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF WAS CONTAINED IN THE COMPILATION OF ACCOUNTS, AND WHICH HAD NO TAX EFFECT, ESTABLISH ED 'REASONABLE CAUSE' UNDER SECTION 273B OF THE ACT AND THEREFORE THE PENALTY SHOULD NOT BE LEVIE D . HOWEVER, I T WAS NOT ICED BY AO THAT THE STATEMENT OF ACCOUNTS OF THE ASSESSEE WITH HIS WIFE SMT. SUDIPA GON DISCLOSED THAT OUT OF THE TOTAL SUM OF RS 10,66,668 / RECEIVED BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION , A SUM OF RS 1,01,460/ WA S RECEIVED IN CHEQUE AND THE BALANCE RS 9,65,208/ IN CASH . THE SOURCE OF THE FUND IN THE HAND OF SMT. S UDIPA GON HAD BEEN CASH WITHDRAWALS IN SIMILARLY SMALL QUANTUM FROM THE FAMILY OWNED CORPORATE BODIES AND PARTNERSHIP FIRMS IN HER CAPACITY AS DIRECTOR AND PARTNER. IN SUCH A SITUATION, THE ASSESSEE'S EXPLANATION TOWARDS THE RECEIPTS BEING 'ACCOMMODATION ADVANCE' FOR REASON OF URGENT BUSINESS COMMITMENTS AND THE REFLECTION OF THE SAME IN THE CASH ACCOUNT OF THE ASSESSEE WAS NOT ACCEPTED BY AO. AO ALSO NOTED THAT NO ANY BUSINESS URGENCY / EXIGENCY CAN CONTINUE THROUGHOUT THE YEAR AND ALSO FOR SO MANY TIMES. THERE WERE CONTINUOUS RECEIPTS OF RS 20,000/ BETWEEN THE DATES 30/05/2009 TO 10/06/2009, FROM 16/06/2009 TO 23/06/2009, AND FROM 26/07/2009 TO 29/0 7/2009. HENCE, AO NOTICED THAT ALMOST ROUTINE MANNER OF TRANSACTIONS EFFECTIVELY RULES OUT ANY SCOPE OF BUSINESS EXIGENCY. IT IS, THEREFORE HELD BY AO THAT THE ASSESSEE HAS FAILED TO ESTABLISH 'REASONABLE CAUSE' IN TERMS OF THE SECTION 273B, OF THE ACT. THEREFORE, AO IMPOSED THE PENALTY U/S. 271 D OF THE ACT TO THE TUNE OF RS. 9,65,208/ . 3. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A), WHO HAS CONFIRMED THE PENALTY IMPOSED U/S. 271D OF THE ACT . AGGR IEVED BY THE IMPUGNED ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4 . THE LD. COUNSEL FOR THE ASSESSEE AT THE OUTSET ITSELF SUBMITTED BEFORE THE BENCH THAT TH ESE TRANSACTION S BETWEEN HUSBAND AND WIFE ARE IN ORDER TO MEET THE BUSINESS ITA NO. 14 3/KOL/2018 SRI HIRANMOY GON 3 EXIG ENCY . THE C OUNSEL ALSO SUBMITTED THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE VARIOUS JUDGMENTS OF TH IS TRIBUNAL. 5 . THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVENUE RELIED ON THE IMPUGNED ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD BO TH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT AO HAS IMPOSED PENALTY U/S. 271D OF THE ACT ON ACCOUNT OF CONTRAVENTION OF PROVISIONS OF SECTION 269SS OF THE ACT. THE ASSESSEE HAS RECEIVED RS. 9,65,208/ FROM HIS WIFE IN CASH. WE NOTE THAT LOAN WAS TAKEN FROM A FAMILY MEMBER. THE LD. COUNSEL SUBMITTED BEFORE US THAT THE SAID LOAN WAS TAKEN ON ACCOUNT OF BUSINESS EXIGENCY AND THERE IS COMPLETE DISCLOSURE IN THE BOOKS OF ACCOUNTS. WE NOTE THAT THE SAID LOAN WAS REPAID BY THE END OF THE YEAR AS THE ACCOUNT WAS SQUARED UP., THEREFORE, NO ENTRY WITH RESPECT TO THE LOAN WAS THERE IN THE BALANCE SHEET OF THE ASSESSEE. WE NOTE THAT THERE WAS SUDDEN AND URGENT REQUIREMENT OF FUNDS THEREFORE THE ASSESSEE REC EIVED THE AMOUNT FROM HIS WIFE TO MEET THE BUSINESS EXIGENCY. WE NOTE THAT I T IS A WELL SETTLED POSITION OF LAW , AS HAVE BEEN HELD IN COMMISSIONER OF INCOME TAX V, SUNIL KUMAR GOEL (2009 315 ITR 0163 P&H) THAT IF THE CASH TRANSACTIONS WERE STRICTLY WITHIN THE FAMILY AND DUE TO BUSINES S EXIGENCY , T HE PENALTY U/S. 271D WOULD NOT BE LEVIED. A FAMILY TRANSACTION BETWEEN TWO INDEPENDENT ASSESSES BASED ON AN ACT OF CASUALNESS, SPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF WAS CONTAINED IN THE COMPILATION OF ACCOUNTS, AND WHICH HAD NO TAX EFFECT, ESTABLISHED 'REASONABLE CAUSE' UNDER SECTION 273B OF THE ACT. THE SAME VIEW WAS UPHELD BY THE HON`BLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX V. DECCAN DESIGNS (INDIA) P, LTD. [2012] 347 ITR 0580 ( MAD ) . 7. ON THE IDENTICAL FAC TS, THE OTHER HONBLE HIGH COURTS HAVE HELD AS FOLLOWS: (I) IN CIT. VS. T. PERUMAL (370 ITR 313 MADRAS) IT HAS BEEN HELD THAT GENUINENESS OF THE TRANSACTIONS TO MEET IMMEDIATE NECESSITY AMOUNT TO REASONABLE CAUSE IN TERMS OF SEC. 273B OF THE INCOME TAX ACT AND THEREFORE PENALTY COULD NOT BE LEVIED U/S 271D OF THE INCOME TAX ACT. ITA NO. 14 3/KOL/2018 SRI HIRANMOY GON 4 (II) IN C.I.T. VS NATVARLAL PURSHOTTAMDAS PAREKH (303 ITR 5 GUJRAT) IT HAS ALSO BEEN HELD THAT SINCE THERE WAS REASONABLE CAUSE AND THE 'TRANSACTIONS' WERE WITH THE FAMILY MEMBERS, THE PENALTY COULD NOT BE LEVIED U/S 271D OF THE INCOME TAX ACT. (III) IN C.I.T. VS BALAJI TRADERS (303 ITR 312 MADRAS) IT HAS BEEN HELD THAT IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND THE TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT PAY EE CHEQUE OR DEMAND DRAFT FOR SOME REASON, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY HAS A DISCRETION NOT TO LEVY PENALTY. (IV) IN DR. RAJARAM L. AKHANI VS INCOME TAX OFFICER (395 ITR 497 GUJRAT) IT HAS BEEN HELD THAT ALL THE TRANSACTIONS WERE BROUGHT IN TO THE ACCOUNT OF THE APPELLANT AND THERE WERE CORRESPONDING ENTRIES IN THE BOOK OF ACCOUNT OF THE CREDITOR WHICH SATISFIED THE TEST OF BUSINESS EXIGENCY. AS REGARDS 'DISCLOSURE IN ACCOUNTS' AS OBSERVED IN THE APPELLA TE ORDER, IT MAY BE NOTE D THAT ALL THE SAID TRANSACTIONS WERE DULY RECORDED IN THE BOOKS OF ACCOUNTS MAINTAINED. SINCE THE ACCOUNT WAS SQUARED UP DURING THE RELEVANT ASSESSMENT YEAR, THERE WAS NO SCOPE TO DISCLOSE THE SAME EITHER IN THE STATEMENT OF ACCOUNTS OR IN THE INCOME T AX RETURN SUBMITTED. ALSO AS REGARDS BUSINESS EXIGENCY AS OBSERVED IN THE APPELLA TE ORDER ONE STATEMENT OF FUND UTILIZATION RECEIVED FROM SMT. SUDIPTA GON DURING F.Y 2009 10 , WHICH SHOWS THAT THERE WAS BUSINESS EXIGENCY. SINCE THE ASSESSEE HAD SATISFA CTORILY ESTABLISHED 'REASONABLE CAUSE' UNDER SECTION 273B OF THE ACT, THE PENALTY SHOULD NOT BE LEVIED. HENCE, WE DELETE THE IMPUGNED PENALTY OF RS. 9,65,208/ IMPOSED U/S. 271 D OF THE ACT AND CONFIRMED BY THE LD. CIT(A). 8. IN THE RESULT, THE APPEAL OF T HE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 08 / 11 /2019 SD/ ( S.S.GODARA ) SD/ (A. L. S AINI ) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; DATED: 08 / 11 /2019 *PP, SR.PS ITA NO. 14 3/KOL/2018 SRI HIRANMOY GON 5 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT SRI HIRAN MOY GON 1/105 M.M. GHOSH ROAD, KOLKATA 74. 2. / THE RESPONDENT. THE J.C.I.T, RANGE 9, AAYKAR BHAWAN, KOLKATA 69. 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, K OLKATA 6. / GUARD FILE. //TRUE COPY// BY ORDER ASSISTANT REGISTRAR, I.T.A.T, KOLKATA BENCHES, KOLKATA .