ITO, Mandi V. Sh. Divesh Gupta, Mandi

ITA 145/CHANDI/2011

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 1339 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 04-02-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SHREE SHARMA
• Assessee Lawyers: MEGHA GUPTA
• Keywords: Reasonable cause; Onus to prove; Ignorance of law
• Section: 273B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI D.K.SRIVASTAVA, ACCOUNTANT MEMBER AND MS SUSHMA CHOWLA, JUDICIAL MEMBER ITA NO. 145/CHD/2011 ASSESSMENT YEAR: 2006-07 THE ITO, VS. SHRI DIVESH GUPTA PROP. SUNDERNAGAR, DURGA MEDICAL STORE, DISTT. MANDI (HP) SUNDERNAGAR, DISTT. MANDH (HP) (APPELLANT) (RESPONDENT) APPELLANT BY : SMT. JAI SHREE SHARMA RESPONDENT BY: MS. MEGHA GUPTA & SHRI VARUN GUPTA ORDER PER SUSHMA CHOWLA, JM THE APPEAL BY THE REVENUE IS AGAINST THE ORDER OF C IT(A), SHIMLA DATED 25.11.2010 RELATING TO ASSESSMENT YEAR 2006-0 7 AGAINST THE ORDER PASSED UNDER SECTION 271D OF THE I.T. ACT, 1961. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUND OF A PPEAL:- ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN CANCELING THE PENALTY OF RS. 2,35,000/- LEVIED UNDER SECTION 271D, AS IGNORANCE OF LAW IS NO EXCUSE AND REASONABLE CAUSE FOR ACCEPTING LOANS IN CASH HAD NOT BEEN SHOWN. 2 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST THE PENALTY LEVIED U/S 271D OF THE ACT. 4. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION WAS FOUND TO HAVE ACCEPTED UNSECURED LOAN IN CASH FROM VARIOUS PERSON S IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. THE EXPLAN ATION OF THE ASSESSEE THAT THIS BEING THE FIRST YEAR OF BUSINESS AND IMMA TURITY OF AGE WAS REJECTED BY THE ASSESSING OFFICER AND PENALTY OF RS . 2,35,000/- WAS LEVIED U/S 271-D OF THE ACT. THE SAID PENALTY WAS DELETED BY THE CIT(A) IN VIEW OF THE EXPLANATION OF THE ASSESSEE AND WITH REGARD TO THE REASONABLE CAUSE IN ACCEPTING THE LOAN IN CASH DURING THE YEAR. THE REVENUE IS IN APPEAL AGAINST THE SAID ORDER OF THE CIT(A). 5. SMT.JAISHREE SHARMA APPEARED FOR THE REVENUE AND MS. MEGHA GUPTA ALONGWITH SHRI VARUN GUPTA APPEARED FOR THE A SSESSEE AND PUT FORWARD THEIR CONTENTIONS. . 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORDS. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD ST ARTED ITS BUSINESS ON 5 TH DECEMBER 2005. THE ASSESSEE WAS A NEW ENTRANT IN T HE BUSINESS ACTIVITY AND IN ORDER TO START ITS BUSINESS, CERTAI N LOANS WERE RAISED DURING THE YEAR. THE ASSESSEE HAD RECEIVED UNDER MENTIONE D AMOUNTS IN CASH FROM THE RESPECTIVE PARTIES. S.NO. NAME AMOUNT (IN RS.) RECEIVED IN CASH 1. SHRI KANSHI RAM S/O SHRI SARDARU RAM, 60,000/- 2 KUMARI BANDANA GUPTA 60,000/- (RS. 10,000/- IN CASH) 3 3 SHRI PAWAN KUMAR GUPTA S/O SHRI KANSHI RAM GUPTA 50,000/- 4 SMT. BABLI GUPTA W/O SHRI DHARAM PAL GUPTA 30,000/- 5 SHRI P.C. GUPTA 20,000/- 6 SHRI H.R. GUPTA S/O LATE SHRI JAI KISHAN GUPTA 20,000/- 7 SHRI B.D. MAHAJAN, SHIMLA 20,000/- 8 SHRI GHANSHYAM GUPTA S.O SHRI MUKUND LAL GUPTA 25,000/- 7. THE EXPLANATION OF THE ASSESSEE IN THIS REGARD W AS AS UNDER:- THAT THE DETAIL OF UNSECURED LOAN HAD BEEN DULY SU PPLIED TO THE ITO, SUNDERNAGAR IN CONNECTION WITH SAID ASSESS MENT. ALL THE DESIRED PARTICULARS AS TO THE LENDERS BANK ACCO UNT NUMBER AND PAN HAD BEEN SUPPLIED JUSTIFYING THEIR CREDITWORTHINESS.. THE BORROWINGS AND LENDING WAS TRUE AND TRANSPARENT. EVERY THING WAS DONE IN GOOD FAITH. I DO VERY HONESTLY ADMIT THAT THERE OCCURRED UNINTE NDED ABERRATION OF THE LAW ON ACCOUNT OF MY BEING NEW TO BUSINESS AND IMMATURITY OF AGE AND EXPERIENCE BUT THERE HAD NEVER BEEN ANY ATTEMPT TO EVADE THE LAW. SUCH AN ENTRY TO GETHER WITH COLLATERAL EVIDENCE IS EVEN DEEMED SUFFICIENT PROOF OF A FACT IN ISSUE UNDER SECTION 34 OF THE INDIAN EVIDEN CE ACT, 1872 AND I HAVE DISCHARGED THE BURDEN OF PROOF CAST ON M E FULLY. IN VIEW OF THE FACTS AND CIRCUMSTANCE NARRATED ABOV E, I TAKE THIS OPPORTUNITY TO REQUEST YOU KINDLY TO TAKE A LE NIENT VIEW OF THE MATTER AND CHARGE ME WITH NORMAL TAX ONLY EXCLU DING ANY PENALTY. 4 8. UNDER THE PROVISIONS OF SECTION 271-D OF THE ACT , PENALTY IS ATTRACTED FOR FAILURE TO COMPLY WITH THE PROVISIONS OF SECTION 269SS OF THE ACT, WHICH STIPULATES THAT NO PERSON SHALL TAKE OR ACCEPT FROM ANOTHER PERSON ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACC OUNT PAYEE CHEQUE / DRAFT EXCEEDING RS. 20,000/- OR MORE, WHETHER IN W HOLE OR IN PART. IN THE FACTS OF THE PRESENT CASE BEFORE US, ADMITTEDLY THE ASSESSEE HAD VIOLATED THE PROVISIONS OF SECTION 269 SS OF THE INCOME TAX ACT. THE ISSUE RAISED BEFORE US IS WITH REGARD TO THE PENALTY LEVIED U/S 271D OF THE ACT. UNDER SECTION 273B OF THE ACT, IT IS PROVIDED THAT NOTWIT HSTANDING ANYTHING CONTAINED IN THE PROVISIONS RELATING TO LEVY OF PEN ALTY UNDER VARIOUS SECTIONS, NO PENALTY IS IMPOSABLE ON THE PERSON IN CASE HE PROVES THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE. THE ASSESSEE BEFORE US HAD EXPLAINED THAT BECAUSE OF HIS IMMATURITY OF AGE AND EXPERIENCE, THE SAID LOANS WERE RAISED IN CASH FOR THE PURPOSE OF I NVESTMENT IN HIS NEW BUSINESS. HOWEVER, THE PARTICULARS OF THE LENDERS INCLUDING THEIR BANK ACCOUNT NUMBERS AND PAN NUMBERS WERE FURNISHED TO P ROVE THEIR CREDITWORTHINESS. IN THE ABOVE SAID CIRCUMSTANCES, WE ARE IN CONFORMITY WITH THE ORDER OF CIT(A) IN HOLDING THAT THERE WAS A REASONABLE CAUSE FOR THE SAID FAILURE ON THE PART OF THE ASSESSEE. ACCO RDINGLY, WE HOLD THAT THE ASSESSEE IS NOT EXIGIBLE TO LEVY OF PENALTY U/S 271 D OF THE INCOME TAX ACT. THE GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 9. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF MARCH, 2011. SD/- SD/- (D.K.SRIVASTAVA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 23 RD MARCH, 2011 5 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR