The ITO, Ward-5(2), Baroda V. V.S.Hostel, Baroda

ITA 151/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6450 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 06-06-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 15-01-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: NONEWRITTEN SUBMISSIONS
• Keywords: Charitable institution; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH 'D' BEFORE SHRI MUKUL SHRAWAT,JM & SHRI A N PAHUJA,AM ITA NOS.151 & 152/AHD/2009 (ASSESSMENT YEAR:-2004-05) INCOME-TAX OFFICER, WARD- 5(2), 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA V/S M/S V S HOSTEL, VIP ROAD, KARELIBAUG, BARODA-390018 PAN: AADFV 2575 N [APPELLANT] [RESPONDENT] REVENUE BY :- SHRI B L YADAV, DR ASSESSEE BY:- NONE[WRITTEN SUBMISSIONS] O R D E R A N PAHUJA: THESE TWO APPEALS BY THE REVENUE AGAINST TWO SEPARATE ORDERS DATED 13-10-2008 OF THE LD. CIT(APP EALS)-V, BARODA FOR THE ASSESSMENT YEAR 2004-05, CANCELLING THE PENALTIES OF RS. 24,52,740/- AND RS.30,92,911/-LEVIED U/S 271D & 271 E OF THE INCOME-TAX ACT,1961[HEREINAFTER REFERRED TO AS THE ACT] RESPECTIVELY. FOLLOWING GROUNDS ARE RAISED IN THE SE TWO APPEALS: ITA NO.151/AHD/2009: [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE THE LD. CIT(A) HAS ERRED IN CANCELING THE ORDER LEVYING PEN ALTY OF RS.24,52,740/- UNDER SECTION 271D OF THE ACT WITHOU T CONSIDERING THE FACT THAT THERE WAS NO REASONABLE CAUSE FOR THE ASSESSEE TO INDULGE IN TO CASH TRANSACTIONS. [2] THE LD. CIT(A) HAS ALSO ERRED IN HOLDING THAT T HE TRANSACTIONS ARE IN THE NATURE OF CURRENT ACCOUNT WHEREAS THE AS SESSEES AUDITOR HAD REPORTED THESE TRANSACTIONS AS LOAN / DEPOSITS IN ITS STATUTORY REPORT IN FORM 3(1). RELIEF CLAIMED IN APPEAL. THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN TH E AFORESAID GROUNDS BE SET ASIDE AND THAT THE ORDER OF THE AO B E RESTORED . 2 ITA NOS.151 & 152/AHD/2009 2 ITA NO.152/AHD/2009: [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE THE LD. CIT(A) HAS ERRED IN CANCELING THE ORDER LEVYING PEN ALTY OF RS.30,92,911/- UNDER SECTION 271E OF THE ACT WITHOU T CONSIDERING THE FACT THAT THERE WAS NO REASONABLE CAUSE FOR THE ASS ESSEE TO INDULGE IN TO CASH TRANSACTIONS IN VIOLATION OF SECTION 269 T OF THE ACT. [2] THE LD. CIT(A) HAS ERRED IN DISREGARDING THE FA CT THAT THE STATUTORY AUDITORS IN THEIR REPORT IN FORM 3(1) HAS REPORTED THESE TRANSACTIONS AS LOAN / DEPOSITS WHEREAS CIT(A) HAS TERMED THEM AS TRANSACTIONS IN CURRENT ACCOUNT. RELIEF CLAIMED IN APPEAL. THE ORDER OF THE CIT(A) ON THE ISSUES RAISED IN TH E AFORESAID GROUNDS BE SET ASIDE AND THAT THE ORDER OF THE AO B E RESTORED. 2. NONE APPEARED ON BEHALF OF THE ASSESSE; INSTEAD WRITTEN SUBMISSIONS HAVE BEEN FILED . WE, THEREFORE, DECIDE D TO DISPOSE OF THE APPEAL IN THE LIGHT OF THESE WRITTEN SUBMISSION S, AFTER HEARING THE LEARNED DEPARTMENTAL REPRESENTATIVE. 3 ADVERTING TO GROUND NOS. 1 & 2 IN THESE TWO APPEA LS, FACTS, IN BRIEF ,AS PER RELEVANT ORDERS ARE THAT THE ADDL. CI T NOTICED DURING THE YEAR UNDER CONSIDERATION THAT THE ASSESSEE ACCEPTED AND REPAID FOLLOWING AMOUNT OF LOANS / DEPOSITS OTHERWISE THAN BY CROSSED CHEQUES / DRAFTS IN CONTRAVENTION TO THE PROVISIONS OF SECTION 269SS & 269T OF THE ACT:- SR. NO. NAME OF THE DEPOSITOR/REPAYER AMOUNT OF LOAN OR DEPOSITS TAKEN OR ACCEPTED AMOUNT OF LOAN OR DEPOSITS REPAID 1 AMBE VIDYALAYA (PRIMARY ENGLISH SECTION) 1,10,565/- 1,80,475/- 2 AMBE VIDYALAYA (PRIMARY GUJARATI SECTION) 1,75,770/- 2,81,350/- 3 JAI AMBE VIDYALAYA (SECONDARY SECTION) 4,62,230/- 8,96,565/- 4 JAI AMBE VIDYALAYA (HIGHER SECONDARY SECTION) 2,25,000/- 5,63,235/- 3 ITA NOS.151 & 152/AHD/2009 3 5 AMBE DAY SCHOOL 7,58,000/- 5,28,286/- 6 AMBE VIDYALAYA (K.G. SECTION) 21,175/- 1,43,000/- 7 OM EDUCATION TRUST 7,00,000/- 5,00,000/- 3.1 IN RESPONSE TO A SHOWCAUSE NOTICE ISSUED U/S 271D & 271E OF THE ACT, THE ASSESSEE REPLIED THAT SHRI SURYAKAN T R SHAH, IS THE SPOUSE OF THE PARTNER OF THE ASSESSEE FIRM AND THE TRUSTE E OF BG EDUCATION TRUST, WHICH IS RUNNING SCHOOL IN THE NAME 'AMBE VLDYALAYA'. T HE COLLECTION CENTRE FOR THE FEES OF THE HOSTEL AND THE SCHOOL WAS AT A SINGLE PL ACE. SOMETIMES THE FEES COLLECTED BY THE HOSTEL WERE HANDED OVER TO SHRI S R S HAH AS THE WORKING HOURS OF THE BANK MIGHT HAVE BEEN OVER. SINCE SHRI S R SHAH HELD THE CASH ON BEHALF OF THE HOSTEL FOR ITS SAFE CUSTODY, THAT DOES NOT IMPLY THAT THE HOSTEL HAD GIVEN ANY LOAN TO THAT PERSON. SIMILARLY IF SOME AMOUNT IS R ECEIVED FROM SHRI S R SHAH THAT DOES NOT MEAN THAT THE HOSTEL ACCEPTED ANY LOAN FROM SHRI S R SHAH IN CASH. IF SOME EXPENDITURE WAS INCURRED BY THE HOSTEL FOR THE SCHOOL STUDENTS AND THE AMOUNT REIMBURSED TO THE HOSTEL BY THE MANAGING T RUSTEE OF THE SCHOOL, I.E. SHRI SURYAKANT R SHAH, DID NOT BECOME DEPOSIT OR LO AN GIVEN OR TAKEN BY WAY OF CASH. ACCORDINGLY, WHILE RELYING ON THE DECISIONS IN MUTHOOT M GEORGE BROS V/S ACIT, 74 TAXMAN 290 (COCH.) (MAG) , ASST. DIRECTOR OF INSPECTION (INVESTIGATION) V. KUM. A. B. SHANTHI AN D CHAMUNDI GRANITES PVT. LTD. V. DEPUTY COMMISSIONER OF INCOME -TAX (2002), 255 ITR 258 (SC) AND RAKESH KUMAR SHAW V. COMMISSI ONER OF INCOME-TAX (2002), 257 ITR 268 (CAL), THE ASSESSEE PLEADED THAT THERE WAS NO CONTRAVENTION OF THE PROVISIONS OF SEC TION 269SS & 269T OF THE ACT AND THEREFORE, THEY WERE NOT LIABLE FOR ANY PENALTY U/S 271D & 271E OF THE ACT. HOWEVER, THE ADDL. CIT DID NOT ACCEPT THE SUBMISSIONS OF THE ASSESSEE ON THE GROUND THE TRANSACTIONS WERE REPORTED IN THE STATUTORY AUDIT REPORT AND THE ASSESSEE DID NOT ESTABLISH WITH REFERENCE TO EACH OF THE TRANSACTION THAT SHRI SU RYAKANT R SHAH ACTED AS A CUSTODIAN ONLY, HOLDING THE MONEY FOR BRIEF PERIOD, A ND THAT THE SAME WERE DEPOSITED !N THE HOSTEL'S BANK ACCOUNT AT THE EARLIEST OP PORTUNITY. ACCORDINGLY, 4 ITA NOS.151 & 152/AHD/2009 4 THE ADDL. CIT IMPOSED A PENALTY OF RS.24,52,740/- & RS.30,92,911/- U/S 27ID & 271E OF THE ACT RESPECTIVELY. 4. ON APPEAL, THE LEARNED CIT(A) CANCELLED THE PENA LTY LEVIED U/S 271D OF THE ACT IN THE FOLLOWING TERMS:- 3.3 DURING THE COURSE OF APPELLATE PROCEEDINGS, THE AR HAD FURNISHED CERTAIN EVIDENCES RELATING TO THE PENALTY INITI ATED UNDER SECTION 27ID OF THE ACT FOR CONTRAVENTION OF PROVISIONS OF SEC.269 SS OF THE ACT. THE SAME WERE FORWARDED TO THE AO FOR HIS COMMENTS WHI CH IN TURN, THE AO VIDE HIS REMAND REPORT DATED 12.09.2008 SUBMITTED H IS COMMENTS. THE GIST OF THE AO'S COMMENTS IS AS UNDER: 3.3.1 ON EXAMINATION, THE AO FOUND THAT IN THE FOLL OWING 5 CASES ACCOUNTS WERE CREDITED BY PASSING JOURNAL ENTRIES FOR VARIO US FEES, THE DETAILS OF WHICH ARE AS UNDER: SR. NO. NAME TO WHOM CASH PAYMENT WAS MADE AMOUNT PAID (RS.) 1 AMBE VIDYALAYA (PE) 1,10,565 2 AMBE VIDYALAYA (PG) 1,75,770 3 AMBE VIDYALAYA (SEC) 4,62,230 4 JAY AMBE VIDYALAYA (HS) 2,25,000 5 AMBE VIDYALAYA (KG) 21,175 TOTAL 9,94,740 3.3.2 IN RESPECT OF THE TRANSACTION OF RS.7,58,000/-BE TWEEN AMBE DAY SCHOOL AND THE APPELLANT IT WAS THROUGH CHEQUE TRAN SACTION AND AS SUCH NO VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT HAVE OCCURRED. LIKE THAT THE TRANSACTION OF RS.7,00,000/- BETWEEN OM E DUCATION TRUST AND THE APPELLANT, THE TRANSACTION WAS ALSO THROUGH CH EQUE PAYMENT AND AS SUCH THERE WAS NO VIOLATION OF PROVISIONS OF SECTION 26 9SS OF THE ACT. IN VIEW OF THIS, AS PER THE REMAND REPORT, THERE WAS A VIOL ATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT IN RESPECT OF FIVE PARTIES MENTIONED ABOVE AMOUNTING TO RS.9,94,740 /-. 4. THE APPELLANT HAS SUBMITTED THAT IN THIS CASE, THE ST UDENTS OF V.S. HOSTEL STUDY IN AMBE VIDYALAYA RUN BY B.G. EDUCATION TRUST . BOTH THE SCHOOL AND HOSTEL ARE IN THE SAME PREMISES. BOTH OF THEM COLLECT FEES FROM SAME STUDENTS. THERE ARE COLLECTION CENTRES FOR FEE OF TH E HOSTEL AND THE 5 ITA NOS.151 & 152/AHD/2009 5 SCHOOL IN THE PREMISES. IT IS SUBMITTED THAT, SOME TIMES CO NSOLIDATED AMOUNT IS RECEIVED FOR FEES OF BOTH HOSTEL AND SCHOOL AN D THE AMOUNT RECEIVED BY ASSESSEE. THE PART THEREOF RELATING TO AMBE VI DYALAYA IS CREDITED TO THE ACCOUNT OF THE SAID SCHOOL. THESE TRANSACTI ONS OF CREDIT TO AMBE VIDYALAYA DOES NOT REPRESENT LOAN OR DEPOSIT RECE IVED FORM AMBE VIDYALAYA BUT REPRESENTS RECEIPT OF FEES FROM STUDENTS ON T HEIR BEHALF, CREDITED TO THEIR ACCOUNT. THESE AMOUNTS SO LEVIED ON THA T BASIS. SUCH TRANSACTIONS ARE ACTUALLY TRANSACTIONS ON CURRENT ACCOUNT IN W HICH FEES OF OTHER INSTITUTION ARE COLLECTED BY ASSESSEE AND THEREAFTER ACCOUNTS ARE SETTLED BY PAYMENT OR RECEIPT. THESE ARE NOT TRANSACTIONS IN THE NATURE OF LOANS OR DEPOSITS AND NO INTEREST IS CHARGED OR RECEIVED. 4.1 IT IS FURTHER SUBMITTED WITHOUT PREJUDICE THAT E VEN IF THE TRANSACTIONS ARE CONSTRUED AS LOANS OR DEPOSIT, PENALTY IS N OT LEVIABLE AS THE TRANSACTIONS ARE BONA FIDE AND THERE IS NO TAX EVASIO N. 4.2 THE ARGUMENTS ARE SUMMARIZED AS UNDER: 4.2.1 THAT THE TRANSACTIONS IN THIS CASE ARE IN THE NAT URE OF CURRENT ACCOUNT AND NOT IN THE NATURE OF LOAN OR DEPOSIT IN AS MUCH AS NO INTEREST IS PAID. HENCE, PROVISIONS OF SECTION 269SS ARE NOT APPLICA BLE. - 4.2.2 WITHOUT PREJUDICE, EVEN IF PROVISIONS OF SECTION 2 69SS ARE APPLICABLE, NO PENALTY IS LEVIABLE IN VIEW OF THE FOLLOW ING: 4.2.2.3 IT MAY BE NOTED THAT THE CIRCUMSTANCES FOR RECEIPT OF THESE AMOUNTS ARE ALREADY EXPLAINED. THAT AMOUNTS ARE CREDITED TO ACCOUNT OF CHARITABLE TRUST WHICH IS REGULARLY ASSESSED TO TAX AND WHICH FILES RETURNS BUT IS NOT LIABLE TO TAX. BOTH THE PARTIES TO THE TRA NSACTION ARE IDENTIFIED AND ASSESSED TO TAX. THERE IS NO EVASION OF TAX EITHER ACTUAL OR EVEN ALLEGED AS SEEN FROM THE PENALTY ORDER AND THE REMAND REPORT. T HAT ASSESSEE WAS NOT AWARE THAT GENUINE TRANSACTIONS IN CASH COULD ATTRACT PENALTY. IN THESE CIRCUMSTANCES, PENALTY IS NOT JUSTIFIED WHEN THERE IS NO ALL EGATION OF ANY EVASION OF TAX AND THERE IS ONLY A TECHNICAL OR VENIAL BR EACH OF PROVISIONS OF SECTION 269SS. 4.2.2.4 UNDER SECTION 271D, WHENEVER THERE IS CONTRAVENT ION OF PROVISIONS OF SECTION 269SS, PENALTY IS NOT AUTOMATIC BUT OPPORTUNITY OF HEARING HAS TO BE GIVEN TO THE ASSESSEE AND PENALTY IS LEVI ABLE ONLY WHEN THERE IS NO REASONABLE CAUSE. 4.2.2.5 RELIANCE IS PLACED ON VARIOUS DECISIONS INCLUDING THE FOLLOWING: DECISION OF MADRAS HIGH COURT IN CASE OF CIT VS. IDHAYAM P UBLICATIONS LIMITED (285 ITR 221) ACCORDING TO WHICH PROVISIONS OF SECT IONS 269SS AND 269T ARE NOT APPLICABLE TO CURRENT ACCOUNTS. 6 ITA NOS.151 & 152/AHD/2009 6 DECISIONS OF AHMEDABAD BENCH OF ITAT IN CASE OF SHREENAT H BUILDERS VS. DCIT (66 TTJ 113) ACCORDING TO WHICH PENALTY UNDER SECTIO N 269SS AND 269 T IS NOT APPLICABLE IN CASE OF BONA FIDE TRANSACTIONS, EVEN IF VIOLATING SECTION 269SS. DECISION OF AHMEDABAD BENCH OF ITAT IN CASE OF SHREENAT HJI CORPORATION VS. ACIT (58 TTJ 611) IS ON THE POINT AT ISSUE. DECISION OF MUMBAI BENCH OF ITAT IN CASE OF DR. DEEPAK MU CHHALA VS. ITO (58 TTJ 524) ALSO SUPPORTS THE CASE IN HAND. 4.2.2.6 IN THE CIRCUMSTANCES, IT IS PRAYED THAT THE PENALT Y LEVIED BY THE AO DESERVES TO BE DELETED. 5. I HAVE CONSIDERED THE FACTS OF THE CASE, THE OBSERVATI ONS OF THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT ALONG WITH THE JUDICIAL DECISIONS CITED. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF TH E CASE, I AM OF THE OPINION THAT THERE IS NO BREACH OF PROVISIONS OF SECTI ON 269SS IN THIS CASE AS THE TRANSACTIONS ARE IN THE NATURE OF CURRENT ACCO UNT. FURTHER, EVEN IF THERE IS VIOLATION OF THE PROVISIONS OF SECTION 269SS, THE VIOLATION IS AT THE MOST OF TECHNICAL OR VENIAL IN NATURE WITH NO TAX IMPLICA TION OR TAX EVASION. CONSIDERING THE ABOVE, I HAVE NO HESITATION IN DELETIN G THE PENALTY IN THIS CASE. 5. LIKEWISE PENALTY U/S 271E WAS CANCELLED BY TH E LD. CIT(A),HOLDING AS UNDER: 3.3 DURING THE COURSE OF APPELLATE PROCEEDINGS, T HE AR HAD FURNISHED CERTAIN EVIDENCES RELATING TO THE PENALTY INITIATED UNDER SECTION 27IE OF THE ACT FOR CONTRAVENTION OF PROVIS IONS OF SEC.269 T OF THE ACT. THE SAME WERE FORWARDED TO THE AO FOR H IS COMMENTS WHICH IN TURN, THE AO VIDE HIS REMAND REPORT DATED 12.09.2008 SUBMITTED HIS COMMENTS. THE GIST OF THE AO'S COMMEN TS IS AS UNDER: 3.4 THE AO ON VERIFICATION REPORTED THE FACTUAL DE TAILS OF THE CASE BY CLASSIFYING THE VARIOUS AMOUNTS AS UNDER:- A. PAYMENTS IN CASH 1203155 B. PAYMENTS BY CHEQUE 210000 C. DEBITS BY JOURNAL ENTRIES 1036756 D. AMOUNTS INCORRECTLY CONSIDERED AS REPAYMENTS 643000 7 ITA NOS.151 & 152/AHD/2009 7 3.5 IN THE LIGHT OF ABOVE, NO PENALTY IS APPARENTL Y LEVIABLE AS REGARDS AMOUNTS AS PER B AND D FOR THE REASON THAT THERE IS NO CONTRAVENTION OF THE PROVISIONS OF SECTION 269T. AL SO REGARDING AMOUNTS AS PER C, THE AMOUNTS REPRESENT JOURNAL ENT RIES AND NOT ACTUAL ACCEPTANCE OR REPAYMENT OF ANY AMOUNT AND HE NCE IN THESE CASES ALSO THERE WAS NO VIOLATION OF SECTION 269T ( THIS VIEW ACCORDS WITH THE DECISION OF DELHI HIGH COURT IN THE CASE O F CIT VS. NOIDA TOLL BRIDGE CO. LTD. (262 ITR 260). 3.6 REGARDING THE OTHER AMOUNTS, PAID IN CASH, THE APPELLANT HAS SUBMITTED THE FOLLOWING:- 3.6.1 THAT THE TRANSACTIONS IN THIS CASE ARE IN TH E NATURE OF CURRENT ACCOUNT AND NOT IN THE NATURE OF LOAN OR DE POSIT IN AS MUCH AS NO INTEREST IS PAID. HENCE, PROVISIONS OF SECTIO N 269SS AND 269T ARE NOT APPLICABLE. THAT THE CIRCUMSTANCES FOR MAKI NG THESE PAYMENTS ARE ALREADY EXPLAINED. THAT REPAYMENTS ARE MADE TO CHARITABLE TRUST WHICH IS REGULARLY ASSESSED TO TAX AND WHICH IS LIABLE TO FILE RETURN BUT IS NOT LIABLE TO TAX. BOT H THE PARTIES TO THE TRANSACTION ARE IDENTIFIED AND ASSESSED TO TAX. THE RE IS NO EVASION OF TAX EITHER ACTUAL OR EVEN ALLEGED AS SEEN FROM T HE PENALTY ORDER AND THE REMAND REPORT. THAT ASSESSEE WAS NOT AWARE THAT GENUINE TRANSACTIONS IN CASH COULD ATTRACT PENALTY. IN THES E CIRCUMSTANCES, PENALTY IS NOT JUSTIFIED WHEN THERE IS NO ALLEGATIO N OF ANY EVASION OF TAX AND THERE IS ONLY A TECHNICAL OR VENIAL BREACH OF PROVISIONS OF SECTION 269T. 3.6.2 UNDER SECTION 271E, WHENEVER THERE IS CONTRAV ENTION OF PROVISIONS OF SECTION 269T, PENALTY IS NOT AUTOMATI C BUT OPPORTUNITY OF HEARING HAS TO BE GIVEN TO THE ASSESSEE AND PENA LTY IS LEVIABLE ONLY WHEN THERE IS NO REASONABLE CAUSE. 3.6.3 RELIANCE IS PLACED ON VARIOUS DECISIONS INCLU DING THE FOLLOWING: DECISION OF MADRAS HIGH COURT IN CASE OF CIT VS. ID HAYAM PUBLICATIONS LIMITED (285 ITR 221) ACCORDING TO WHI CH PROVISIONS OF SECTIONS 269SS AND 269T ARE NOT APPLICABLE TO CURRE NT ACCOUNTS. DECISIONS OF AHMEDABAD BENCH OF ITAT IN CASE OF SHR EENATH BUILDERS VS. DCIT (66 TTJ 113) ACCORDING TO WHICH P ENALTY UNDER SECTION 269SS AND 269 T IS NOT APPLICABLE IN CASE O F BONA FIDE TRANSACTIONS, EVEN IF VIOLATING SECTION 269SS. DECISION OF AHMEDABAD BENCH OF ITAT IN CASE OF SHRE ENATHJI CORPORATION VS. ACIT (58 TTJ 611) IS ON THE POINT A T ISSUE. DECISION OF MUMBAI BENCH OF ITAT IN CASE OF DR. DEE PAK MUCHHALA VS. ITO (58 TTJ 524) ALSO SUPPORTS THE CASE IN HAND . 8 ITA NOS.151 & 152/AHD/2009 8 3.6.4 IN THE CIRCUMSTANCES, IT IS PRAYED THAT THE P ENALTY LEVIED BY THE AO DESERVES TO BE DELETED. 4 I HAVE CONSIDERED THE FACTS OF THE CASE, THE OBS ERVATIONS OF THE AO AND THE SUBMISSIONS MADE BY THE APPELLANT ALONG WITH THE JUDICIAL DECISIONS CITED. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE. I AM OF THE OPINION THAT THERE IS NO BREACH O F PROVISIONS OF SECTION 269T IN THIS CASE AS THE TRANSACTIONS ARE I N THE NATURE OF CURRENT ACCOUNT. FURTHER, EVEN IF THERE IS VIOLATIO N OF THE PROVISIONS OF SECTION 269T, THE VIOLATION IS AT THE MOST OF TE CHNICAL OR VENIAL IN NATURE WITH NO TAX IMPLICATION OR TAX EVASION. CONS IDERING THE ABOVE, I HAVE NO HESITATION IN DELETING THE PENALTY IN THI S CASE. 6 THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST TH E AFORESAID FINDINGS OF THE LEARNED CIT(A). THE LEARNED DR SUPP ORTED THE ORDER OF THE ADDL. CIT. ON THE OTHER HAND, THE ASSESSEE CONTENDED IN THEIR WRITTEN SUBMISSIONS THAT T HE TRANSACTIONS BETWEEN THE DIFFERENT SECTIONS OF THE SCHOOL AND THE HOSTEL AND THROUGH JOURNA L ENTRIES OR CHEQUE , WERE NEITHER LOAN NOR DEPOSIT, ACCEPTED OR REPAID BY THE ASSESSEE . RELYING UPON THE DECISION IN MUTHOOT M GEORGE BROS V/S. ACIT 74 TAXMAN 290(COCH.)(MAG.)., THE ASSESSEE SUPPORTED THE FINDINGS OF THE LD. CIT(A) . 7. WE HAVE HEARD THE LD. DR AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID WRITTEN SUBMISSIONS. BEF ORE PROCEEDING FURTHER, WE MAY HAVE A LOOK AT THE RELEVANT PROVIS IONS OF SEC. 269SS OF THE ACT, WHICH READ AS UNDER: ' NO PERSON SHALL, AFTER THE 30TH DAY OF JUNE, 1984 , TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREAFTER IN THIS SECTION RE FERRED TO AS THE DEPOSITOR), ANY LOAN OR DEPOSIT OTHERWISE THAN BY A N ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT IF,- (A) THE AMOUNT OF SUCH LOAN OR DEPOSIT OR THE AGGRE GATE AMOUNT OF SUCH LOAN AND DEPOSIT; OR (B) ON THE DATE OF TAKING OR ACCEPTING SUCH LOAN OR DEPOSIT, ANY LOAN OR DEPOSIT TAKEN OR ACCEPTED EARLIER BY SUCH PERSON FROM THE DEPOSITOR IS REMAINING UNPAID (WHETHER REPAYMENT HA S FALLEN DUE OR NOT), THE AMOUNT OR THE AGGREGATE AMOUNT REMAINING UNPAID; OR (C) THE AMOUNT OR THE AGGREGATE AMOUNT REFERRED TO IN CLAUSE (A) TOGETHER WITH THE AMOUNT OR THE AGGREGATE AMOUNT RE FERRED TO IN CLAUSE (B), IS TWENTY THOUSAND RUPEES OR MORE: 9 ITA NOS.151 & 152/AHD/2009 9 .. EXPLANATION: FOR THE PURPOSE OF THIS SECTION, (III) 'LOAN OR DEPOSIT' MEANS LOAN OR DEPOSIT OF MO NEY.' 7.1 THE PROVISIONS OF SECTION 269T OF THE ACT RE AD AS UNDER: 269T.MODE OF REPAYMENT OF CERTAIN DEPOSITS. NO BRANCH OF A BANKING COMPANY OR A CO-OPERATIVE B ANK AND NO OTHER COMPANY OR CO-OPERATIVE SOCIETY AND NO FIRM O R OTHER PERSON SHALL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERW ISE THAN BY AN ACCOUNT PAYEE CHEQUE OR ACCOUNT PAYEE BANK DRAFT DR AWN IN THE NAME 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 H ELD BY SUCH PERSON WITH THE BRANCH OF THE BANKING COMPANY OR CO -OPERATIVE BANK OR, AS THE CASE MAY BE, THE OTHER COMPANY OR CO-OPE RATIVE 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: EXPLANATION.- FOR THE PURPOSES OF THIS SECTION,- (III) 'LOAN OR DEPOSIT' MEANS ANY LOAN OR DEPOSIT OF MONEY WHICH IS REPAYABLE AFTER NOTICE OR REPAYABLE AFTER A PERIOD AND, IN THE CASE OF A PERSON OTHER THAN A COMPANY, INCLUDES LOAN OR DEP OSIT OF ANY NATURE. 7.2 THE AFORESAID PROVISIONS OF S. 269SS & 269 T SAY THAT IF THE STIPULATED AMOUNT OF LOAN OR DEPOSIT IS ACCEPTED O R REPAID OTHERWISE THAN BY CROSSED CHEQUE OR ACCOUNT PAYEE BANK DRAFT, THERE IS A VIOLATION OF THE SAID PROVISIONS. IN THE CASE UNDE R CONSIDERATION, THE LD. CIT(A) WHILE ADJUDICATING THE LEVY OF PENALTY U/S 271D OF THE ACT CONCLUDED THAT THE AMOUNT ACCEPTED FROM AMBE VIDY ALAYA (PE)- RS.1,10,565/-, AMBE VIDYALAYA (PG)-RS.1,75,770/-AMB E VIDYALAYA (SEC)-RS.4,62,230/-,JAY AMBE VIDYALAYA (HS)-RS.2,25 ,000/- AND AMBE VIDYALAYA (KG)-RS.21,175/- WAS CREDITED THROUG H JOURNAL ENTRIES ON ACCOUNT OF FEES WHILE THE TRANSACTIONS WITH AMBAY DAY SCHOOL-RS.7,58,000/- AND OM EDUCATION TRUST RS.7,0 0,000/- WERE THROUGH CHEQUES. 10 ITA NOS.151 & 152/AHD/2009 10 7.3. LIKEWISE ,WHILE CANCELLING THE PENALTY U/S 271E OF THE ACT , THE LD. CIT(A) FOUND THAT REPAYMENTS IN CASH WER E ONLY RS.12,03,155/- WHILE RS.2,10,000 WAS REPAID BY C HEQUE AND RS.10,36,756/- THROUGH JOURNAL ENTRIES BESIDES RS. 6,43,000/- INCORRECTLY CONSIDERED AS REPAYMENTS OF LOAN/DEPOSIT. THERE IS NOTHING ON RECORD TO SHOW THAT THESE TRANS ACTIONS WERE ATTACHED WITH CERTAIN CONDITIONS OR STIPULATION AS TO PERIOD OF REPAYMENT, RATE OF INTEREST, MANNER OF REPAYMENT, E TC. SO AS TO TREAT THE SAID TRANSACTIONS AS LOANS OR DEPOSITS. THE REV ENUE HAVE NOT PLACED BEFORE US ANY MATERIAL SUGGESTING THAT THE TRANSACTIONS WERE ACTUALLY IN THE NATURE OF LOANS OR DEPOSITS. SINCE THERE IS NOTHING ON RECORD TO SUGGEST THAT THE TRANSACTIONS ARE IN THE NATURE OF LOANS OR DEPOSITS, APPARENTLY, THE PROVISIONS OF SECTION 269 SS & 269T ARE NOT ATTRACTED. THE MEANING OF 'DEPOSIT ' AND ' LOAN ' HAS BEEN EXPLAINED ON PAGE 8454 OF THE CHATURVEDI AND PITHI SARIA'S INCOME- TAX LAW. FIFTH EDITION, VOLUME 5, AS UNDER: ' 'DEPOSIT' AND 'LOAN'- THESE TWO ARE NOT IDENTICAL IN MEANING. - IT IS TRUE THAT BOTH IN THE CASE OF A LOAN AND IN THE CAS E OF A DEPOSIT THERE IS A RELATIONSHIP OF A DEBTOR AND A CREDITOR BETWEE N THE PARTY GIVING MONEY AND THE PARTY RECEIVING MONEY. BUT IN THE CAS E OF A DEPOSIT, THE DELIVERY OF MONEY IS USUALLY AT THE INSTANCE OF THE GIVER AND IT IS FOR THE BENEFIT OF THE PERSON WHO DEPOSITS THE MONE Y - THE BENEFIT NORMALLY BEING EARNING OF INTEREST FROM A PARTY WHO CUSTOMARILY ACCEPTS DEPOSITS. DEPOSITS COULD ALSO BE FOR SAFE-K EEPING OR AS A SECURITY FOR THE PERFORMANCE OF AN OBLIGATION UNDER TAKEN BY THE DEPOSITOR. IN THE CASE OF A LOAN, HOWEVER, IT IS TH E BORROWER AT WHOSE INSTANCE AND FOR WHOSE NEEDS THE MONEY IS ADVANCED. THE BORROWING IS PRIMARILY FOR THE BENEFIT OF THE BORRO WER ALTHOUGH THE PERSON WHO LENDS THE MONEY MAY ALSO STAND TO GAIN T HEREBY BY EARNING INTEREST ON THE AMOUNT LENT. ORDINARILY, TH OUGH NOT ALWAYS, IN THE CASE OF A DEPOSIT, IT IS THE DEPOSITOR WHO IS T HE PRIME MOVER WHILE IN THE CASE OF A LOAN, IT IS THE BORROWER WHO IS THE PRIME MOVER. THE OTHER AND MORE IMPORTANT DISTINCTION IS IN RELATION TO THE OBLIGATION TO RETURN THE AMOUNT SO RECEIVED. IN THE CASE OF A DEPOSIT WHICH IS PAYABLE ON DEMAND, THE DEPOSIT WOULD BECOM E PAYABLE WHEN A DEMAND IS MADE. IN THE CASE OF A LOAN, HOWEV ER, THE OBLIGATION TO REPAY THE AMOUNT ARISES IMMEDIATELY O N RECEIPT OF THE LOAN. IT IS POSSIBLE THAT IN CASE OF DEPOSITS WHICH ARE FOR A FIXED PERIOD OR LOANS WHICH ARE FOR A FIXED PERIOD, THE P OINT OF REPAYMENT MAY ARISE IN A DIFFERENT MANNER. BUT BY AND LARGE, THE TRANSACTION OF 11 ITA NOS.151 & 152/AHD/2009 11 A LOAN AND THE TRANSACTION OF MAKING A DEPOSIT ARE NOT ALWAYS CONSIDERED IDENTICAL. ' 7.31 IN THE LIGHT OF AFORESAID DISTINCTION BETWEE N LOAN AND DEPOSIT, ESPECIALLY WHEN THERE IS NOTHING TO SUGGEST IN THE CASE UNDER CONSIDERATION THAT THE AFORESAID TRANSACTIONS ARE IN THE NATURE OF LOAN OR DEPOSIT, WE ARE OF THE OPINION THAT PROVISI ONS OF SEC. 269SS & 269T ARE NOT ATTRACTED IN THIS CASE. 7.4. WE MAY POINT OUT THAT THE PROVISIONS OF SECTION 269SS & 269T WERE BROUGHT IN THE STATUTE BOOK TO COUNTER T HE EVASION OF TAX IN CERTAIN CASES, AS CLEARLY STATED IN THE HEADING OF CHAPTER XXB OF THE ACT WHICH READS 'REQUIREMENT AS TO MODE OF ACCEPTANCE, PAYMENT OR REPAYMENT IN CERTAIN CASES T O COUNTERACT EVASION OF TAX'. THE LEGISLATIVE INTENT ION IN BRINGING SECTIONS 269SS & 269T IN THE ACT WAS TO AV OID CERTAIN CIRCUMSTANCES OF TAX EVASION, WHEREBY HUGE TRANSACT IONS ARE MADE OUTSIDE THE BOOKS OF ACCOUNT BY WAY OF CASH. AS FAR AS THESE APPEALS BEFORE US ARE CONCERNED, THERE IS NO CASE A GAINST THE ASSESSEE THAT THESE TRANSACTIONS HAD ANYTHING TO DO WITH EVASION OF TAX OR CONCEALMENT OF INCOME. IN THE INSTANT CASE, AS IS APPARENT FROM THE PENALTY ORDERS, THERE WERE NUMBER OF TRAN SACTIONS BETWEEN THE ASSESSEE AND THE PARTIES REFERRED TO ABOVE. AS REGARDS AMOUNT STATED TO HAVE ACCEPTED THROUGH JOURNAL ENTRIES ,T HERE IS NO VIOLATION OF PROVISIONS OF SEC. 269SS OF THE ACT AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. NOI DA TOLL BRIDGE CO. LTD.,262 ITR 260. 7.5 HONBLE MADRAS HIGH COURT IN CIT V IDHAYA M PUBLICATIONS LIMITED 285 ITR 221 ( MAD ) HELD THAT DEPOSITS AND WITHDRAWALS OF MONEY FROM CURRENT ACCOUNT COULD NOT BE CONSIDERED AS LOAN OR ADVANCE.. 12 ITA NOS.151 & 152/AHD/2009 12 7.6 THERE IS ANOTHER ASPECT OF THE MATTER. IN TH E CASE OF BOMBAY CONDUCTORS & ELECTRICALS LTD. VS. DCIT,56 TTJ 580(A HD.), THE TRIBUNAL FOUND THAT THERE WAS NO EVIDENCE ON RECOR D TO SHOW THAT INFRACTION OF THE PROVISIONS WAS WITH THE KNOWLEDGE OR IN DEFIANCE OF THE PROVISIONS. IT WAS FURTHER FOUND THAT THERE WAS NOTHING ON RECORD TO INDICATE THAT THE ASSESSEE HAD INDULGED IN ANY T AX PLANNING OR TAX EVASION AND IF AT ALL THERE WAS A VIOLATION, IT WA S MERE VENIAL OR TECHNICAL. THIS DECISION OF THE ITAT HAS BEEN UPHEL D BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. B OMBAY CONDUCTORS & ELECTRICALS LTD, 301 ITR 328(GUJ). IN THE CASE UN DER CONSIDERATION ALSO, THERE IS NOTHING ON RECORD, SUGGESTING ANY T AX PLANNING OR INFRACTION OF RELEVANT PROVISIONS WITH MALAFIDE INT ENTION. THE HONBLE APEX COURT, INTERPRETING THE POWERS CONFERRED ON TH E REVENUE UNDER SECTION 273B OF THE ACT IN ASST. DIRECTOR OF INSPEC TION (INVESTIGATION) V. KUM. A.B. SHANTHI [2002] 255 ITR 258 HELD THAT I F THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND THE ASSESSEE COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT PAYEE CHEQUE OR DEMAND D RAFT FOR SOME BONA FIDE REASON, THE AUTHORITY VESTED WITH THE POW ER TO IMPOSE PENALTY HAS A DISCRETION NOT TO LEVY PENALTY. 7.7 MOREOVER, THE ITAT AHMEDABAD BENCH 'C' IN THE CASE OF VIR SALES CORPORATION V. ACIT (1994) 50 TTJ 130(AHD ), HAVE HELD THAT IN RESPECT OF TRANSACTIONS INTER SE BETWEEN T HE SISTER CONCERNS MADE WITH A VIEW TO MEET THE BUSINESS NEEDS UNDER T HE BONA FIDE BELIEF AND WITH REASONABLE CAUSE, NO PENALTY IS IM POSABLE UNDER SUCH CIRCUMSTANCES. IN THE CASE UNDER CONSIDERATION , ADMITTEDLY THE TRANSACTIONS ARE BETWEEN DIFFERENT SECTIONS OF THE SCHOOL AND THE HOSTEL. APPARENTLY, RATIO OF THE SAID DECISION IS A PPLICABLE TO THE FACTS OF THE CASE 8. IN VIEW OF THE FOREGOING, AND IN THE L IGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS, WE HAVE NO ALTERNATIVE BUT TO CONCLUDE THAT IT IS NOT A FIT CASE FOR IMPOSITION OF PENALTY UNDER SECTION 271D & 13 ITA NOS.151 & 152/AHD/2009 13 271E FOR VIOLATION OF PROVISIONS OF SECTION 269SS & 269T OF THE ACT RESPECTIVELY. THEREFORE, BOTH IN LAW AS WELL AS O N FACTS, WE FIND THAT IMPOSITION OF PENALTY UNDER SECTION 271 D & 2 71E OF THE ACT WAS NOT IN ORDER AND THE LD. CIT(A) WAS RIGHT IN CANCELLING THESE PENALTIES. IN VIEW THEREOF, GROUND NOS.1 & 2 IN THE SE TWO APPEALS ARE DISMISSED. 9. IN THE RESULT, BOTH THESE APPEALS ARE DISMISSE D. ORDER PRONOUNCED IN THE COURT TODAY ON 10-06-2011 SD/- SD/- ( MU KUL SHRAWAT ) JUDICIAL MEMBER ( A N PAHUJA ) ACCOUNTANT MEMBER DATED : 10-06-2011 COPY OF THE ORDER FORWARDED TO: 1. M/S V S HOSTEL, VIP ROAD, KARELIBAUG, BARODA-390 018 2. THE INCOME-TAX OFFICER, WARD-5(2), 5 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA 3. CIT CONCERNED 4. CIT(A)-V, BARODA 5. DR, ITAT, AHMEDABAD BENCH-D, AHMEDABAD 6. GUARD FILE BY ORDER DEPUTY REGISTRAR ASSISTANT REGISTRAR ITAT, AHMEDABAD