Murali Tex, CHENNAI V. ITO, Erode

ITA 154/CHNY/2011

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 4909 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-06-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 14-06-2011
• Assessment Year: 1992-1993
• Appeal Filed On: 31-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P B SEKARAN
• Assessee Lawyers: M SWAMINATHAN
• Section: 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHENNAI BENCH B : CHENNAI [BEFORE DR. O.K. NARAYANAN, VICE-PRESIDENT AND SHRI HARI OM MARATHA, JUDICIAL MEMBER] I.T.A NO. 154/MDS/2011 ASSESSMENT YEAR : 1992-93 M/S MURALI TEX 274, ESWARAN KOIL STREET ERODE VS THE INCOME-TAX OFFICER WARD I(1) ERODE (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI M.SWAMINATHAN RESPONDENT BY : SHRI P.B.SEKARAN, CIT O R D E R PER HARI OM MARATHA, JUDICIAL MEMBER: THIS APPEAL OF THE ASSESSEE, FOR ASSESSMENT YEA R 1992-93, IS DIRECTED AGAINST THE ORDER OF THE LD. CIT(A),-I, CO IMBATORE, DATED 11.11.2010. 2. THIS IS THE SECOND ROUND BEFORE THE TRIBUNAL AS THE APPEAL IN THE FIRST ROUND TRAVELLED ON THE ISSUE THAT THERE W AS A DELAY IN FILING THE APPEAL BEFORE THE LD. CIT(A) AND HE HAD NOT CONDONE D THE DELAY. IN FIRST ROUND, THE TRIBUNAL CONDONED THE DELAY AND DI RECTED THE LD. CIT(A) TO DECIDE THE ISSUE ON MERITS. IN THE SECON D ROUND, THE LD. CIT(A) HAS DECIDED THE ISSUE ON MERITS AND HAS CONF IRMED THE PENALTY ITA 154/11 :- 2 -: LEVIED U/S 271D OF THE ACT BY THE ASSESSING OFFICER FOR THE VIOLATION OF SECTION 269SS. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT PE NALTY PROCEEDING U/S 271D WAS INITIATED ON 30.7.1993 SINCE THE ASSES SEE HAD RECEIVED LOAN/DEPOSITS EXCEEDING ` 20,000/- IN CONTRAVENTION OF PROVISIONS OF SECTION 269SS. THE ASSESSEE HAD RECEIVED A LOAN OF ` 70,000/- ON 31.12.1991 FROM M/S ABIRAMI FINANCE AND ` 50,000/- FROM M/S BHARANI FINANCE ON 2.4.1991, BOTH IN CASH. WHEN ASKED TO D O, THE ASSESSEE DID NOT/COULD NOT EXPLAIN THE CIRCUMSTANCES UNDER W HICH THE CASH AMOUNTS WERE TAKEN AS LOAN/DEPOSIT. THEREFORE, THE ASSESSING OFFICER PRESUMED THAT THE ASSESSEE HAD NO REASONABLE EXPLAN ATION REGARDING THE CASH RECEIPTS, HENCE, HE FOUND IT A FIT CASE FO R LEVY OF PENALTY U/S 271D AND ACCORDINGLY, LEVIED A PENALTY OF ` 1,20,000/-. THE LD. CIT(A) HAS CONFIRMED THIS PENALTY. FOLLOWING GROUNDS HAVE BEEN RAISED IN THIS APPEAL: 1. THE COMMISSIONER OF INCOME-TAX (APPEALS)-I, COIMBATORE IS NOT JUSTIFIED IN CONFIRMING THE PENAL TY ORDER PASSED U/S 271D OF THE ACT. 2. THE COMMISSIONER OF INCOME TAX APPEALS HAS ERRE D IN NOT APPRECIATING THE FACT THAT THE APPELLANT BORROW ED THE MONEY ONLY FOR BUSINESS EXIGENCY AND NOT FOR ANY OT HER PURPOSES. 3. THE COMMISSIONER OF INCOME TAX APPEALS ERRED IN NOT APPRECIATING THE FACT THAT THE APPELLANT HAS BORROW ED THE SUM OF RS.70,000 FROM ABHIRAMI FINANCE ON 31.12.199 1 AFTER DISCOUNTING THE CITY UNION BANK CHEQUE NO.249 301 DATED 31.01.1992 AND THE SAME WAS REPAID BY THE APPELLANT ON 31. 01.1992. 4. THE COMMISSIONER OF INCOME TAX APPEALS ERRED IN NOT ITA 154/11 :- 3 -: APPRECIATING THE FACT THAT THE APPELLANT HAS BORROW ED THE SUM OF RS.50,0001- FROM BHARANI FINANCE ON 02.04.1991 AFTER DISCOUNTING THE CITY UNION BANK CHEQUE NO.155 999 DATED 18. 04.1991 THE SAME WAS REPAID BY THE APPELL ANT ON 18.04.1991. 5. THE HON'BLE APPELLATE TRIBUNAL, VIDE ORDER DATED 19.03.2008 IN ITA NO.2 OF 2006, IN THE SISTER CONCE RN OF THE APPELLANT, M/S.SRIDHAR TEX AND VIDE ORDER DATED 19.08.2008 IN ITA NO.3 OF 2006, IN THE SISTER CONCE RN OF THE APPELLANT, M/S DHANAM TEX, THE TRIBUNAL HAS CANCELED THE PENALTY ON IDENTICAL ISSUE . 6 . FOR THE FOREGOING GROUNDS AND FOR THE GROUNDS THAT MAY BE RAISED AT THE TIME OF HEARING, THE APPELLANT HUM BLY PRAYS THAT THE ORDER OF THE CIT (A)-I, COIMBATORE, CONFIRMING THE PENALTY LEVIED U/S 271D, BE CANCELLE D AND THUS RENDER JUSTICE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND HAVE C AREFULLY PERUSED THE RECORDS AVAILABLE BEFORE US. IT WAS AR GUED THAT THE AMOUNT OF ` 70,000/- WAS BORROWED FROM ABHIRAMI FINANCE AFTER DISCOUNTING THE CITY UNION BANK CHEQUE NO.249301 DA TED 31.1.1992 AND THE SAME WAS REPAID ON 31.1.1992 ITSELF. AGAIN REGARDING ` 50,000/-, AS LOAN FROM M/S BHARANI FINANCE, ON 2.4 .1991, IT WAS STATED THAT THIS AMOUNT WAS TAKEN AFTER DISCOUNTING THE CITY UNION BANK CHEQUE NO.155999 DATED 18.4.1991 WHICH WAS REP AID ON 18.4.1991 ITSELF. IT WAS ARGUED THAT UNDER IDENTIC AL FACTS AND CIRCUMSTANCES, WHILE DECIDING THE CASE OF M/S SRID HAR TEX, WHICH IS A SISTER CONCERN OF THE ASSESSEE, IN I.T.A.NO.2/MDS/2 006 VIDE ORDER DATED 19.3.2008 AND IN THE CASE OF ANOTHER SISTER C ONCERN, M/S DHANAM TEX IN I.T.A.NO. 3/MDS/1006 VIDE ORDER DATED 19.8.2008, THE TRIBUNAL HAS CANCELLED SIMILAR PENALTY IMPOSED ON IDENTICAL FACTS. ITA 154/11 :- 4 -: COPIES OF THE TRIBUNAL ORDERS WERE PLACED IN THE PA PER BOOK FILED BY THE ASSESSEE. ON THE OTHER HAND, THE LD.DR HAS RE LIED ON THE REASONING GIVEN BY THE LD. CIT(A). HE HAS SATED TH AT IT WOULD BE ABSURD TO IMAGINE THAT THE ASSESSEE WAS DISCOUNTING ITS OWN CHEQUES. THE CHEQUE WAS ONLY A MEASURE OF SECURITY TO THE FI NANCIER/FIRM. IN THE TOTALITY OF THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE CONVINCED THAT THE ISSUE STANDS COVERED IN FAVOUR O F THE ASSESSEE BY THE ABOVE STATED ORDERS OF THE TRIBUNAL RENDERED IN THE CASES OF ASSESSEES SISTER CONCERNS. THIS IS NOT ONLY A FIT CASE FOR DELETION OF THE PENALTY BUT IS ALSO COVERED BY THE SAID TRIBUNA L ORDERS. THE PURPOSE OF SECTION 269SS/271D IS TO CHECK THE CIRCU LATION OF BLACK MONEY AND IN THE GIVEN CASE, NO SUCH CIRCUMSTANCE EXISTS. HENCE, WE ORDER TO DELETE THE IMPUGNED PENALTY AND ALLOW THE APPEAL. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE STANDS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 15.6.2011. SD/- SD/- (DR. O.K. NARAYANAN) VICE-PRESIDENT (HARI OM MARATHA) JUDICIAL MEMBER DATED: 15 TH JUNE, 2011 RD COPY TO: APPELLANT/RESPONDENT/CIT(A)/CIT/DR