Assistant Commissioner of Income-tax, V. M/s. Ambarwadikar & Co., Aurangabad

ITA 1593/PUN/2015

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 7315 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-10-2017
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 04-12-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: E PASS AURANGABAD PAN AAHFAA
• Keywords: Bonafide belief; Initiation of penalty proceedings; Ignorance of law

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUNE . , , , BEFORE SHRI D. KARUNAKARA RAO, AM AND SHRI VIKAS AWASTHY, JM . / ITA NO . 1593 /P U N/201 5 / ASSESSMENT YEAR : 20 1 0 - 11 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 3, AURANGABAD ....... / APPELLANT / V/S. M/S. AMBARWADIKAR & CO., GUT NO. 103, BEED BYE PASS, AURANGABAD 431005 PAN : AAHFA6223A / RESPONDENT ASSESSEE BY : S HRI M.K. KULKARNI REVENUE BY : SHRI VIVEK AGGARWAL / DATE OF HEARING : 31 - 08 - 2017 / DATE OF PRONOUNCEMENT : 11 - 10 - 2017 / ORDER PER VIKAS AWASTHY, JM : TH IS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - 2, AURANGABAD DATED 22 - 09 - 2015 FOR THE ASSESSMENT YEAR 2010 - 11 AGAINST DELETING OF PENALTY LEVIED U/S. 271E O F THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ). 2 ITA NO . 1593/PUN/2015, A.Y. 2010 - 11 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS A PARTNERSHIP FIRM. SMT. GANGABAI VITHALRAO AMBARWADIKAR WIFE OF ONE OF THE PARTNERS OF ASSESSEE FIRM DEPOSITED AN AMOUNT OF RS.16 LACS WITH THE FIRM VIDE TWO CHEQUES OF RS.8 LACS EACH DATED 22 - 03 - 2007 AND 04 - 04 - 2007 , RESPECTIVELY . THEREAFTER, THE ASSESSEE RETURNED THE AFORESAID AMOUNT TO MRS. GANGABAI VITHALRAO AMBARWADIKAR IN CASH ON FOLLOWING DATES : DATE AMOUNT 13 - 09 - 2009 RS.3,03,288/ - 10 - 01 - 2010 RS.4,00,000/ - 10 - 02 - 2010 RS.3,50,000/ - 10 - 03 - 2010 RS.3,50,000/ - 29 - 03 - 2010 RS.2,00,000/ - -------------------- TOTAL RS.16,03,288/ - THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S. 271E FOR VIOLATING THE PROVISIONS OF SECTION 269T OF THE ACT. THE ASSESSING OFFICER VIDE ORDER DATED 11 - 03 - 2014 LEVIED PENALTY OF RS.16,03,288/ - U/S. 271E OF THE ACT. AGGRIEVED BY THE ORDER LEVYI NG PENALTY, THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER ACCEPTED THE EXPLANATION FURNISHED BY THE ASSESSEE FOR RETURNING THE AMOUNT IN CASH AND DELETED THE PENALTY LEVIED U/S. 271E OF THE ACT. NOW, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL ASSAILING THE FINDINGS OF FIRST APPELLATE AUTHORITY. 3. SHRI VIVEK AGGARWAL REPRESENTING THE DEPARTMENT SUBMITTED THAT SMT. GANGABAI VITHALRAO AMBARWADIKAR HAD ADVANCED LOAN TO THE ASSESSEE FIRM WHICH WAS REPAID BY ASSESSEE IN CASH, IN VIOLATION OF THE PROVISIONS OF 3 ITA NO . 1593/PUN/2015, A.Y. 2010 - 11 SECTION 269T OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED LEVY OF PENALTY PRIMARILY ON THE GROUND THAT THE ASSESSEE HAS REPAID THE LOAN I N CASH ON ACCOUNT OF IGNORANCE OF LAW. THE STAND OF THE ASSESSEE THAT THE AMOUNT HAS BEEN REPAID IN CASH ON THE INSTRUCTION OF SMT. GANGABAI VITHALRAO AMBARWADIKAR ARE NOT TENABLE AS THE ASSESSEE WAS DUTY BOUND TO FOLLOW THE PROVISIONS OF THE ACT , RATHER THAN FOLLOWING INSTRUCTION S FROM AN INDIVIDUAL. THE LD. DR PRAYED FOR SETTING ASIDE THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) AND CONFIRMING LEVY OF PENALTY U/S. 271E OF THE ACT. 4. ON THE OTHER HAND SHRI M.K. KULKARNI APPEARING ON BEHALF OF TH E ASSESSEE SUBMITTED THAT THE AMOUNT DEPOSITED BY SMT. GANGABAI VITHALRAO AMBARWADIKAR WITH THE ASSESSEE FIRM WAS NEITHER IN THE FORM OF LOAN, ADVANCE OR DEPOSIT AS CONTEMPLATED U/S. 269SS OR 269T OF THE ACT. THE ASSESSEE HAD RETURNED THE AMOUNT TO SMT. G ANGABAI VITHALRAO AMBARWADIKAR IN CASH ON DEMAND. THE ASSESSEE WAS NOT AWARE THAT RETURNING THE AMOUNT IN CASH IN EXCESS OF RS.20,000/ - IS NOT PERMISSIBLE UNDER THE PROVISIONS OF THE ACT AND WOULD ATTRACT PENALTY. THE ASSESSEE RETURNED THE AMOUNT IN CASH UNDER BONAFIDE BELIEF THAT THERE WOULD BE NO VIOLATION OF PROVISIONS OF THE ACT. 4.1 THE LD. AR FURTHER SUBMITTED THAT THOUGH THE ASSESSEE HAS NOT FILED ANY CROSS OBJECTIONS BUT THE ASSESSEE C AN ALWAYS RAISE LEGAL PLEA BEFORE THE TRIBUNAL IN AN APPEAL FILED BY THE REVENUE. THE LD. AR POINTED THAT IN THE PRESENT CASE PENALTY PROCEEDINGS U/S. 271E ARE NOT INITIATED IN ACCORDANCE WITH THE PROVISIONS OF THE ACT. AS PER THE PROVISIONS OF SUB - SECTION ( 2 ) OF SECTION 271E , PENALTY CAN BE IMPOSED BY JOINT COMM ISSIONER ONLY. IN THE PRESENT CASE THE DOCUMENTS ON RECORD WOULD SHOW THAT THE PENALTY ORDER 4 ITA NO . 1593/PUN/2015, A.Y. 2010 - 11 HAS BEEN PASSED BY ADDL. COMMISSIONER OF INCOME TAX. THE LD. AR FURTHER SUBMITTED THAT THE PENALTY PROCEEDINGS HAVE BEEN INITIATED AFTER PASSING OF ASSESSMENT OR DER. THE LD. AR CONTENDED THAT THE MANNER IN WHICH PENALTY PROCEEDINGS ARE INITIATED ARE CONTRARY TO THE LAW AND DECISIONS OF PUNE BENCH OF TRIBUNAL IN THE CASES OF SHRI DEVIDAS RAMCHANDRA KULKARNI VS. JT. COMMISSIONER OF INCOME TAX IN ITA NO. 444/PN/2013 FOR ASSESSMENT YEAR 2009 - 10 DECIDED ON 29 - 07 - 2016 AND SHRIRAM DOODH JILLHA MADHYAVARTI SAHAKARI DOODH VYAVASAIK SANGH LTD. VS. ASSTT. COMMISSIONER OF INCOME TAX IN ITA NOS. 1187 & 118/PUN/2017 FOR ASSESSMENT YEAR 2013 - 14 DECIDED ON 26 - 07 - 2017. 4.2 THE LD. AR TO BUTTRESS HIS SUBMISSIONS THAT THE ASSESSEE CAN ADVANCE FRESH LEGAL PLEA BEFORE THE TRIBUNAL WITHOUT FILING CROSS OBJECTIONS AGAINST THE FINDINGS OF FIRST APPELLATE AUTHORITY P LACED RELIANCE ON THE DECISION OF ALLAHABAD HIGH COURT IN THE CASE OF C OMMISSIONER OF INCOME TAX VS . JINDAL POLYESTER LTD. REPORTED AS 397 ITR 282. 5. THE LD. DR TAKING STRONG OBJECTION TO THE LEGAL PLEA AND THE SUBMISSIONS MADE BY LD. AR OF THE ASSESSEE SUBMITTED THAT FRESH PLEA CHALLENGING VALIDITY OF PENALTY PROCEEDINGS H AVE BEEN RAISED BY THE ASSESSEE BEFORE THE TRIBUNAL FOR THE FIRST TIME WITHOUT FILING CROSS OBJECTIONS OR CROSS APPEAL. THE ASSESSEE HAD NEVER RAISED ANY OBJECTION BEFORE THE AUTHORITIES BELOW QUESTIONING VALIDITY OF PENALTY ORDER OR INITIATION OF PENALTY PROCEEDINGS. THE LD. DR SUBMITTED THAT THE FRESH PLEA IS THUS LIABLE TO BE REJECTED. THE LD. DR MADE AN ALTERNATE SUBMISSION THAT SINCE LEGAL PLEA RAISED GOES TO THE ROOT OF PENALTY PROCEEDINGS IT REQUIRES VERIFICATION OF RECORDS. THE LD. DR SUBMITTED THAT ON MERITS THE ASSESSEE HAS NO CASE THEREFORE THE IMPUGNED ORDER SHOULD BE SET ASIDE. 5 ITA NO . 1593/PUN/2015, A.Y. 2010 - 11 6. W E HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF RIVAL SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW . IN APPEAL THE REVENUE HAS ASSAILE D DELETING OF PENALTY LEVIED U/S. 271E BY THE COMMISSIONER OF INCOME TAX (APPEALS). A PERUSAL OF DOCUMENTS ON RECORD SHOWS THAT THE ASSESSEE HAS UNDOUBTEDLY MADE CASH PAYMENT TO THE TUNE OF RS.16 ,03,288/ - TO SMT. GANGABAI VITHALRAO AMBARWADIKAR IN VIOLATI ON OF PROVISIONS OF SECTION 269T OF THE ACT. THE COMMISSIONER OF INCOME TAX (APPEALS) HAS DELETED LEVY OF PENALTY U/S. 271E BY PLACING RELIANCE ON VARIOUS DECISIONS AND ACCEPTING EXPLANATION FURNISHED BY ASSESSEE FOR REPAYING THE AMOUNT IN CASH. THE COMM ISSIONER OF INCOME TAX (APPEALS) HAS FURTHER GRANTED BENEFIT OF IGNORANCE OF LAW TO THE ASSESSEE. IT IS A WELL SETTLED PROPOSITION THAT IGNORANCE OF LAW IS NO EXCUSE. THEREFORE, GRANTING BENEFIT OF IGNORANCE OF LAW TO ASSESSEE AND DELETING PENALTY U/S . 271E IS NOT SUSTAINABLE. THE LD. AR OF ASSESSEE HAS RAISED A NEW LEGAL GROUND CHALLENGING VALIDITY OF PENALTY PROCEEDINGS. IN SO FAR AS THE ISSUE, WHETHER THE ASSESSEE CAN RAISE ANY LEGAL GROUND ORALLY IN AN APPEAL FILED BY THE REVENUE WITHOUT FILING C ROSS OBJECTIONS OR CROSS APPEAL BEFORE THE TRIBUNAL IS CONCERNED, THE HONBLE MADRAS HIGH COURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. SMT. S. VIJAYALAKSHMI REPORTED AS 242 ITR 46 HAS HELD THAT ABSENCE OF SPECIFIC APPEAL OR CROSS APPEAL BY THE ASSES SEE WOULD NOT PRECLUDE THE TRIBUNAL IN CONSIDERING THE CLAIM OF ASSESSEE. HENCE, THERE IS NO BAR IN ACCEPTING THE LEGAL GROUND ORALLY RAISED BY THE LD. AR OF THE ASSESSEE. THE LD. AR OF THE ASSESSEE HAS CONTENDED THAT PENALTY PROCEEDINGS HAVE NOT BEEN INITIATED IN ACCORDANCE WITH THE PROVISIONS OF ACT. THE ASSESSING OFFICER HAS PURPORTEDLY MADE REFERENCE TO JOINT COMMISSIONER OF INCOME TAX FOR INITIATING PENALTY U/S. 271E A FTER PASSING OF THE ASSESSMENT 6 ITA NO . 1593/PUN/2015, A.Y. 2010 - 11 ORDER WHICH IS AGAINST THE RATIO LAID DOWN BY THE CO - ORDINATE BENCH OF THE TRIBUNAL IN THE CASES OF SHRI DEVIDAS RAMCHANDRA KULKARNI VS. JT. COMMISSIONER OF INCOME TAX (SUPRA) AND SHRIRAM DOODH JILLHA MADHYAVARTI SAHAKARI DOO DH VYAVASAIK SANGH LTD. VS. ASSTT. COMMISSIONER OF INCOME TAX (SUPRA). THE ALLEGATION LEVELED BY ASSESSEE REQUIRES VERIFICATION OF RECORDS. MOREOVER , THE ISSUE HAS BEEN RAISED FOR THE FIRST TIME BY ASSESSEE BEFORE THE TRIBUNAL, WE ARE OF CONSIDERED VIEW THAT THE FILE NEEDS REVISIT TO COMMISSIONER OF INCOME TAX (APPEALS) FOR VERIFICATION OF RECORD S AND ADJUDICATION OF THE LEGAL GROUND RAISED BY THE ASSESSEE. WE HOLD AND DIRECT ACCORDINGLY. 7. IN THE RESULT, IMPUGNED ORDER IS SET ASIDE AND THE APPEAL OF REVENUE IS ALLOWED FOR STATISTICAL PURPOSE. ORDER PRONOUNCED ON WEDNESDAY, THE 11 TH DAY OF OCTOBER, 2017 . SD/ - SD/ - ( . /D. KARUNAKARA RAO ) ( / VIKAS AWASTHY) / ACCOUNTANT MEMBER / JUDICIAL MEMBER / PUNE; / DATED : 11 TH OCTOBER, 2017 RK / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 2, AURANGABAD 4. THE PR. COMMISSIONER OF INCOME TAX - 2, AURANGABAD 5. , , , / DR, ITAT, B BENCH, PUNE. 6. / GUARD FILE. / / // TRUE COPY// / BY ORDER, / PRIVATE SECRETARY, , / ITAT, PUNE