M/s. Manoj Kumar Narari, Jalpaiguri V. ITO, Ward - 1(3), Jalpaiguri, Jalpaiguri

ITA 1697/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 62087 (ITAT-KOLKATA)
• Duration Of Justice: 4 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-04-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 12-12-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A P ROY
• Assessee Lawyers: S M SURANA
• Keywords: Gift; Question of law; Reasonable cause
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: KOL KATA () BEFORE , !' !' !' !' /AND #! $'# #! $'# #! $'# #! $'# , ) [BEFORE SHRI PRAMOD KUMAR, AM & SHRI MAHAVIR SINGH, JM] '% '% '% '% / I.T.A NO. 1697/KOL/2011 $&' !() $&' !() $&' !() $&' !()/ // / ASSESSMENT YEAR : 2006-07 M/S. MANOJ KUMAR NARARI VS. INCOME-TAX OFFICER, WD-1(3), JALPAIGURI (PAN: ABOPN6204A) (+, /APPELLANT ) (-+,/ RESPONDENT ) FOR THE APPELLANT: SHRI S. M. SURANA FOR THE RESPONDENT: SHRI A. P. ROY DATE OF HEARING: 27.03.2012 DATE OF PRONOUNCEMENT: 20.04.2012 . / ORDER PER MAHAVIR SINGH, JM ( #! $'# #! $'# #! $'# #! $'#, , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A), JALPAIGURI IN APPEAL NO.08/CIT(A)/JAL/09-10 DATED 21.09.2011. ASSESSMENT WAS FRAMED BY ITO, WD-1(3), JAL U/S. 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER RE FERRED TO AS THE ACT) FOR ASSESSMENT YEAR 2006-07 VIDE HIS ORDER DATED 31.12.2008. PENALTY I N DISPUTE WAS IMPOSED BY ADDL. CIT, RANGE-1, JALPAIGURI U/S. 271E OF THE ACT. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY U/S. 271E OF THE ACT FOR AN AMOUNT OF RS.1 LAC. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE IS AN INDIVIDUAL ENGAGED IN THE FERTILIZERS BUSINESS CARRYING ON PROPRIETARY BUSINESS UNDER THE NAME AND STYLE OF BA LAJI KRISHI BHANDER AT JALPAIGURI. THE ASSESSEE HAS RECEIVED TRADE ADVANCES OF RS.1 LAC BY ACCOUNT PAYEE CHEQUE DATED 03.12.2005 FROM HIS BROTHER SHRI AJAY KR. AGARWALA (NARARI), W HO IS ALSO FERTILIZER DEALER. ASSESSEE HAS GIVEN TENDER FOR SUPPLY OF FERTILIZER AND WAS VERY MUCH CONFIDENT AND HOPEFUL OF GETTING THE SAID TENDER AND DUE TO SCARCITY OF PARTICULAR TYPE OF FERTILIZERS HE MADE ADVANCE TO MANOJ KR. NARARI FOR LIFTING OF SAID MATERIAL. BUT THE REPAYM ENT OF THE SAME AMOUNT WAS MADE BETWEEN 15.03.2006 TO 29.03.2006 IN SIX INSTALLMENTS RANGIN G BETWEEN 20 TH AND 15 TH . AS THE ASSESSEE REPAID THE ABOVE LOAN IN CASH IN EXCESS OF RS.20,00 0/-, THE ASSESSING OFFICER NOTICED THAT HE HAS 2 ITA 1697/K/2011 M/S.MANOJ KUMAR NARARI A.Y. 2006-07 VIOLATED THE PROVISIONS OF SECTION 269T OF THE ACT SO INITIATED PENALTY PROCEEDINGS U/S. 271E OF THE ACT. ADDL. CIT, RANGE-1, JALPAIGURI LEVIED THE PENALTY U/S. 271E OF THE ACT AMOUNTING TO RS. 1 LAC FOR VIOLATION OF THE PROVISIONS OF SECTIO N 269T OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A) WHO ALSO CONFIRMED T HE ACTION OF ASSESSING OFFICER ON FOLLOWING COUNTS: BUT THERE ARE CERTAIN MISSING POINTS IN THE STORY. FIRSTLY, UNDER WHAT CIRCUMSTANCES, EVEN BEFORE THE SUPPLY ORDER WAS RECEIVED FROM THE GOVT. DEPARTMENT, THE CREDITOR MADE THE ADVANCE FOR SUPPLYING OF A PARTICULAR ITEM. SECOND LY, THERE WAS NO SATISFACTORY EXPLANATION AS TO WHY THE ASSESSEE REPAID THE AMOUNT IN CASH IN SMALL INSTALLMENTS WHEN HE HAD SUFFICIENT CASH BALANCE WITH HIM AND NOT BY CHEQUE. THIRDLY, IF IT WAS A TRADE ADVANCE, SAME SHOULD HAVE BEEN REFLECTED IN THE BOOKS OF THE ASSESSEE. BUT THE ASSESSEE FAILED TO ESTABLISH THE SAME WITH HIS BOOKS OF A/C. FOURTHLY , THERE WAS NO EXPLANATION/INFORMATION WHETHER THE ASSESSEE HAD ANY OTHER TRANSACTION WITH THIS PARTY. APPARENTLY, THE ANSWER TO THIS QUESTION IS NO. FIFTHLY, THE ARGUMENT THAT T HE TRANSACTIONS WERE GENUINE CANNOT HELP THE ASSESSEE. 4. BEFORE US, LD. COUNSEL FOR THE ASSESSEE STATED T HAT THE AMOUNT OF ADVANCE OF RS.1 LAC TO ASSESSEE WAS BY HIS OWN BROTHER AND REPAYMENT IS MA DE OF THE SAME ADVANCE. FIRST, LD. COUNSEL FOR THE ASSESSEE STATED THAT THE CREDIT IS GENUINE AND MOREOVER, THE TRANSACTION IS BETWEEN BROTHERS I.E. ASSESSEE SHRI MANOJ KR. NARAR I AND SHRI AJAY AGARWAL. THIS FACT HE DEMONSTRATED BEFORE US FROM STATEMENT OF FACTS FILE D BEFORE CIT(A). EVEN IN GROUNDS OF APPEAL THE ASSESSEE HAS RAISED THE ISSUE THAT THE AMOUNT W AS RECEIVED AS ADVANCE FOR SUPPLY OF GOODS FROM ASSESSEES OWN BROTHER HAVING IN THE SAME LINE OF BUSINESS AND BECAUSE OF FAILURE TO MAKE THE SUPPLY, THE AMOUNT WAS RETURNED IN CASH. ANOTHE R ARGUMENT OF LD. COUNSEL FOR THE ASSESSEE IS THAT THIS IS A GENUINE TRANSACTION AND IT IS A T RANSACTION OF TRADE AND ADVANCE FOR SUPPLY OF SPECIAL TYPE OF FERTILIZERS AND ASSESSEE ASSURED HI S BROTHER THAT HE WILL SUPPLY THE SAID FERTILIZER I.E. THE PARTICULAR FERTILIZER TO HIM AND FOR THAT PURPOSE SHRI AJAY KR. AGARWALA HAS ADVANCED THE SUM OF RS.1 LAC. FROM THE ABOVE FACTS, WE ARE OF THE VIEW THAT THIS ADVANCE IS AMONG FAMILY MEMBER. NOW THE QUESTION ARISES, WHETHER TH E PROVISIONS OF SEC. 269T WILL APPLY AMONG THE FAMILY MEMBERS, WHEN THEY AMONG THEMSELVE S HAD ADVANCED LOANS OR DEPOSITS. THIS HAS BEEN ANSWERED BY HONBLE GUJARAT HIGH COUR T IN THE CASE OF CIT VS. NATVARLAL PURSHOTTAMDAS PAREKH (2008) 303 ITR 5 (GUJ.), WHERE IN IT IS ANSWERED THAT THE ASSESSEE WOULD NOT VIOLATE THE PROVISIONS OF SECTION 269SS AND 269 T OF THE ACT, IF THE ASSESSEE RECEIVES AMOUNT FROM THE FAMILY MEMBERS AS LOANS OR DEPOSITS , REASON BEING AMONG THE FAMILY MEMBERS, THE LOANS AND DEPOSITS CANNOT BE CONSTRUED STRICTLY IN THE TERMS OF THESE PROVISIONS. EVEN HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V S. IDHAYAM PUBLICATIONS LTD. (2006) 285 ITR 221 (MAD.) AS HELD THAT THE TRANSACTIONS BETWEE N RELATIVES CANNOT BE TERMED AS LOAN OR DEPOSIT PARTICULARLY WHEN NO INTEREST IS BEING CHAR GED ON THE TRANSACTIONS. IN THE PRESENT CASE ALSO THE ASSESSEE HAS NOT PAID ANY INTEREST TO SHRI AJAY AGARWAL AND IT IS ALSO A FACT THAT HE IS 3 ITA 1697/K/2011 M/S.MANOJ KUMAR NARARI A.Y. 2006-07 RELATED TO ASSESSEE. HONBLE GUJARAT HIGH COURT IN THE CASE OF NATVARLAL PURSHOTTAMDAS PAREKH (SUPRA) HAS CONFIRMED THE FINDINGS OF TRIBUNAL AS U NDER: 18. AS DISCUSSED ABOVE, THE ANNEXURE ATTACHED TO T HE PENALTY ORDER GOES TO SHOW THAT EACH OF THE FAMILY MEMBERS OF THE ASSESSEE AND EAC H ONE OF THEM WAS HAVING SUFFICIENT OPENING BALANCE AS ON APRIL 1, 1990. AFTER THAT WE HAVE TO LOOK INTO SOURCES OF THE AMOUNTS RECEIVED BY THE ASSESSEE ON BEHALF OF HIS FAMILY MEMBERS AS THE SAME IS AN IMPORTANT FACTOR. HANDSOME AMOUNT HAS BEEN RECEIVED ON ACCOUNT OF MATURITY OF NSCS AND THEN MOST OF THE AMOUNTS HAVE BEEN CREDITED ON ACCOUNT OF GIFTS RECEIVED FROM ONE FAMILY MEMBER TO OTHER AND THAT WAS THROUGH JOURNA L ENTRY EXCEPT RS. 32,000 WHICH WAS GIFT BY ONE FAMILY MEMBER TO OTHER. THESE AMOUNTS W ERE NOT RECEIVED BY THE ASSESSEE IN CASH AS THESE WERE MERE BOOK ENTRIES. THESE AMOUNT S CANNOT BE EQUATED WITH ANY OF THE AMOUNTS INVOLVED IN THE CASES RELIED ON BY BOTH TH E PARTIES AS IN THOSE CASES, THE AMOUNTS WERE RECEIVED BY THE ASSESSEE AS DEPOSITS I N CASH AND THAT IS NOT THE POSITION HERE BECAUSE THESE WERE BOOK ENTRIES EXCEPT THE AM OUNTS OF NSCS AND OTHER CASH LOAN OF RS. 11,910. IN THE SAME BREATH, THE AMOUNT OF RS. 1,920 CREDITED ON ACCOUNT OF RENT AND RS. 24,360 CREDIT IN THE ACCOUNT OF HARENDRAKUMAR AND HITESHKUMAR CANNOT BE TREATED AS DEPOSITS OR LOAN BECAUSE THESE WERE CREDIT ENTR IES ON ACCOUNT OF SALARY AND BONUS. ACCORDINGLY, THE CRUX OF THE MATTER IS THAT MOST O F THE AMOUNTS AS REFERRED TO ABOVE WAS BASED ON MERE BOOK ENTRIES AND NOT RECEIVED IN CAS H BY THE ASSESSEE FROM FAMILY MEMBERS EXCEPT THE AMOUNT OF NSCS AND OTHER CASH LO AN AND THAT CANNOT BE TREATED AS LOAN OR DEPOSITS FOR THE PURPOSE OF SECTION 269SS. COMING TO THE NATURE OF PAYMENTS, MOST OF THE AMOUN TS, VIZ., RS. 5,41,450 HAS BEEN REPAID BY THE ASSESSEE BY DEPOSITING THE DIFFERENT SUMS ON BEHALF OF HIS FAMILY MEMBERS IN PPF RS. 25,523 HAS BEEN PAID TOWARDS LIC PREMIUM. THE AMOUNTS OF ADVANCE TAX, INCOME-TAX AS WELL AS WEALTH-TAX WILL BE AROUND RS. 80,000 AND AGAIN GIFT FROM ONE FAMILY MEMBER TO OTHER FAMILY MEMBER COMES TO RS. 1.09 LAKHS AND RS. 16,000 IS AGAIN JOURNAL ENTRY FOR ALLOCATION OF SHARE FOR HOUSEHOL D EXPENSES. THIS AGAIN SHOWS THAT NO AMOUNT WAS PAID BY THE ASSESSEE IN CASH TO ANY OF THE FAMILY MEMBER. THESE FACTS AS MENTIONED ABOVE, HAVE NOT BEEN CHALLENGED BY THE RE VENUE AS GENUINENESS OF THESE TRANSACTIONS, VIZ., RECEIPTS OF AMOUNT OF NSCS, BO OK ENTRIES RELATING TO GIFT FROM ONE FAMILY MEMBER TO OTHER AND CREDIT ENTRIES IN RESPE CT OF SALARY AND BONUS AND RENT ETC., THE GENUINENESS OF INVESTMENT IN PPF, LIC PREMIUM MADE TOWARDS DIFFERENT TYPES OF TAXES AND DIFFERENT BOOK ENTRIES, TRANSACTION RELAT ING TO GIFTS ARE NOT DOUBTED BY THE REVENUE. APART FROM IT, THE ASSESSEE HAS FILED DOC UMENTS FROM PAGES 1 TO 14 AND PAGES 17 TO 163 OF THE PAPER BOOK IN SUPPORT OF THESE EN TRIES AND THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS NOT ABLE TO POINT OUT THAT FACTS AS NARRATED ABOVE AND RELIED ON BY THE ASSESSEE ARE IN ANY MANNER NOT TRUE. IF THESE ARE THE FACTS, THEN THE AMOUNTS OF THE ALLEGED RECEIPTS EXCEPT THE AMOUNTS OF CASH LOAN T AKEN BY THE ASSESSEE AND THE AMOUNT RECEIVED BY THE ASSESSEE ON MATURITY OF NSCS OF DIF FERENT FAMILY MEMBERS CANNOT BE TREATED AS LOAN AND DEPOSITS NOR AMOUNTS OF REPAYM ENTS CAN BE BROUGHT FOR VIOLATION OF THE PROVISIONS OF SECTION 269T AS AMOUNTS WERE NOT RECEIVED IN CASH BY THE ASSESSEE NOR HE PAID THE AMOUNTS IN CASH TO DIFFERENT FAMILY ME MBERS. THE TRIBUNAL HAS ALSO FOUND THAT THE ASSESSEE WAS P REVENTED BY A REASONABLE CAUSE IN LIGHT OF THE AFFIDAVIT OF ONE MR. J. B. SHAH, THE A DVOCATE AND THE INCOME-TAX PRACTITIONER HAVING STANDING OF 33 YEARS AS THE GENTLEMAN HAD OP INED THAT THE ASSESSEE WOULD NOT VIOLATE THE PROVISIONS OF SECTIONS 269SS AND 269T OF THE ACT IF THE ASSESSEE RECEIVES AMOUNTS FROM THE FAMILY MEMBERS AND REPAYS TO DIFF ERENT FAMILY MEMBERS. HEARD MR. B. B. NAIK, LEARNED STANDING COUNSEL FOR THE APPLICANTREVENUE AND MR. VARUN PATEL FOR MR. S. N. SOPARKAR, LEARNED SENIOR ADVOCA TE FOR THE RESPONDENT-ASSESSEE. AS CAN BE SEEN FROM THE FINDINGS REPRODUCED HEREINB EFORE THE TRIBUNAL HAS APPRECIATED THE EVIDENCE ON RECORD AND ARRIVED AT CERTAIN FINDI NGS BASED ON SUCH APPRECIATION OF 4 ITA 1697/K/2011 M/S.MANOJ KUMAR NARARI A.Y. 2006-07 EVIDENCE. THE POSITION IN LAW IS WELL-SETTLED THAT WHETHER EVIDENCE IS CORRECTLY APPRECIATED OR NOT CANNOT GIVE RISE TO A QUESTION OF LAW UNLESS AND UNTIL SUCH FINDINGS ARE CHALLENGED AS BEING CONTRARY TO THE EVIDENCE ON RECORD OR RECORDED AFTER OMITTING TO CONSIDER RELEVANT EVIDENCE AND TAKING INTO CONSIDER ATION IRRELEVANT EVIDENCE. IN THE PRESENT CASE, THAT IS NOT THE POSITION AND IN FACT THAT IS NOT EVEN ALLEGED. FURTHERMORE, THE TRIBUNAL HAS ALSO FOUND THAT THE ASSESSEE HAD B EEN ABLE TO ESTABLISH EXISTENCE OF A REASONABLE CAUSE, EVEN IF THE FINDING OF THE TRIBUN AL THAT THERE WAS NO VIOLATION IS NOT ACCEPTED. IN THE CIRCUMSTANCES, THERE IS NO REASON TO TAKE A DIFFERENT VIEW OF THE MATTER. THE TRIBUNAL HAS FOUND THAT ON THE FACTS AND IN THE LIG HT OF THE EVIDENCE ON RECORD THERE WAS NO VIOLATION OF EITHER THE PROVISIONS OF SECTION 2 69SS OR SECTION 269T OF THE ACT. THE TRIBUNAL HAS FURTHER FOUND THAT THERE WAS A REASON ABLE CAUSE, ASSUMING THAT THERE WAS ANY VIOLATION BY THE ASSESSEE. HENCE, THE TRIBUNAL HAS RIGHTLY DELETED THE PENALTIES LEVIED UNDER SECTIONS 271D AND 271E OF THE ACT. IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT PENAL TY U/S. 271E OF THE ACT CANNOT BE LEVIED IN THIS CASE AND ACCORDINGLY, WE DELETE THE SAME. 5. IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED 6. ORDER PRONOUNCED IN OPEN COURT ON 20.04.2012. SD/- SD/- , #! #! #! #! $'# $'# $'# $'# , (PRAMOD KUMAR) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( / / / /) )) ) DATED : 20TH APRIL, 2012 !01 $&23 $4! JD.(SR.P.S.) . 5 $$ 6(7- COPY OF THE ORDER FORWARDED TO: 1 . +, / APPELLANT M/S. MANOJ KUMAR NARARI, PROP. M/S. BAL AJI KRISHI BHANDAR, MAYNAGURI, JALPAIGURI, WEST BENGAL. 2 -+, / RESPONDENT- ITO, WARD-1(3), JALPAIGURI. 3 . $.& ( )/ THE CIT(A), KOLKATA 4. $.& / CIT, KOLKATA 5 . !>$? $& / DR, KOLKATA BENCHES, KOLKATA - $/ TRUE COPY, .&/ BY ORDER, # '3 /ASSTT. REGISTRAR .