Viral Chetankumar Patel, Gandhinagar V. The Ad. CIT, Gnadhinagar

ITA 1742/AHD/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 0783 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 4 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2010-2011
• Appeal Filed On: 17-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N K GOYAL
• Keywords: Initiation of penalty proceedings; Reasonable cause; Set aside
• Section: 271(1)(c); 273B; 142(1); 271D; 68; 148

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD SMC BENC H (BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER & SHRI AMARJIT SINGH, ACCOUNTANT MEMBER) ITA. NO: 1742/AHD/2017 (ASSESSMENT YEAR: 2010-11) VIRAL CHETANKUMAR PATEL 352/2,SECTOR 2B, GANDINAGAR V/S THE ADD. CIT, GANDHINGAR RANGE, GANDHINAGAR, AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AEOPD7471E APPELLANT BY : SHRI MEHUL THAKKAR, AR RESPONDENT BY : SHRI N. K. GOYAL, SR. D.R. ( )/ ORDER DATE OF HEARING : 09 -12-201 9 DATE OF PRONOUNCEMENT : 11-12-2019 PER MAHAVIR PRASAD, JUDICIAL MEMBER 1. THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. CIT(A), GANDHINAGAR, AHMEDABAD DATED 05.05.2017 PER TAINING TO A.Y. 2010- 11 AND FOLLOWING GROUNDS HAVE BEEN TAKEN: ITA NO1742/A HD/2017 . A.Y. 2010-11 2 1. THE LD. ADDL. CIT GANDHINAGAR RANGE, GANDHINAGAR HAS ERRED IN LAW AND ON FACTS IN LEVYING THE PENALTY OF RS. 4,00,000/- U/S 271D OF THE IT ACT, 1961 AND LD CIT(A), GANDHINAGAR, AHMEDABAD HAS FURTHER ERRED IN CONFIRMING THE SAME WITHOUT PROPERLY APPRECIATING THE FACTS OF THE CASE . 2.BOTH THE ABOVE AUTHORITIES HAVE ERRED IN OVERLOOK ING THE SUBMISSION RR.ADE BEFORE THE A.O. DURING THE COURSE OF ASSESSMENT PRO CEEDINGS, EXPLAINING THE REASONS AND PURPOSE FOR WHICH CASH LOAN OF RS. 4,00 ,000/- WAS RECEIVED FROM SHRI HASMUKHBHAI PATEL AND PAID BACK THOUGH ACCOUNT PAY CHEQUE. 3. BOTH THE ABOVE AUTHORITIES HAVE ERRED IN OVERLOO KING THE ASSESSMENT ORDER WHERE A.O. IS FULLY SATISFIED AS TO THE REASON FOR OBTAINING CASH LOAN OF RS. 4,00,000/- IN CONTRAVENTION OF SECTION 269SS OF THE IT ACT, 1961 THAT IT WAS FOR THE PURPOSE TO STUDY IN FOREIGN COUNTRY AND THEREFO RE THERE IS NO MENTION IN THE ASSESSMENT ORDER IN RESPECT OF SEPARATE PROPOSAL IS BEING FORWARDED TO ADDL. CIT, GANDHINAGAR RANGE FOR INITIATION OF PENALTY U/S 271 D OF THE IT ACT IN CONTRAVENTION OF SECTION 269SS OF THE INCOME TAX AC T, 1961. 4. BOTH THE ABOVE AUTHORITIES HAVE ERRED IN OVERLOO KING THE MATERIAL FACT THAT THERE WAS A REASONABLE CAUSE AS CONTEMPLATED UNDER SECTION 273 B OF THE ACT FOR ACCEPTING SUCH LOAN IN CASH FROM SHRI HASMUKHBHAI P ATEI. 5. THE APPELLANT CRAVES LEAVE FOR MODIFICATION /AMENDMENT IN ANY OF TU GROUND OF APPEAL. 2. THERE IS A DELAY OF THREE DAYS IN FILING OF APPEAL. AND IN SUPPORT OF ITS CONTENTION, ASSESSEE FILED AN AFFIDAVIT STATING THE REIN THAT HE COULD NOT VISIT THE OFFICE OF HIS CHARTERED ACCOUNTED IN TIME FOR SIGNI NG THE NECESSARY DOCUMENTS ON ACCOUNT OF ROAD ACCIDENT OF HIS FATHER WHEN HE H AD TO UNDERGO FOR SURGERY AT HI-TECH HOSPITAL, GANDHINAGAR. WE ARE SATISFIED WITH THE PLEA TAKEN BY THE ASSESSEE AND CONDONE THE DELAY. ITA NO1742/A HD/2017 . A.Y. 2010-11 3 3. FACTS OF THE CASE ARE THAT THE APPELLANT IS AN INDI VIDUAL AND HAS NOT FILED THE RETURN OF INCOME FOR A.Y, 2010-11 BEING BELOW EXEMP TION LIMIT. 4. THE APPELLANT RECEIVED NOTICE U/S 148 OF THE IT ACT , 1961 FOR THE REASON THAT HE HAS DEPOSITED CASH MORE THAN RS. 10,00,000/- IN HIS BANK ACCOUNTS. 5. IN RESPONSE THE NOTICE, THE APPELLANT FILED THE RET URN OF INCOME FOR A.Y. 2010- 11 DECLARING THE INCOME OF RS. 73,320/- ON 05/09/20 14. 6. DURING THE RE-ASSESSMENT PROCEEDINGS, THE A.O. NOTE D THAT THE APPELLANT HAS MAINTAINED BANK ACCOUNTS WITH AXIS BANK, BANK OF BA RODA AND STATE BANK OF INDIA. 7. IN RESPONSE TO THE NOTICE U/S 142(1) OF THE IT ACT, 1961 REGARDING SOURCE OF CASH DEPOSIT INTO THE BANK, THE APPELLANT EXPLAINED THE SOURCES OF CASH DEPOSIT INTO THE BANK OUT OF CASH WITHDRAWAL FROM OTHER BAN K ACCOUNTS AND MONEY ARRANGED FROM FRIENDS AND RELATIVES. 8. THE APPELLANT ALSO EXPLAINED THE PURPOSE OF WITHDRA WAL OF CASH FROM OTHER BANKS AND REDEPOSIT OF THE SAID CASH INTO BANK AS H E HAS TO SHOW THE BANK BALANCE IN HIS BANK ACCOUNT FOR OBTAINING STUDENT V ISA FOR STUDY IN FOREIGN COUNTRY. 9. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AP PELLANT ALSO SUBMITTED THE CONFIRMATION FROM FRIENDS AND RELATIVES TO THE A.O. ALONG WITH PAN; ADDRESS AND CONTRA BANK ACCOUNT OF CREDITORS FOR HIS VERIFI CATION. ITA NO1742/A HD/2017 . A.Y. 2010-11 4 10. ASSESSEE CONTENDED THAT THE A.O. WAS SATISFIED WIT H THE SAID EXPLANATION AND NOTED THAT THE APPELLANT HAS EXPLAINED THE REASONS AND PURPOSE FOR COLLECTING CASH FROM FRIENDS AND RELATIVES AND DEPOSITED IN HI S BANK ACCOUNT (PARA-3 OF HIS ORDER) 11. ON PERUSAL OF THE ASSESSMENT ORDER PASSED ON 08-09- 2014, THE A.O. HAS INITIATED PENALTY U/S 271(L)(C) OF THE IT ACT, 1961 FOR THE ADDITION MADE BY HIM ONLY. 12. SURPRISINGLY, AFTER NEARLY COMPLETION OF 30 MONTHS, THE APPELLANT RECEIVED THE NOTICE FROM THE OFFICE OF THE ADDL. COMMISSIONER, G ANDHINAGAR RANGE, ON 05- 07-2016 FOR IMPOSITION OF PENALTY U/S 271D OF THE I T ACT, 1961 FOR THE REASON THAT THE APPELLANT HAS ACCEPTED LOAN OF RS. 4,00,00 0/- IN CASH IN CONTRAVENTION OF SECTION 269SS OF THE IT ACT, 1961. 13. DURING THE ASSESSMENT PROCEEDINGS THE APPELLANT HAS EXPLAINED ALL THE CASH DEPOSITED INTO THE BANK TOGETHER WITH PURPOSE OF CA SH RECEIVED FROM FRIENDS AND RELATIVES FOR WHICH A.O. WAS FULLY SATISFIED (P ARA-3 OF HIS ORDER) AND EVEN DID NOT MAKE ANY REFERENCE THAT SEPARATE PROPOSAL I S FORWARDED TO ADD' C1T, GANDHINAGAR RANGE FOR INITIATION OF PENALTY U/S 271 D OF THE IT ACT, IN CONTRAVENTION OF SECTION 269SS OF THE IT ACT, 1961. 14. THEREAFTER ASSESSING OFFICER MADE ADDITION OF RS. 1 ,55,935/- AGAINST THE ORDER OF THE LD. A.O. LD. CIT(A) CONFIRMED THE ACTION OF THE ASSESSING OFFICER. ITA NO1742/A HD/2017 . A.Y. 2010-11 5 15. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE IMPUGNED ORDER. IN THIS CASE, LD. A.O. INITIATED THE PENALTY PROCEEDING IN ASSESSMENT ORDER U/S.271(1)(C) BUT LD. CIT(A) CONFIRMED THE PENALTY U/S. 271D. 16. IN SUPPORT OF ITS CONTENTION, LD. A.R. CITED AN ORD ER OF ITAT DELHI ORDER WHEREIN IN SIMILAR FACTS AND CIRCUMSTANCES MATTER WAS DECIDED IN FAVOUR OF THE ASSESSEE AND REVENUES APPEAL WAS DISMISSED WITH FO LLOWING OBSERVATIONS: 2. BRIEFLY THE FACTS OF THE CASE ARE THAT THE A.O. IN THE ASSESSMENT ORDER NOTED THAT ASSESSEE WAS ASKED TO EXPLAIN SOURCE OF THE CA SH DEPOSIT IN HER BANK ACCOUNT MAINTAINED WITH STATE BANK OF INDIA. THE ASSESSEE A TTENDED THE PROCEEDINGS BEFORE A.O. AND FILED REPLY ALONG WITH LETTER OF MR . W. SUTONG THAT SHRI P.V. IYER WAS HIS FAMILY FRIEND AND IN JULY, 2009, SHRI P.V. IYER INFORMED MR. W. SUTONG ABOUT HIS HOUSING LOAN. ON 8TH SEPTEMBER, 2009, MR. W. SUTONG DEPOSITED RS.16 LAKHS, THE AMOUNT RECEIVED OUT OF HIS BUSINESS RECE IPTS, IN ASSESSEE'S JOINT BANK ACCOUNT WITH SBI ACCOUNT. ON LEARNING ABOUT THE TRA NSACTION, SHRI P.V. IYER, HUSBAND OF ASSESSEE REALISED THAT THIS IS NOT RIGHT WAY TO ACCEPT SUCH A HUGE AMOUNT AND HE RETURNED BACK THE AMOUNT OF RS.14 LAK HS ON THE SAME DAY AND RS.1.00 LAKH ON 10TH SEPTEMBER, 2009 AS EVIDENT FRO M PASS BOOK ENTRY, AMOUNT OF RS.80,000 RETURNED BACK IN THE MONTH OF DECEMBER , 2012 AND BALANCE OF RS.20,000 ARE KEPT IN SAFE DEPOSIT FOR HIM. THE ASS ESSEE ATTENDED THE PROCEEDINGS. BUT, DID NOT FILE ANY DOCUMENTARY EVID ENCE. THE A.O. WAS NOT SATISFIED WITH THE ITA.NO.3869/D/2017 & 3115/D/2017 MRS. LAKSHMI VISHWANATH, DELHI. EXPLANATION OF ASSESSEE AND ADDED BACK RS.16.18 LAK HS UNDER SECTION 68 OF THE I.T. ACT. THE A.O. INITIATED PENALTY PROCEEDINGS FO R VIOLATION OF SECTION 269SS SEPARATELY. THE A.O. VIDE SEPARATE ORDER LEVIED PEN ALTY UNDER SECTION 271D OF THE I.T. ACT IN A SUM OF RS.15,80,000 WHICH IS SUM EQUA L TO THE AMOUNT OF CASH LOAN SO TAKEN OR ACCEPTED. 2.1. THE LD. CIT(A) CONSIDERING THE EXPLANATION OF ASSESSEE NOTED THAT THE AMOUNT OF CASH LOAN WAS NEVER BEEN RECEIVED BY ASSESSEE IN HAND INSTEAD THE CASH HAS BEEN DEPOSITED DIRECTLY IN THE BANK ACCOUNT OF ASSE SSEE BY MR. W. SUTONG FROM SHILLONG BRANCH OVER WHICH THE ASSESSEE HAD NO CONT ROL. RATHER BY TAKING INSTANT ITA NO1742/A HD/2017 . A.Y. 2010-11 6 ACTION, THE ASSESSEE HAS REFUNDED BACK THE IMPUGNED CASH ON THE SAME DAY WHICH GOES TO PROVE THE BONAFIDE OF THE ASSESSEE AN D COMPLETELY RULES OUT ANY FOUL PLAY ON ASSESSEE'S PART. THE A.O. HAS NOT OFFE RED ANY COMMENTS ON THE SAME. THE LD. CIT(A) ALSO NOTED THAT IMPUGNED CASH WAS NE VER USED BY ASSESSEE AS OUT OF RS.16 LAKHS, THE ASSESSEE HAS RETURNED BACK RS.1 4 LAKHS ON THE SAME DAY, WHEREAS ANOTHER RS.1 LAKH WAS REFUNDED MERELY AFTER TWO DAYS.THEREFORE, PENALTY TO THE EXTENT OF RS.15 LAKHS WAS CANCELLED. THE PENALTY FOR RS.80,000 WAS CONFIRMED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORITIES BELOW AND SUBMITTED THAT THE ADDITI ON OF RS.16,18,000 IN ASSESSMENT YEAR UNDER APPEAL ON QUANTUM REMAINED SU BJECT MATTER IN APPEAL BEFORE ITAT, DELHI BENCH IN DEPARTMENTAL APPEAL IN ITA.NO.4579/2013 AND VIDE ORDER DATED 20TH MARCH, 2015, THE DEPARTMENTAL APPE AL HAS BEEN DISMISSED. THE LD. CIT(A) IN THIS CASE DELETED THE ADDITION OF RS. 15,80,000 BY CONSIDERING THE EXPLANATION OF ASSESSEE AS IS NOTED IN THE IMPUGNED ORDER OF THE LD. CIT(A) ON PENALTY MATTER. THE LEARNED COUNSEL FOR THE ASSESSE E THEREFORE, SUBMITTED THAT BONAFIDE OF THE ASSESSEE IS NOT DISPUTED AND FURTHE R SUBMITTED THAT A.O. DID NOT RECORD ANY SATISFACTION UNDER SECTION 271D OF THE I .T. ACT BEFORE INITIATING THE PENALTY PROCEEDINGS. 4. ON THE OTHER HAND, LD. D.R. RELIED UPON THE ORDE RS OF THE AUTHORITIES BELOW. 5. AFTER CONSIDERING THE RIVAL CONTENTIONS, I AM OF THE VIEW THAT NO PENALTY IS LEVIABLE IN THE FACTS AND CIRCUMSTANCES OF THE CASE . THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. JAI LAXMI RICE MILLS (2015) 379 ITR 521(SC) HELD AS UNDER : 'FOR THE ASSESSMENT YEAR 1992-93, THE ASSESSMENT ORD ER WAS PASSED ON THE ASSESSEE ON FEBRUARY 26, 1996, EX-PARTE. WHILE FRAMING THE ASSESSMENT, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE INCOME-TAX ACT, 1961, AND BECAUSE OF THIS THE ASSESSING OFFICER WAS SATIS FIED THAT PENALTY PROCEEDINGS UNDER SECTION 271D OF THE ACT WERE TO B E INITIATED. ON APPEAL, THE COMMISSIONER (APPEALS) BY ORDER DATED D ECEMBER 5, 1996, SET ASIDE THE ASSESSMENT ORDER WITH A DIRECTION TO FRAM E THE -ASSESSMENT DE NOVO AFTER AFFORDING ADEQUATE OPPORTUNITY TO THE AS SESSEE. MEANWHILE PENALTY UNDER SECTION 271D WAS LEVIED BY ORDER DATE D SEPTEMBER 23, ITA NO1742/A HD/2017 . A.Y. 2010-11 7 1996, I.E., BEFORE THE APPEAL OF THE ASSESSEE AGAIN ST THE ORIGINAL ASSESSMENT ORDER WAS HEARD AND ALLOWED THEREBY SETT ING ASIDE THE ASSESSMENT ORDER ITSELF. AFTER REMAND, THE ASSESSIN G OFFICER PASSED A FRESH ASSESSMENT ORDER BUT IN THIS ASSESSMENT ORDER , NO SATISFACTION REGARDING INITIATION OF PENALTY PROCEEDINGS UNDER S ECTION 271D OF THE ACT WAS RECORDED. THE TRIBUNAL AS WELL AS THE HIGH COUR T HELD THAT THE PENALTY ORDER PASSED ON THE BASIS OF THE ORIGINAL ASSESSMEN T ORDER COULD NOT STILL SURVIVE WHEN THAT ASSESSMENT ORDER HAD BEEN SET ASI DE BECAUSE THE SATISFACTION RECORDED THEREIN FOR THE PURPOSE OF IN ITIATION OF THE PENALTY PROCEEDINGS WOULD ALSO NOT SURVIVE. ON FURTHER APPE ALS : HELD, DISMISSING THE APPEALS, THAT IN THE FRESH ASS ESSMENT ORDER THERE WAS NO SATISFACTION RECORDED REGARDING PENALTY PROCEEDI NGS UNDER SECTION 271D OF THE ACT THOUGH IN THAT ORDER THE ASSESSING OFFICER WANTED PENALTY PROCEEDING TO BE INITIATED UNDER SECTION 271(1)(C) OF THE ACT. THUS, THE PENALTY UNDER SECTION 271D WAS WITHOUT ANY SATISFAC TION AND, THEREFORE, NO SUCH PENALTY COULD BE LEVIED.' 5.1. IN THIS CASE, THE A.O. MERELY INITIATED PENALT Y PROCEEDINGS SEPARATELY FOR VIOLATION OF SECTION 269SS OF THE I.T. ACT. HE DID NOT RECORD ANY SATISFACTION UNDER SECTION 271D OF THE I.T. ACT BEFORE INITIATING THE PENALTY PROCEEDINGS UNDER SECTION 271D OF THE I.T. ACT. FURTHER, THE EXPLANAT ION OF ASSESSEE ON MERIT CLEARLY SUGGEST THAT ASSESSEE HAD A 'REASONABLE CAUSE' FOR V IOLATION TO COMPLY WITH THE PROVISIONS OF LAW BECAUSE NO CASH GIVEN DIRECTLY TO ASSESSEE BUT DEPOSITED AT SHILONG BRANCH OVER WHICH ASSESSEE DID NOT HAVE ANY CONTROL. THE ASSESSEE IMMEDIATELY ACTED ON THE MATTER AND REFUNDED THE AM OUNT IN QUESTION. THE FINDING OF FACT RECORDED BY LD. CIT(A) HAVE NOT BEE N DISPUTED THROUGH ANY EVIDENCE OR MATERIAL ON RECORD. THEREFORE, CONSIDER ING THE ISSUE IN THE LIGHT OF 'REASONABLE CAUSE' UNDER SECTION 273B OF I.T. ACT, F OR FAILURE TO COMPLY WITH THE PROVISIONS OF LAW, NO PENALTY IS LEVIABLE IN THE MA TTER. 6. CONSIDERING THE ABOVE DISCUSSION IN THE LIGHT OF JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. JAI LAXMI RICE MILLS (SUPRA), I SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW AND CANCEL THE ENTI RE PENALTY. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D AND APPEAL OF THE ASSESSEE IS ALLOWED. ITA NO1742/A HD/2017 . A.Y. 2010-11 8 17. IN PARITY WITH THE ITAT DELHI BENCH ORDER, WE ALLOW THE APPEAL OF THE ASSESSEE BECAUSE ITAT HAS DISCUSSED AND GRANTED RELIEF CITIN G A JUDGMENT OF SUPREME COURT IN THE CASE OF CIT VS. JAI LAXMI RICE MILLS ( 2015) 379 ITR 521 (SC). 18. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED. ORDER PRONOUNCED IN OPEN COURT ON 11- 12- 2019 SD/- SD/- (AMARJIT SINGH) (MAHAVIR PRASAD) ACCOUNTANT MEMBER TRUE COPY JUDICIAL MEMBER AHMEDABAD: DATED 11/12/2019 RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHME DABAD