Shri Ghanshyambhai Dahyabhai Patel, Petlad V. The Jt.CIT, Range-3, Baroda

ITA 1788/AHD/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 85613 (ITAT-AHMEDABAD)
• Duration Of Justice: 7 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-01-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 08-01-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 13-06-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: S N DIVETIA
• Keywords: Principle of natural justice; Reasonable cause
• Section: 273B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD , , BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI KUL BHARAT, JUDICIAL MEMBER 1. ./ I.T.A.NO.1787/AHD/2014A.Y.2008-09 2. ./ I.T.A.NO.1788/AHD/2014A.Y.2008-09 1. SHRI DINESHBHAI DAHYABHAI PATEL AZAD CHOWK AT: VADODLA388 435 TAL: PETLAD PAN: ADHPP 8485 C 2. SHRI GANSHYAMBHAI DAHYABHAI PATEL AZAD CHOWK AT: VADODLA-388 435 TAL: PETLAD PAN: AGEPS 0583 Q / VS. 1. THE JCIT, RANGE-3, BARODA 2. DO- ( '# / APPELLANTS ) .. ( $%'# / RESPONDENTS ) '#& / APPELLANTS BY : SHRI S.N.DIVETIA, AR $%'#'& / RESPONDENT BY : SMT. SONIA KUMAR SR.DR (' / DATE OF HEARING 08/01/2015 )*+,' / DATE OF PRONOUNCEMENT 23/01/2015 / O R D E R PER SHRI KUL BHARAT, JUDICIAL MEMBER : THESE TWO APPEALS BY THE SEPARATE ASSESSEES ARE DIRECTED AGAINST THE ORDERS OF THE LD.COMMISSIONER OF INCOME TAX(APP EALS)-I, BARODA ITA NOS.1787 & 1788 /AHD/2014 S/SHRI DINESHBHAI D.PATEL & GHANSHYAMBHAI D.PATEL VS. JCIT RESPECTIVELY ASST.YEAR(S) 2008-09 - 2 - (CIT(A) IN SHORT) BOTH IDENTICALLY DATED 26/12/20 12 PERTAINING TO ASSESSMENT YEAR (AY) 2008-09. SINCE COMMON ISSUES ARE INVOLVED, B BOTH THESE APPEALS WERE HEARD TOGETHER AND ARE BEIN G DISPOSED OF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE. 2. FIRST, WE TAKE UP THE ASSESSEES APPEAL (IN THE CASE OF DINESHBHAI DAHYABHAI PATEL) IN ITA NO.1787/AHD/2014 FOR AY 20 08-09 AS A LEAD CASE. THE ASSESSEE HAS RAISED THE FOLLOWING GROUN DS OF APPEAL:- 1.1. THE ORDER PASSED U/S.250 ON 03-03-2014 FOR A. Y. 2008-09 BY CIT(A)-I, BARODA UPHOLDING THE PENALTY OF RS.6 LACS LEVIED U/S.271D MADE BY JCIT IS WHOLLY ILLEGAL, UNLAWFUL A ND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO T HE IMPUGNED PENALTY. 2.1.THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THAT THERE WAS CONTRAVENTION OF THE PROV ISIONS OF SECTION 269SS WITHOUT SUFFICIENT CAUSE AND THEREBY UPHOLDING THE PENALTY OF RS.6 LACS LEVIED U/S.271D. 2.3. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THERE W AS CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS WI THOUT SUFFICIENT CAUSE AND THEREBY UPHOLDING THE PENALTY OF RS.6 LAC S LEVIED U/S.271D. ITA NOS.1787 & 1788 /AHD/2014 S/SHRI DINESHBHAI D.PATEL & GHANSHYAMBHAI D.PATEL VS. JCIT RESPECTIVELY ASST.YEAR(S) 2008-09 - 3 - 3.1. THE LD.CIT(A) HAS ERRED IN UPHOLDING THAT (A ) THE PENALTY PROCEEDINGS INITIATED U/S.271D R.W.S.274 WERE NOT B ARRED BY LIMITATION OF TIME (B) THERE WAS A DIFFERENCE BETWE EN THE PENALTY LEVIED U/S.271B AND 271D (C) THE CASE LAW RELIED UP ON BY THE APPELLANT WAS NOT APPLICABLE IN THE FACTS OF THE CA SE. IT IS, THEREFORE, PRAYED THAT THE PENALTY OF RS.6 L ACS UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT U/S.143( 3) OF THE INCOME TAX ACT,1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 22.10.2010, THEREBY THE ASSESSING OFFICER (AO IN SHORT) ACCEPTE D THE INCOME DECLARED IN THE RETURN OF INCOME. SUBSE QUENTLY, THE JT.COMMISSIONER OF INCOME TAX BARODA PASSED A PENAL TY ORDER DATED 27.11.2012, THEREBY A PENALTY U/S.271D OF THE ACT W AS IMPOSED AMOUNTING TO RS.6 LACS IN RESPECT OF THE LOAN OF RS .6 LACS RECEIVED FROM ONE SHRI BHUPENDRABHAI CHUNIBHAI PATEL ON 17/1/2007 IN CASH. THE AO IMPOSED A PENALTY FOR CONTRAVENING THE PROVISIONS O F SECTION 269SS OF THE ACT. AGAINST THIS, THE ASSESSEE FILED AN APPEA L BEFORE THE LD.CIT(A), WHO AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESS EE REJECTED THE APPEAL. NOW, THE ASSESSEE IS FURTHER IN APPEAL BEFORE THIS TRIBUNAL. 3. GROUND NOS.1.1 TO 2.3 ARE ON MERITS OF THE C ASE. THE LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT AS PER ASSESSMENT ORDER , THE REVENUE HAS NOT ITA NOS.1787 & 1788 /AHD/2014 S/SHRI DINESHBHAI D.PATEL & GHANSHYAMBHAI D.PATEL VS. JCIT RESPECTIVELY ASST.YEAR(S) 2008-09 - 4 - DOUBTED THE TRANSACTIONS SINCE THE LOAN WAS TAKEN F ROM THE FARMER. THE AMOUNT COULD NOT BE TAKEN BY WAY OF CHEQUE OR THE M ODE PRESCRIBED UNDER THE ACT. HE SUBMITTED THAT IT WAS ONLY A TEC HNICAL OR VENIAL BREACH OF THE PROVISIONS OF THE ACT. HE SUBMITTED THAT UN DER THE IDENTICAL FACTS, THE HONBLE GUJARAT HIGH COURT HAS TAKEN A VIEW AGA INST THE REVENUE IN THE CASE OF CIT VS. MAA KHODIAR CONSTRUCTION IN TA X APPEAL NO.325 OF 2014 DATED 28/04/2014. HE FURTHER REITERATED THE S UBMISSIONS MADE BEFORE THE LD.CIT(A). 3.1. ON THE CONTRARY, LD.SR.DR SMT.SONIA KUMAR VEHE MENTLY OPPOSED THE SUBMISSION OF THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE. SHE STRONGLY SUPPORTED THE ORDERS OF THE AUTHORITIES BE LOW AND SUBMITTED THAT IT IS EVIDENT FROM THE RECORD THAT THE ASSESSEE HAS CONTRAVENED THE PROVISIONS OF SECTION 269SS OF THE ACT. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS, PERUSED TH E MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AS WELL AS THE JUDGEMENT OF THE HONBLE GUJARAT HIG H COURT RENDERED IN THE CASE OF CIT VS. MAA KHODIYAR CONSTRUCTION (SUPR A). IN THIS CASE, THE SCRUTINY ASSESSMENT PROCEEDINGS WERE INITIATED ON T HE BASIS OF AIR INFORMATION AND THE ASSESSMENT WAS FRAMED VIDE ORDE R DATED 22/10/2010, WHEREBY THE AO AFTER VERIFYING THE DETAILS FURNISHE D BY THE ASSESSEE AND ALSO VERIFYING THE TRANSACTIONS, GAVE A FINDING THA T NO DISCREPANCY WAS ITA NOS.1787 & 1788 /AHD/2014 S/SHRI DINESHBHAI D.PATEL & GHANSHYAMBHAI D.PATEL VS. JCIT RESPECTIVELY ASST.YEAR(S) 2008-09 - 5 - FOUND AND, ACCORDINGLY, ACCEPTED THE INCOME OF THE ASSESSEE IN THE RETURN OF INCOME. IT IS NOT IN DISPUTE THAT THE ASSESSEE ACCEPTED A LOAN IN CASH. THE CONTENTION OF THE ASSESSEE IS THAT THE LOAN HAS BEEN TAKEN FROM THE FARMER WHO IS NOT ASSESSED TO INCOME-TAX. IT IS AL SO THE CONTENTION OF THE ASSESSEE THAT IT WAS A FRIENDLY INTEREST-FREE LOAN AND UNDER THE BONA FIDE BELIEF, THE TRANSACTION WAS CARRIED OUT. THE HONB LE GUJARAT HIGH COURT, UNDER THE IDENTICAL FACTS, HAS AFFIRMED THE VIEW OF THE TRIBUNAL BY OBSERVING AS UNDER:- FOR NOT INVITING THE RIGOUR OF PENALTY U/S.271D OF THE ACT AS CONSEQUENCE, ON THE PART OF THE ASSESSEE, THE REASONABLE CAUSE NEEDS TO BE SHOWN. WHAT IS PLEADED BY THE RESPONDENT WAS THAT ALL THESE PERSONS WERE AGRICULT URISTS AND THAT THE GENUINENESS OF THE TRANSACTIONS AT NO POINT OF TIME HAD BEEN DOUBT ED BY THE REVENUE. THEY STAYED IN REMOTE AREAS. BOTH THE AUTHORITIES, THEREFORE, WER E OF THE OPINION THAT REASONABLE CAUSE HAD BEEN SUFFICIENTLY MADE OUT AND WHEN THE V ERY TRANSACTIONS WERE NEVER DOUBTED BY THE REVENUE AUTHORITIES, THE BREACH IS T O BE TREATED AS A MERE TECHNICAL OR VENIAL BREACH. WE NOTICE THAT THE REQUIREMENT OF SECTION 273B IS F OR THE ASSESSEE TO PROVE THAT THERE WAS A REASONABLE CAUSE FOR ITS HAVING FAILED TO ABI DE BY THE PROVISIONS OF SECTION 269SS. AS EMERGES FROM THE RECORD, NOT ONLY THE SU BSTANTIATING EVIDENCE LIKE 7/12 EXTRACTS WERE PRODUCED, BUT, ALSO ADDITIONALLY, TRA NSACTIONS WERE REFLECTED IN THE ACCOUNTS OF ASSESSEE AND THE ADVANCEMENT OF LOAN TO THE ASSESSEE HAD BEEN REFLECTED IN THE BOOKS OF ACCOUNT OF THOSE PERSONS FROM WHOM THE LOAN HAD BEEN RECEIVED. THE IDENTITY OF THOSE PERSONS HAS ALSO BEEN WELL ESTABL ISHED. THE ASSESSEE ALSO HAD GIVEN SATISFACTORY REASON FOR TAKING SUCH LOAN. HIS BONA FIDE BELIEF THAT SUCH TRANSACTIONS WOULD NOT ATTRACT PROVISION OF SECTION 269SS ON THE GROUND THAT THEY WERE AGRICULTURISTS AND LIVED IN REMOTE VILLAGES ALSO WA S ONE OF THE GROUNDS WHICH HAS WEIGHED WITH BOTH THE AUTHORITIES. IN VIEW OF FORGOING DISCUSSION, WE ARE OF THE OPINI ON THAT NO ERROR HAS BEE COMMITTED BY BOTH THE AUTHORITIES BELOW IN DELETING THE PENAL TY. IT IS TRUE THAT THE RESPONDENT HAS INCOME FROM OTHER BUSINESS AND THESE TRANSACTIO NS WERE NOT BETWEEN AGRICULTURISTS HAVING ONLY AGRICULTURE INCOME, NOT LIABLE TO TAX WHICH HAVE BEEN ITA NOS.1787 & 1788 /AHD/2014 S/SHRI DINESHBHAI D.PATEL & GHANSHYAMBHAI D.PATEL VS. JCIT RESPECTIVELY ASST.YEAR(S) 2008-09 - 6 - EXEMPTED FROM SUCH RIGOR OF LAW AND YET, THE CAUSE ADVANCED IS WHEN FOUND TO BE SUFFICIENTLY REASONABLE, NO INTERFERENCE WOULD BE D ESIRABLE. 4.1. IN THE PRESENT CASE, UNDISPUTEDLY, THE AO HAS VERIFIED THE TRANSACTIONS AND FOUND NO DISCREPANCY IN RESPECT OF THE TRANSACTIONS. THE EXPLANATION OF THE ASSESSEE WITH REGARD TO ACCEPTIN G THE LOAN IN CASH THAT HE OBTAINED FROM FARMERS, WHO WERE STAYING IN REMOT E VILLAGE AND THE TRANSACTION IS BONA FIDE AND THERE IS NO INTENTION OF EVADING THE TAX. THE AO HAS ALSO VERIFIED THE TRANSACTIONS. THEREFORE , RESPECTFULLY FOLLOWING THE JUDGEMENT OF HONBLE GUJARAT HIGH COURT RENDERE D IN THE CASE OF CIT VS. MAA KHODIYAR CONSTRUCTION(SUPRA), WE ARE OF THE CONSIDERED VIEW THAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN LEVYING THE PENALTY, THEREFORE PENALTY LEVIED VIDE ORDER DATED 27/11/201 2 AND AFFIRMED BY THE LD.CIT(A) VIDE ORDER DATED 03/03/2014 IS HEREBY DEL ETED. THUS, THIS GROUND OF ASSESSEES APPEAL IS ALLOWED. 5. GROUND NO.3.1 IS AGAINST THE PENALTY BEING BARRE D BY LIMITATION. SINCE WE HAVE ALLOWED THE APPEAL ON MERIT, THIS GRO UND OF ASSESSEES APPEAL HAS BECOME ACADEMIC. HENCE WE ARE NOT ADJUD ICATING THE SAME. 6. IN THE RESULT, ASSESSEES APPEAL IN THE CASE OF DINESHBHAI DAHYABHAI PATEL (ITA NO.1787/AHD/2014 AY 2008-09) IS ALLOWED. 7. NOW , WE TAKE UP THE ASSESSEES APPEAL (IN THE CASE OF GHANSHYAMBHAI DAHYABHAI PATEL) IN ITA NO.1788/AHD/2 014 FOR AY 2008-09. THE ASSESSEE HAS RAISED THE FOLLOWING GRO UNDS OF APPEAL:- ITA NOS.1787 & 1788 /AHD/2014 S/SHRI DINESHBHAI D.PATEL & GHANSHYAMBHAI D.PATEL VS. JCIT RESPECTIVELY ASST.YEAR(S) 2008-09 - 7 - 1.1. THE ORDER PASSED U/S.250 ON 03-03-2014 FOR A. Y. 2008-09 BY CIT(A)-I, BARODA UPHOLDING THE PENALTY OF RS.7,35,0 00/- LEVIED U/S.271D MADE BY JCIT IS WHOLLY ILLEGAL, UNLAWFUL A ND AGAINST THE PRINCIPLES OF NATURAL JUSTICE. 1.2. THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE SUBMISSIONS MADE AND EVIDENCE PRODUCED BY THE APPELLANT WITH REGARD TO THE IMPUGN ED PENALTY. 2.1.THE LD.CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND O N FACTS IN CONFIRMING THAT THERE WAS CONTRAVENTION OF THE PROV ISIONS OF SECTION 269SS WITHOUT SUFFICIENT CAUSE AND THEREBY UPHOLDIN G THE PENALTY OF RS.7,35,000/- LEVIED U/S.271D. 2.2. THAT IN THE FACTS AND CIRCUMSTANCES OF THE CAS E AS WELL AS IN LAW, THE LD.CIT(A) OUGHT NOT TO HAVE UPHELD THERE WAS CO NTRAVENTION OF THE PROVISIONS OF SECTION 269SS WITHOUT SUFFICIENT CAUS E AND THEREBY UPHOLDING THE PENALTY OF RS.7,35,000/- LEVIED U/S. 271D. 3.1. THE LD.CIT(A) HAS ERRED IN UPHOLDING THAT (A ) THE PENALTY PROCEEDINGS INITIATED U/S.271D R.W.S.274 WERE NOT B ARRED BY LIMITATION OF TIME (B) THERE WAS A DIFFERENCE BETWEEN THE PENA LTY LEVIED U/S.271B AND 271D (C) THE CASE LAW RELIED UPON BY THE APPELL ANT WAS NOT APPLICABLE IN THE FACTS OF THE CASE. IT IS, THEREFORE, PRAYED THAT THE PENALTY OF RS.7,3 5,000/- UPHELD BY THE CIT(A) MAY KINDLY BE DELETED. 7.1. IN THIS APPEAL, THE FACTS ARE IDENTICAL TO THE FACTS OF ASSESSEES APPEAL IN ITA NO.1787/AHD/2014 FOR AY 2008-09(SUPRA ). THE RESPECTIVE REPRESENTATIVES OF THE PARTIES ADOPTED T HEIR ARGUMENTS AS WERE ADDRESSED IN ITA NO.1787/AHD/2014(SUPRA), WHEREIN W E HAVE ALLOWED ITA NOS.1787 & 1788 /AHD/2014 S/SHRI DINESHBHAI D.PATEL & GHANSHYAMBHAI D.PATEL VS. JCIT RESPECTIVELY ASST.YEAR(S) 2008-09 - 8 - THE APPEAL OF THE ASSESSEE BY FOLLOWING THE JUDGEME NT OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF CIT VS. MAA KHOD IYAR CONSTRUCTION (TAX APPEAL NO.325 OF 2014, DATED 28/04/2014). ACC ORDINGLY, THE APPEAL OF THE ASSESSEE (IN THE CASE OF DINESHBHAI D AHYABHAI PATEL FOR AY 2008-09), FOR THE SAME REASONING, WE ALLOW THE GROU ND NOS.1.1 TO 2.2 ON MERITS AND THE GROUND RELATED TO PENALTY BEING BARR ED BY LIMITATION HAS BECOME ACADEMIC, HENCE WE ARE NOT ADJUDICATING THE SAME. AS A RESULT, THIS APPEAL OF THE ASSESSEE IS ALLOWED. 8. IN THE COMBINED RESULT, BOTH THE APPEALS; I.E. I TA NO.1787/AHD/2014 (IN THE CASE OF DINESHBHAI DAHYA BHAI PATEL) & ITA NO.1788/AHD/2014 (IN THE CASE OF GHANSHYAMBHAI DAHYABHAI PATEL) FOR AY 2008-09 BOTH ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON FRIDAY, THE 23 RD DAY OF JANUARY, 2015 AT AHMEDABAD. SD/- SD/- ( ) ( ) ( ANIL CHATURVEDI ) ( KUL BHARAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 23/ 01 /2015 0..,.../ T.C. NAIR, SR. PS ITA NOS.1787 & 1788 /AHD/2014 S/SHRI DINESHBHAI D.PATEL & GHANSHYAMBHAI D.PATEL VS. JCIT RESPECTIVELY ASST.YEAR(S) 2008-09 - 9 - !'#$%$&' / COPY OF THE ORDER FORWARDED TO : 1. '# / THE APPELLANT 2. $%'# / THE RESPONDENT. 3. 123 4 / CONCERNED CIT 4. 4 ( ) / THE CIT(A)-I, BARODA 5. 56$ 23 , 23, , 1 / DR, ITAT, AHMEDABAD 6. 689:( / GUARD FILE. / BY ORDER, %5 $ //TRUE COPY// / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION .. 16.1.15 (DICTATION-PAD 12- P AGES ATTACHED AT THE END OF THIS FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 19.1.15 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR. P.S./P.S.23.1.15 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23.1.15 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER