Rugmini Ram Raghav Spinners P Ltd., CHENNAI V. JCIT, Coimbatore

ITA 1792/CHNY/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 68870 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 21-11-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 25-09-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S DASGUPTA
• Assessee Lawyers: R VIJAYARAGHAVAN
• Keywords: Reasonable cause
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI (BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ) .. I.T.A. NO.1792/MDS/2013 ASSESSMENT YEAR : 2008-09 M/S.RUGMINI RAM RAGHAV SPINNERS P LTD., 33-40.CHANDRALOK, PONNIAHRAJAPURAM, COIMBATORE 641 001. PAN : AABCR 0312 C (APPELLANT) V. THE JOINT COMMISSIONER OF INCOME TAX , RANGE-I, COIMBATORE 641 018. (RESPONDENT) APPELLANT BY : SHRI R.VIJAYARAGHAVAN,ADVOCATE RESPONDENT BY : SHRI S.DAS GUPTA, JCIT D.R DATE OF HEARING : 21.11.13 DATE OF PRONOUNCEMENT : 02.12.13 O R D E R PER A.MOHAN ALANKAMONY , ACCOUNTANT MEMBER: THIS APPEAL IS FILED BY THE ASSESSEE, AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX(APPEALS)-I, COIMBATORE DATED 10.07.2013 IN APPEAL NO.69/12-13 PASSED UNDER SECTI ON 271D READ WITH SECTION 250 OF THE INCOME TAX ACT,1961. ITA NO.1792/MDS/13 2 2. THE ASSESSEE HAS RAISED THREE ELABORATE GROUNDS IN ITS APPEAL, HOWEVER, THE CRUX OF THE ISSUE IS THAT THE ASSESSEE IS AGGRIEVED BY THE ORDER OF LD. CIT(A) FOR HAVING CONFIRMED THE L EVY OF PENALTY UNDER SECTION 271 D OF THE ACT AMOUNTING TO `. 3 LAKHS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASS ESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN THE BUSINESS OF MANUFACT URING AND SALE OF COTTON YARN. THE ASSESSEE FILED ITS RETURN OF IN COME FOR THE ASSESSMENT YEAR 2008-09 ON 29.09.2008 DECLARING A LOSS OF `. 71,52,927/-. SUBSEQUENTLY, THE RETURN WAS TAKEN FOR SCRUTINY AND ASSESSMENT UNDER SECTION 143(3) OF THE ACT WAS COMP LETED ON 02.08.2010. DURING THE COURSE OF ASSESSMENT, IT CA ME TO LIGHT THAT THE ASSESSEE HAD ACCEPTED CASH LOAN IN CONTRAVENTIO N TO SEC 269SS OF THE ACT, FROM MR.T RAGHAVAN `. 2 LAKHS, AND MR.A. GOKULA KRISHNAN `. 1 LAKH ON 11.04.2007 AND 12.04.2007 RESPECTIVELY. 4. THE ASSESSEE HAD SUBMITTED THE FOLLOWING EXPLAN ATIONS FOR NOT VIOLATING THE PROVISIONS OF THE ACT:- (A) DUE TO COMPELLING CIRCUMSTANCES, THIS AMOU NT OF `. 3 LAKHS IN AGGREGATE WAS OBTAINED FROM THE DIRECTORS OF THE CO MPANY. ITA NO.1792/MDS/13 3 (B) THE AMOUNT WAS PAID DIRECTLY BY THE DIRECTORS OF THE COMPANY TO THE LORRY DRIVERS IN CASH, WHO HAD COME FROM NORTHE RN PARTS OF THE COUNTRY TRANSPORTING THE RAW MATERIALS FOR THE COMPANY. (C) THE AMOUNT HAD TO BE PAID TO THE LORRY DRIVE RS AT ODD HOURS AS THEY HAD COME AT ODD HOURS AND NOT DURING THE REGUL AR BANKING HOURS. (D) IT WAS NOT POSSIBLE TO DRAW CASH FROM THE COM PANY SINCE THE OFFICE OF THE COMPANY WAS CLOSED AT ODD HOURS. 5. HOWEVER, LD.JCIT CITING VARIOUS REASONS IN HIS ORDER DID NOT ACCEPT THE CONTENTION OF THE ASSESSEE AND INVOKED S EC. 269SS AND LEVIED PENALTY UNDER SECTION 271D OF THE ACT. 6. LD. CIT(A) CONFIRMED THE ORDER OF THE LD. JCIT BY OBSERVING AS UNDER:- 6. I HAVE GONE THROUGH THE SUBMISSIONS MADE BY THE APPELLANT AND ALSO THE ORDER OF THE ASSESSING OFFICER. AS SEEN FROM T HE DETAILS FURNISHED BY THE APPELLANT CASH PAYMENTS WERE MADE ONLY ON 08.04 .2007 AND 11.04.2007. THE ASSESSING OFFICER IN HIS ORDER HAS ELABORATELY DISCUSSED THE REASONS FOR LEVY OF PENALTY. THE APPELLANT COU LD NOT PROVE THE ITA NO.1792/MDS/13 4 COMPELLING REASONS FOR ACCEPTING THE CASH LOAN OF R S.3 LACS. THE ASSESSING OFFICER HAS EXAMINED THE DETAILS OF ARRIV AL OF TRUCKS, WEIGHT BRIDGE SLIPS AND HELD THAT THERE WERE SUFFICIENT CA SH BALANCES AVAILABLE WITH THE ASSESSEE COMPANY FOR THE PAYMENT BUT THE APPELL ANT COMPANY DID NOT WITHDRAW THE BALANCE AVAILABLE TOWARDS FREIGHT PAYM ENT. THE ASSESSING OFFICER STATED THAT THE PROVISIONS OF SEC 269SS DOE S NOT RECOGNIZE THE GENUINENESS OF THE TRANSACTIONS, IT BARS TAKING OF LOANS/DEPOSITS IN CASH. IN MY OPINION, AFTER ANALYZING ALL THE FACTS THE ASSE SSING OFFICER HAS LEVIED PENALTY UNDER SECTION 271D BECAUSE OF CONTRAVENTION OF SEC 269SS OF THE INCOME TAX ACT. HENCE, I CONFIRM THE PENALTY LEVIED BY THE ASSESSING OFFICER THE GROUNDS OF APPEAL ARE DISMISSED. 7. BEFORE US, LD.A.R SUBMITTED THAT THE DIRECTORS OF THE COMPANY HAD PAID CASH DIRECTLY TO THE TRANSPORTERS BECAUSE OF THE CONSTRAINTS MENTIONED BEFORE THE LD. JCIT ON THIS REGARD. IT W AS THEREFORE PLEADED THAT THE PENALTY LEVIED UNDER SECTION 271D MAY BE DELETED. LD.D.R SUPPORTED THE ORDERS OF THE REVENUE. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CARE FULLY PERUSED THE MATERIALS ON RECORD AND THE PAPER BOOKS CONTAINING 01 TO 36 PAGES SUBMITTED BY THE LD.A.R . ON PERUSAL OF THE PAPE R BOOKS, WE FIND ITA NO.1792/MDS/13 5 THAT THE ASSESSEE HAD SUBMITTED THE ACKNOWLEDGEMENT OF THE RETURN OF INCOME FILED BY THE DIRECTORS OF THE COMPANY MR T. RAGHAVAN AND MR.A.GOKULA KRISHNAN WHEREIN THEY HAD DECLARED TOTA L INCOME OF `. 28,55,693/- & `. 23,58,736/- RESPECTIVELY. MOREOVER, IT IS NOT TH E CASE WHERE THE ASSESSEE HAS DIRECTLY TAKEN THE LOAN OF `. 3/- LAKHS CASH LOAN FROM THE DIRECTORS BUT THEY ARE AMOUNT PA ID BY THE DIRECTORS OF THE COMPANY TO THE TRANSPORTERS DIRECTLY SINCE T HE PAYMENT COULD NOT BE MADE BY THE COMPANY AT THE APPROPRIATE TIME. THOUGH THE PROVISIONS OF THE SEC.271D OF THE ACT PROVIDES FOR LEVY OF PENALTY FOR FAILURE TO COMPLY WITH SEC.269SS OF THE ACT, SEC.27 3B OF THE ACT PROVIDES THAT NO PENALTY SHALL BE IMPOSABLE IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAILURE. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT IN THE PRESENT CIRCUMSTANCES, THERE WERE REASONABLE CAUSES FOR THE DIRECTORS OF THE COMPANY TO MAKE CASH PAYMENTS DIRE CTLY TO THE TRANSPORTERS ON BEHALF OF THE COMPANY DUE TO COMMER CIAL EXIGENCIES. FURTHER, BOTH THE DIRECTORS HAD SUFFICIENT INCOME T O MAKE SUCH PAYMENT AND THERE WAS NO SCOPE OF LOSS TO THE REVEN UE FOR ANY ITA NO.1792/MDS/13 6 REASONS. THEREFORE, WE HEREBY DIRECT THE REVENUE TO DELETE THE PENALTY LEVIED UNDER SECTION 271D OF THE ACT FOR `. 3/- LAKHS. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER PRONOUNCED ON 2 ND DECEMBER, 2013 AT CHENNAI. SD/- SD/- (CHALLA NAGENDRA PRASAD) (A.MOHAN ALANKAMONY) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 2 ND DECEMBER, 2013. K S SUNDARAM. COPY TO: ASSESSEE/AO/CIT (A)/CIT/D.R./GUARD FILE ITA NO.1792/MDS/13 7