M/s Aishwarya Nano City , HUbli V. Additional Commissioner of Income Tax Range-1, Hubli

ITA 1794/BANG/2018

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1507 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-12-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 05-12-2019
• Assessment Year: 2013-2014
• Appeal Filed On: 25-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M NARASHIMA RAJU J
• Assessee Lawyers: S RAMASUBRAMANIAM
• Keywords: Reasonable cause; Set aside
• Section: 271D

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI B.R BASKARAN , ACCOUNTANT MEMBER AND SMT. BEENA PILLAI, JUDICIAL MEMBER ITA NO.1794/BANG/2018 ASSESSMENT YEAR : 2013-14 M/S AISHWARYA NANO CITY, NO.HIG 98, KURANI COMPLEX, NAVANAGAR, HUBLI. VS. THE ASST. COMMISSIONER OF INCOME-TAX, RANGE-1, HUBLI. APPELLANT RESPONDENT APPELLANT BY : SHRI S RAMASUBRAMANIAM, C.A RESPONDENT BY : SHRI M NARASHIMA RAJU, J.C.I.T (DR) DATE OF HEARING : 05.12.2019 DATE OF PRONOUNCEMENT : .12.2019 O R D E R PER B.R BASKARAN, ACCOUNTANT MEMBER : THE ASSESSEE HAS FILED THIS APPEAL CHALLENGING THE ORDER DATED 19/3/2018 PASSED BY LD CIT(A), HUBLI CONFIRMING THE PENALTY OF 14.60 LAKHS LEVIED BY THE AO U/S 271D OF THE ACT FO R VIOLATION OF PROVISIONS OF SEC. 269SS OF THE ACT. 2. AT THE OUTSET THE LD COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ASSESSEE HAS MADE DETAILED SUBMISSIONS BEFORE T HE TAX AUTHORITIES EXPLAINING THE BUSINESS NECESSITY FOR T AKING LOAN BY WAY OF CASH. HOWEVER THE TAX AUTHORITIES HAVE NOT APPR ECIATED THE SAME AND, IN PARTICULAR, THE LD CIT(A) HAS REJECTED THEM BY MAKING GENERAL OBSERVATIONS WITHOUT APPRECIATING THEM IN P ROPER ITA NO.1794 /BANG/2018 PAGE 2 OF 6 PERSPECTIVE. ACCORDINGLY HE PRAYED THAT THE MATTER MAY BE RESTORED TO THE FILE OF LD CIT(A) FOR PROPERLY APPRECIATING THE EXPLANATIONS OF THE ASSESSEE AND TAKING APPROPRIATE DECISION. 3. THE LD DR AGREED WITH THE PRAYER PUT FORTH BY LD AR. 4. WE HEARD THE RIVAL CONTENTIONS AND PERUSED THE R ECORD. WE NOTICED THAT THE LD CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY MAKING FOLLOWING OBSERVATIONS :- 4.2 IN THE COURSE OF APPELLATE PROCEEDINGS, THE ASSESSEE SUBMITTED A CHART SHOWING DATES ON WHICH CASH LOANS WERE ACCEPTED ALONG WITH A CORRESPONDING EXPLANATION FOR ACCEPTING THE LOANS I N CASH. AN EXAMINATION OF THE SAME SHOWS THAT THE REASON GIVEN FOR ACCEPTING CASH LOANS IS THAT HE HA D INSUFFICIENT BALANCE IN HIS BANK ACCOUNT. THE CASH LOAN OF RS.2,50,000/- TAKEN ON DT.15.12.2012, AND RS.3,10,000/- ON 22&23-12-2012, WAS SAID TO BE FOR MAKING PAYMENTS VIDE CHEQUES TOWARDS MEGHA PROJECT. THE CASH LOAN OF RS.1,50,000/- TAKEN ON 07 - 12-2012, IS SAID TO BE FOR EMERGENCY EXPENSES, WHICH ARE NOT SPECIFIED. THE CASH LOAN OF RS.2,50,000/- TAKEN ON 03-04-2012, WAS SAID TO HAVE BEEN TAKEN FOR MAKING ADVANCES TOWARDS LAND PURCHASES, AND THE CASH LOAN OF RS.2,50,000/- TAKEN ON 25-07-2012 WAS SAID TO BE FOR MEETING DAILY EXPENDITURE OF OFFICE', WHICH IS NOT SPECIFIED. THE ITA NO.1794 /BANG/2018 PAGE 3 OF 6 CASH LOAN TAKEN ON 28.01.2013 OF RS.2,50,000/- WAS SAID TO CONSIST OF BANK CREDITS AND NOT CASH LOANS. THE ASSESSEE HAS ALTERNATIVELY PLEADED THAT THE AO SHOULD HAVE ADDED THE AMOUNTS AS UNDISCLOSED INCOME U/S.68 OF THE I.T. ACT, 1961. 4.3 THE SUBMISSIONS OF THE ASSESSEE ARE EXAMINED AND IT IS SEEN THAT THE COMMON THREAD RUNNING THROUGH THEM IS THAT IT IS ON ACCOUNT OF LOW BALANC E IN HIS BANK ACCOUNT THAT HE HAS TAKEN THESE CASH LOANS. THE EXACT NATURE OF NEED AND THE PERSONS TO WHOM SUCH PAYMENTS ARE MADE IS NOT CLEAR. THE PAYMENTS ARE SAID TO BE MADE VIA CHEQUES TO MEGHA PROJECTS, WHO I PRESUME IS ANOTHER REAL ESTATE ENTI TY, AND THE IDENTITY OF THE OTHERS IS UNCLEAR. 5. THERE IS NO DISPUTE IN THE FACT THAT LOANS ARE USUALLY TAKEN WHEN THERE IS A REQUIREMENT FOR ADDITIONAL FUNDS AND NOT WHEN THERE IS EXCESS OR IT A NO.CIT(A)/HUBLI/10158/2016-17 SUFFICIENT FUNDS. A REASONABLE CAUSE FOR TAKING CASH LOANS, AS DISCUSSED IN THE PENALTY ORDER, IS USUALLY DUE TO N ON AVAILABILITY OF BANKING FACILITIES OR LACK OF ACCES S TO BANKING FACILITIES, ETC. HOWEVER, IN THE ASSESSEE'S CASE IT APPEARS TO BE DUE TO NEED FOR FUNDS, WHICH WERE DEPOSITED INTO A BANK TO COVER CHEQUE PAYMENTS, AS CLAIMED FOR AN AMOUNT OF RS.5,60,000/-. THE PURPOSE OF OTHER CASH LOANS IS F OR ITA NO.1794 /BANG/2018 PAGE 4 OF 6 MAKING PAYMENTS WHEN HE DID NOT HAVE SUFFICIENT FUNDS. THE ASSESSEE ALSO SUBMITTED THAT SOME CASH PAYMENTS THAT WERE ACCEPTED AS CASH PAYMENTS IN THE COURSE OF ASSESSMENT PROCEEDINGS WERE NOT CASH PAYMENTS BUT DIRECT DEPOSITS, BUT NO PROOF OR DETAI LS OF-SUCH CLAIMS WERE SUBMITTED. THE ASSESSEE HAS ALSO FAILED TO SUBMIT ANY DETAILS OF THE PAYMENTS O R HIS CLAIMS IN THE COURSE OF EITHER ASSESSMENT PROCEEDINGS OR PENALTY PROCEEDINGS OR APPELLATE PROCEEDINGS. 6. SECTION 271D IMPOSES PENALTY FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE I.T. ACT, 1961, BY ACCEPTING LOANS OR DEPOSITS IN CASH. THE ASSESSEE HAS ADMITTEDLY ACCEPTED THE FACT THAT HE HAS VIOLAT ED THE PROVISIONS OF SECTION 269SS OF THE I.T.ACT, 196 1, IN THE COURSE OF ASSESSMENT PROCEEDINGS AND HAS NOT SUBMITTED ANY REASONABLE CAUSE OR EXTENUATING CIRCUMSTANCES, AS TO WHY THE LOANS HAD TO BE ACCEPTED BY HIM IN CASH. 5. A PERUSAL OF THE DOCUMENTS FURNISHED IN THE PAPE R BOOK WOULD SHOW THAT THE ASSESSEE HAS FURNISHED COPIES O F CASH BOOK IN ORDER TO PROVE THE CLAIM OF URGENT BUSINESS NECESSI TY WHICH COMPELLED IT TO BORROW MONEY BY WAY OF CASH. WE NO TICED THAT THE LD CIT(A) HAS NOT CRITICALLY EXAMINED THE EXPLANATI ONS FURNISHED BY THE ASSESSEE AND ALSO EVIDENCES FURNISHED BEFORE HI M. UNDER THESE CIRCUMSTANCES, WE ARE OF THE VIEW THAT THERE IS MER IT IN THE PRAYER ITA NO.1794 /BANG/2018 PAGE 5 OF 6 OF THE ASSESSEEE. ACCORDINGLY WE SET ASIDE THE ORD ER PASSED BY LD CIT(A) AND RESTORE ALL THE ISSUES TO HIS FILE FOR E XAMINING THEM AFRESH AFTER AFFORDING ADEQUATE OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE I S TREATED AS ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER, 2019. SD/ - (BEENA PILLAI) JUDICIAL MEMBER SD/ - (B.R BASKARAN) ACCOUNTANT MEMBER BANGALORE, DATED, DECEMBER, 2019. / VMS / COPY TO: 1. THE APPLICANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, BANGALORE. ITA NO.1794 /BANG/2018 PAGE 6 OF 6 1. DATE OF DICTATION 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER . 3. DATE ON WHICH THE APPROVED DRAFT COMES TO SR.P.S .. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER .. 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S. .. 6. DATE OF UPLOADING THE ORDER ON WEBSITE.. 7. IF NOT UPLOADED, FURNISH THE REASON FOR DOING SO .. 8. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK .. 9. DICTATION NOTE ENCLOSED DATE ON WHICH ORDER GOES FOR XEROX & ENDORSEMENT 10. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 11. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER . 12. THE DATE ON WHICH THE FILE GOES TO DISPATCH SEC TION FOR DISPATCH OF THE TRIBUNAL ORDER . 13. DATE OF DESPATCH OF ORDER. .. 14. DICTATION NOTE ENCLOSED