ITO, Coimbatore V. Shri V.Jagannathan, Coimbatore

ITA 1797/CHNY/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0707 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 26-02-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 03-10-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Assessee Lawyers: K RAGHU
• Keywords: Gift; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ITA NO.1797/MDS/2012 ASST. YEARS : 2008-09 THE INCOME TAX OFFICER - I(4) SALARY WARD COIMBATORE. (APPELLANT) V. SHRI V. JAGANNATHAN, 2 ND CROSS STREET, VANMATHI ILLAM KARUNANIDHI NAGAR, SOWRIPALAYAM, COIMBATORE-641 028. PAN : AAMPJ1931F. (RESPONDENT) APPELLANT BY : MR. GURU BASHYAM, JCI T RESPONDENT BY : MR. K. RAGHU DATE OF HEARING : 26 FEB 2013 DATE OF PRONOUNCEMENT : 28 FEB 20 13 O R D E R PER CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-II, COIMBAT ORE, DATED 29.6.2011 FOR ASST. YEAR 2008-09. THE ONLY GRIEVAN CE OF THE ITA 1797/MDS/12 2 REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APP EALS) ERRED IN DELETING THE PENALTY LEVIED UNDER SEC.271D READ WIT H SEC.269 SS OF THE I.T. ACT. 2. THE FACTS OF THE CASE ARE THAT THE ASSESSEE FIL ED RETURN OF INCOME ON 5.7.2008 DECLARING INCOME AT D.2,83,900/- . THE ASSESSMENT WAS COMPLETED UNDER SEC.143(3) OF THE AC T ON 10.12.2010, ACCEPTING THE INCOME RETURNED BY THE AS SESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE RECEIVED LOANS AND GIFTS FROM VAR IOUS PERSONS BY WAY OF CASH IN CONTRAVENTION TO SEC.269SS OF THE A CT. IN VIEW OF THIS, SHOW CAUSE NOTICE HAS BEEN ISSUED TO THE ASSE SSEE UNDER SEC.271D OF THE ACT BY LETTER DATED 13.1.2011 BY TH E ADDITIONAL COMMISSIONER OF INCOME TAX CALLING FOR EXPLANATION AS TO WHY PENALTY UNDER SEC.271D OF THE ACT SHOULD NOT BE LEV IED AS THE ASSESSEE RECEIVED LOANS BY WAY OF CASH IN CONTRAVEN TION TO THE PROVISIONS OF SEC.269 SS OF THE ACT. THE ASSESSEE SOUGHT TIME ON SEVERAL OCCASIONS WITHOUT FURNISHING ANY REPLY. TH E JT. COMMISSIONER OF INCOME TAX PASSED ORDER DATED 27.7.2011 UNDER S EC.271D OF THE ITA 1797/MDS/12 3 ACT LEVYING PENALTY OF D.20,60,000/-. THE ASSESSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) RAI SING GROUNDS ON LIMITATION AS WELL AS ON MERITS. 3. THE ASSESSEE CONTENDED BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE IMPUGNED ORDER PASSED UNDER SEC.271D OF THE ACT WAS BARRED BY LIMITATION UNDER SEC.275(1)(C) OF THE ACT. ON MERITS THE ASSESSEE CONTENDED BEFORE T HE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT DID NOT MAKE ANY ADDITION AND ACCEPT ED THE LOANS AND GIFTS AS GENUINE AND HE FURTHER SUBMITTED BEFOR E THE COMMISSIONER OF INCOME TAX (APPEALS) THAT THE ASSES SEE IS A SALARIED EMPLOYEE AND PSG CO-OPERATIVE HOUSING SOCI ETY REQUESTED HIM TO BRING IN FUNDS BEFORE THE CUT OFF DATE AND, THEREFORE, ASSESSEE RAISED BORROWED MONEY FROM FRIENDS AND REL ATIVES. BASED ON THESE SUBMISSIONS, THE COMMISSIONER OF INCOME TA X (APPEALS) DELETED THE PENALTY AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. ITA 1797/MDS/12 4 4. THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT TH E COMMISSIONER OF INCOME TAX (APPEALS) HAS GROSSLY ER RED IN DELETING THE PENALTY. THE ASSESSEE HAS VIOLATED THE PROVISI ONS OF SEC.269SS OF THE I.T. ACT BY ACCEPTING CASH LOANS. THE DEPAR TMENTAL REPRESENTATIVE SUBMITS THAT EVEN IF THESE LOANS ARE GENUINE, STILL THE PROVISIONS OF SEC.271D OF THE ACT ARE ATTRACTED FOR IMPOSITION OF PENALTY. THE DEPARTMENTAL REPRESENTATIVE FURTHER S UBMITS THAT THE ASSESSEE DID NOT EVEN PROVE THAT THERE IS A REASONA BLE CAUSE IN ACCEPTING THE LOANS BY WAY OF CASH. IN SUPPORT OF HIS SUBMISSIONS, HE RELIED ON THE FOLLOWING CASES :- I) THENAMAL CHHAJJER V. JCIT (96 ITD 201)(CHEN NAI) II) UDAI CHAND SANTOSH KUMAR JAIN V. ITO (131 TAXMAN 184)(INDORE). III) ADDL. CIT V. MADIREDDY VENKAT REDDY (55 SOT 94)(HYD.) THE DEPARTMENTAL REPRESENTATIVE SUBMITS THAT IN VIE W OF THE ABOVE DECISIONS, THE COMMISSIONER OF INCOME TAX (APPEALS) IS NOT JUSTIFIED IN DELETING THE PENALTY. ITA 1797/MDS/12 5 5. THE COUNSEL FOR THE ASSESSEE, REFERRING TO THE PROVISIONS OF SEC.275(1)(C) OF THE ACT SUBMITS THAT THE PENALT Y ORDER PASSED BY THE JCIT IS BARRED BY LIMITATION AND, THEREFORE, NO PENALTY IS SUSTAINABLE. ON MERITS, THE COUNSEL FOR THE ASSES SEE SUBMITS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTL Y DELETED THE PENALTY AS THERE WAS NO ADDITION MADE BY THE ASSESS ING OFFICER IN THE COURSE OF ASSESSMENT PROCEEDINGS AND THERE WERE COM PELLING CIRCUMSTANCES IN THE CASE OF THE ASSESSEE IN ACCEPT ING LOANS BY WAY OF CASH AND, THEREFORE, THERE IS REASONABLE CAUSE. IN THE CIRCUMSTANCES, THE COUNSEL FOR THE ASSESSEE SUBMIT S THAT THE COMMISSIONER OF INCOME TAX (APPEALS) HAS RIGHTLY DE LETED THE PENALTY. COUNSEL FOR THE ASSESSEE RELIED ON THE DE CISION OF KOLKATA BENCH OF ITAT IN THE CASE OF BASIL EXPORTS LTD. V. DCIT IN ITA NO.1912 TO 1914/KOL/2009 DATED 21.1.2011 IN SUPPORT OF HIS CONTENTIONS. 6. IN REPLY, THE DEPARTMENTAL REPRESENTATIVE SUBMI TS THAT PENALTY ORDER PASSED BY THE JCIT IS WITHIN TIME LIM IT PRESCRIBED UNDER THE PROVISIONS OF SEC.275(1)(C) OF THE ACT. ITA 1797/MDS/12 6 7. WE HAVE HEARD BOTH SIDES. PERUSED THE MATERIAL S ON RECORD AND THE ORDERS OF AUTHORITIES BELOW AND THE CASE LAW RELIED ON. THE COMMISSIONER OF INCOME TAX (APPEALS) DELETED T HE PENALTY OBSERVING AS UNDER :- THE ASSESSEE IS A SALARIED EMPLOYEE AND THE PSG COOPERATIVE HOUSING SOCIETY HAD REQUESTED HIM TO BR ING IN FUNDS BEFORE THE CUT OFF DATE. THEREFORE HE HAS BORROWED MONEY FROM HIS FRIENDS AND RELATIVES, ALL OF WHICH HAD BEEN VERIFIED AND FOUND TO BE CORRECT BY THE ASSESSING OFFICER. THE ASSESSING OFFICER HAD COMPL ETED THE ASSESSMENT WITHOUT MAKING ANY ADDITION ON THE GIFTS/FINANCIAL ASSISTANCE RECEIVED FROM THE 19 PER SONS LISTED IN THE ASSESSMENT ORDER. TO MY MIND, THE AS SESSEE HAS EXPLAINED THE COMPELLING CIRCUMSTANCES UNDER WH ICH HE OBTAINED CASH FROM THESE PERSON WHICH WOULD INDI CATE A REASONABLE CAUSE FOR THE ARRANGEMENTS. IN VIEW O F THE LETTER DATED 14.7.2011, THE ASSESSEE HAS SATISFIED THE CONDITIONS MENTIONED U/S.273B FOR ESTABLISHING REASONABLE CAUSE AND THEREFORE LEVY OF PENALTY U/S.271D/E IS UNWARRANTED. ACCORDINGLY THIS GROUND OF APPEAL IS ALLOWED. ITA 1797/MDS/12 7 8. THE COMMISSIONER OF INCOME TAX (APP EALS) DID NOT GIVE ANY COGENT REASONS FOR DELETING THE PENALTY. IT IS NOT KNOWN FROM THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEAL S) WHAT ARE THE COMPELLING CIRCUMSTANCES UNDER WHICH THE ASSESSEE H AS ACCEPTED CASH LOANS FROM RELATIVES AND FRIENDS. THE COMMISS IONER OF INCOME TAX (APPEALS) HAS SIMPLY GONE BY THE SUBMISSIONS MA DE BY THE ASSESSEE IN HIS LETTER DATED 14.7.2011 AND STATED T HAT THE ASSESSEE HAS SATISFIED THE CONDITIONS MENTIONED IN SEC.273B OF THE ACT IN ESTABLISHING REASONABLE CAUSE. WE ARE NOT ABLE TO SEE WHAT ARE THE REASONS SUBMITTED BY THE ASSESSEE AND THE SATISFACT ORY CONDITIONS ESTABLISHING REASONABLE CAUSE IN ACCEPTING CASH LOA NS. WE ALSO SEE THAT THE COMMISSIONER OF INCOME TAX (APPEALS) DID N OT DEAL WITH THE GROUNDS ON LIMITATION. THERE ARE NO FINDINGS AS TO WHETHER THE PENALTY ORDER IS BARRED BY LIMITATION OR PASSED WIT HIN THE TIME PRESCRIBED UNDER THE PROVISIONS OF SEC.275 OF THE A CT. IN THE CIRCUMSTANCES, WE FEEL THAT THIS MATTER SHOULD GO B ACK TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) FOR DECIDI NG THE GROUND ON LIMITATION AND ALSO ON MERITS AS THE COMMISSIONE R OF INCOME TAX ITA 1797/MDS/12 8 (APPEALS) DID NOT PASS A SPEAKING ORDER WITH COGENT REASONS FOR DELETION OF PENALTY. THEREFORE, WE REMIT THE APPEA L TO THE FILE OF THE COMMISSIONER OF INCOME TAX (APPEALS) TO DISPOSE OF THE SAME IN ACCORDANCE WITH LAW AFTER PROVIDING ADEQUATE OPPORT UNITY OF HEARING TO THE ASSESSEE. GROUNDS RAISED BY THE REVENUE ARE ALLOWED FOR STATISTICAL PURPOSE. 9. IN THE RESULT, APPEAL OF THE REVENU E IS ALLOWED FOR STATISTICAL PURPOSE. 10. ORDER PRONOUNCED ON THURSDAY, THE 28 TH DAY OF FEBRUARY 2013, AT CHENNAI. SD/- SD/- ( N.S. SAINI ) (CHALLA N AGENDRA PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER CHENNAI, DATED : FEBRUARY 2013. JLS. COPY TO:- (1) APPELLANT (2) RESPONDENT (3) CIT-(A), (4) C.I.T., (5) D.R. (6) GUARD FILE