The Income Tax Officer, Ferozepur V. M/s Tehal Singh Khara, Ferozepur

ITA 180/ASR/2016

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 0486 (ITAT-AMRITSAR)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-07-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 01-04-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR BEFORE SH. A.D.JAIN, JUDICIAL MEMBER AND SH. T.S. KAPOOR, ACCOUNTANT MEMBER [ I.T.A NOS.180 & 181 (ASR)/2016 (ASSESSMENT YEAR: 2007-08) INCOME TAX OFFICER, WARD-3(1), FEROZEPUR. VS. M/S. TEHAL SINGH KHARA, VILL. CHANGALI JADID, P.O:- SHERKHANWALA. PAN:AACFT2544A (APPELLANT) (RESPONDENT) APPELLANT BY: NONE RESPONDENT BY: NONE DATE OF HEARING: 13.06. 2016 DATE OF PRONO UNCEMENT: 25.07.2016 ORDER PER T.S.KAPOOR (AM): THESE ARE TWO APPEALS FILED BY REVENUE AGAINST THE ORDER OF LEARNED CIT(A), BATHINDA, DATED 28.01.2016 FOR ASST. YEAR 2 007-08. 2. THE REVENUE IN THESE APPEALS IS AGGRIEVED BY THE ACTION OF LEARNED CIT(A), BY WHICH HE HAD DELETED THE PENALTIES IMPOS ED BY ASSESSING OFFICER U/S 271D & 271E OF THE ACT. 3. THE BRIEF FACTS OF THE CASE AS NOTED IN THE IMPU GNED ORDER ARE THAT THE ASSESSEE IS OPERATING AS COMMISSION AGENTS IN V ILLAGE, CHANGALI JADID, DIST:- FEROZEPUR. DURING THE YEAR UNDER CONS IDERATION, THE ASSESSEE RECEIVED AND REPAID DEPOSIT IN CASH FROM F OUR AGRICULTURISTS. ITA NOS.180 & 182 (ASR)/2016 ASST. YEAS: 2007- 08 2 THE ACCEPTANCE AND REPAYMENTS OF SUCH DEPOSITS IN C ASH WERE IN EXCESS OF STATUTORY LIMIT OF 20,000/-. THEREFORE, THE ASSE SSEE WAS IMPOSED PENALTIES FOR VIOLATION OF PROVISIONS OF SECTION 26 9SS AND 269T OF THE ACT, 1961 (IN SHORT, THE ACT). THE APPEALS FILED BY AS SESSEE BEFORE LEARNED CIT(A) WERE ALSO DISMISSED. HOWEVER, THE HONBLE IT AT, AMRITSAR BENCH REMITTED THE ISSUE TO LEARNED CIT(A) FOR RECONSIDER ATION OF THE CASES AND THEREFORE, LEARNED CIT(A) AFTER HEARING THE ASSESSE E DELETED THE PENALTIES AND THEREFORE, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HAVE GONE THROUGH THE MATERIAL PLACED ON RECO RD. WE FIND THAT NO BODY WAS PRESENT ON BEHALF OF BOTH PARTIES. HOWE VER, CONSIDERING THE ISSUE AND MATERIAL ON RECORD WE DECIDED TO DISPOSE OFF THESE APPEALS. 5. WHILE GOING THROUGH THE MATERIAL PLACED ON RECOR D, WE FIND THAT IN THE SECOND ROUND OF APPELLATE PROCEEDINGS BEFORE LE ARNED CIT(A), THE LEARNED CIT(A) REMANDED THE ISSUE BACK TO OFFICE OF ASSESSING OFFICER. THE ASSESSING OFFICER IN HIS REMAND REPORT SUBMITTE D THAT THE PERSONS FROM WHOM CASH WAS RECEIVED AND WAS SUBSEQUENTLY RE PAID WERE IDENTIFIABLE AGRICULTURISTS. IT WAS ALSO SUBMITTED IN THE REMAND REPORT THAT THE SAID PERSONS HAD FILED A COPY OF JAMANBAND I TO INDICATE THAT AGRICULTURAL OPERATIONS WERE BEING CONDUCTED ON THE IR LAND. THE LEARNED CIT(A) IN VIEW OF THESE FACTS DELETED THE PENALTIES BY HOLDING AS UNDER: 6. THE PENAL PROVISIONS OF SECTION 271D & 271E FOR CONTRAVENTION OF THE PROVISIONS CONTAINED IN SECTIONS 269SS & 269T RESPE CTIVELY ARE HEMMED IN BY THE PROVISIONS OF SECTION 273B OF THE ACT WHICH PROSCRIBES IMPOSITION OF PENALTY IN CASES WHERE CONTRAVENTION OF THE STATUTO RY PROVISIONS HAVE BEEN OCCASIONED BECAUSE OF REASONABLE CAUSE. REASONAB LE CAUSE NEITHER ITA NOS.180 & 182 (ASR)/2016 ASST. YEAS: 2007- 08 3 FINDS ANY DEFINITION IN THE ACT, NOR IS IT SUSCEPTI BLE OF A CLEAR AND PRECISE DEFINITION, FOR, AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF AZADI BACHAO ANDOLAN VERSUS UNION OF INDIA [2001] 252 ITR 471, ATTEMPTING TO GIVE A SPECIFIC MEANING TO THE WORD REASONABLE IS TRYING TO COUNT WHAT IS NOT NUMBER AND MEASURE WHAT IS NOT SPACE. ORDINARIL Y, REASONABLE CAUSE WOULD MEAN AN HONEST BELIEF FOUNDED UPON REASONABLE GROUNDS OF THE EXISTENCE OF A STATE OF CIRCUMSTANCES WHICH (ASSUMI NG THEM TO BE TRUE), WOULD REASONABLY LEAD ANY ORDINARY, PRUDENT AND CAU TIOUS PERSON (PLACED IN THE POSITION OF THE PERSON CONCERNED) TO COME TO THE CONCLUSION THAT THE SAME WAS THE RIGHT THING TO DO. THE CAUSE HAS TO BE CONSIDERED AND ONLY IF IT IS FOUND TO BE FRIVOLOUS, WITHOUT SUBSTANCE OR F OUNDATION, AS HELD BY THE HONBLE DELHI HIGH COURT IN THE CASE OF THE WOOD WA RD GOVERNORS OF INDIA (P) LTD [2001] 118 TAXMAN 433, 745, PENALTY CAN BE IMPOSED. IN THE CONTEXT OF PENALTY PROVISIONS, WORDS REASONABLE CA USE WOULD DEFINITELY MEAN A CAUSE WHICH IS BEYOND THE CONTROL OF THE APP ELLANT. 7. IN THE APPELLANTS CASE, THE BUSINESS EXIGENCIES OF MAKING CASH PAYMENT TO FARMERS FOR THE PURPOSES OF BOTH-HONOURI NG COMMITMENT AS ALSO TO HELP THEM CANNOT BE DENIED. THE REMAND PROCEEDIN GS FOUND THE CREDITORS TO BE GENUINE AGRICULTURISTS AND THEIR CA SH TRANSACTIONS ALSO TO BE TO BE GENUINE, IN AS MUCH AS THERE WAS A CONFIRMATI ON OF THE MONEY HAVING BEEN DEPOSITED AND RETURNED. THE SAID IMPUGNED TRAN SACTIONS ALSO CANNOT BE SAID TO HAVE BEEN AIMED AT OR ATTEMPTING TO EVAD E TAX, THEREBY CAUSING LOSS TO REVENUE. IN SUCH CIRCUMSTANCES, IT CAN REAS ONABLY BE HELD THAT THE BREACH OF THE STATUTORY PROVISIONS CONTAINED IN SEC TIONS 269SS & 269T OF THE ACT FLOWED FROM A BONAFIDE BELIEF, WHICH IS EX- FACIE A VENIAL BREACH. IT MAY ALSO BE APPRECIATED THAT THE HONBLE SUPREME CO URT, WHILE HEARING THE CONSTITUTIONALITY OF THE PROVISIONS OF SECTION 269SS, OBSERVED THAT THE UNDUE HARDSHIP EMANATING FROM THE SAID PROVISION, P ERCEIVED TO BE EXPROPRIATORY N NATURE, IS VERY MUCH MITIGATED BY T HE INCLUSION OF SECTION 273B [2002] 255 ITR 258. FOLLOWING THE JUDICIAL PRE CEDENTS, INCLUDING THAT OF THE JURISDICTIONAL HIGH COURT OF PUNJAB AND HARY ANA, IT IS HELD THAT THE IMPOSITION OF PENALTY UNDER SECTIONS 271D & 271E OF THE ACT, IN THE CIRCUMSTANCES, WAS NOT JUSTIFIED. THE AO IS, THEREF ORE, DIRECTED TO DELETE BOTH THE AFORESAID PENALTIES. IT IS ORDERED ACCORDI NGLY. WE FIND THAT THE LEARNED CIT(A) HAS MADE A FINDING OF FACT THAT CREDITORS FROM WHOM CASH WAS RECEIVED AND CASH WAS REPAID WE RE GENUINE AND HE HAS ALSO MADE A FINDING OF FACT THAT A CONFIRMATION TO THAT FACT WAS OBTAINED FROM THESE PERSONS AND THE TRANSACTIONS WE RE NOT MADE FOR ATTEMPTING TO EVADE TAX, THEREFORE, HE HELD THAT TH ERE WAS A REASONABLE CAUSE FOR ENTERING INTO SUCH TRANSACTIONS. THE LEAR NED CIT(A) HAS PASSED ITA NOS.180 & 182 (ASR)/2016 ASST. YEAS: 2007- 08 4 AN EXHAUSTIVE AND ELABORATE SPEAKING ORDER, AND WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A), THEREFORE , THE APPEALS FILED BY REVENUE ARE DISMISSED. 6. IN THE RESULT, THE APPEALS FILED BY REVENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 25.07.2016. SD/- SD/- (A.D. JAIN) ( T. S. KAPOOR) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED: 25.07.2016. /PK/ PS. COPY OF THE ORDER FORWARDED TO: (1) THE ASSESSEE: (2) THE (3) THE CIT(A), (4) THE CIT, (5) THE SR DR, I.T.A.T., TRUE COPY BY ORDER