M/s Pradhan Perfumers, Bangalore V. Addl.Commissioner of Income Tax, Bangalore

ITA 1817/BANG/2016

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7277 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-11-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2009-2010
• Appeal Filed On: 25-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PADMA MEENAKSHI
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 1 817 /BANG/201 6 ASSESSMENT YEAR : 2009 - 10 M/S. PRADHAN PERFUMERS, NO. 131, 10 TH A MAIN, 1 ST BLOCK, JAYANAGAR, BANGALORE 560 011. PAN: AABFP 3385Q VS. THE ADDL. COMMISSIONER OF INCOME TAX, RANGE 7[2], BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI NARENDRA SHARMA, ADVOCATE REVENUE BY : SMT. PADMAMEENAKSHI, JCIT (DR) DATE OF HEARING : 0 8 . 1 1 .201 7 DATE OF PRONOUNCEMENT : 10 .1 1 .2017 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS IS AN ASSESSEES APPEAL WHICH IS DIRECTED AGAI NST THE ORDER OF LD. CIT (A)- 7, BANGALORE DATED 19.08.2016 FOR ASSESSMENT YEAR 2 009-10. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE ORDERS OF THE AUTHORITIES BELOW IN SO FAR AS LEVYING PENALTY U/S 271-E OF THE ACT AGAINST THE APPELLANT, ARE OPPOSED TO LAW, EQUITY, WEIGHT OF EVIDENCE, PROBABILITIES FACTS AND CIRCUMS TANCES OF THE CASE. 2. THE LEVY OF PENALTY U/S 271-E OF THE ACT IS BAD IN LAW IN AS MUCH AS THE APPELLANT HAS NOT COMMITTED ANY DEFAULT ACTIONA BLE U/S 271-E OF THE ACT AND CONSEQUENTLY, THE IMPUGNED ORDER PASSED DESERVES TO BE CANCELLED. 3. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT[ A] OUGHT TO HAVE APPRECIATED THAT THE APPELLANT WAS PREVENTED BY REA SONABLE CAUSE AND THAT THERE WAS NO ANIMUS TO DEFY THE STATUTORY PROV ISIONS OF THE ACT AND THEREFORE, HE OUGHT NOT TO HAVE CONFIRMED THE P ENALTY IMPOSED UNDER THE FACTS AND IN THE CIRCUMSTANCES OF THE APP ELLANT'S CASE. 4. WITHOUT PREJUDICE TO THE ABOVE, THE PENALTY LEVI ED IS EXCESSIVE AND LIABLE TO REDUCED SUBSTANTIALLY. ITA NO. 1817/BANG/2016 PAGE 2 OF 4 5. FOR THE ABOVE AND OTHER GROUNDS THAT MAY BE URGE D AT THE TIME OF HEARING OF THE APPEAL, YOUR APPELLANT HUMBLY PRAYS THAT THE APPEAL MAY BE ALLOWED AND JUSTICE RENDERED AND THE APPELLA NT MAY BE AWARDED COSTS IN PROSECUTING THE APPEAL AND ALSO OR DER FOR THE REFUND OF THE INSTITUTION FEES AS PART OF THE COSTS. 3. IT WAS SUBMITTED BY LD. AR OF ASSESSEE THAT THIS WAS THE CONTENTION RAISED BY ASSESSEE BEFORE THE CIT (A) THAT THE AMOUNT OF RS. 45,000/- WAS DEPOSITED IN ICICI BANK ACCOUNT OF THE SISTER CONCERN M/S. PRADH AN HERBAL COMPANY PRATHAM DUE TO UNAVOIDABLE BUSINESS EXIGENCY BECAUS E SOME CHEQUES WERE ISSUED TO VARIOUS PARTIES BY THE SISTER CONCERN AND THEREFORE, IMMEDIATE FUND WAS REQUIRED BY THE SISTER CONCERN TO ENSURE THAT T HOSE CHEQUES ARE NOT DISHONOURED FOR WANT OF FUND IN THEIR BANK ACCOUNT. HE SUBMITTED THAT THE CIT(A) HAS DECIDED THIS ISSUE AGAINST THE ASSESSEE ON THIS BASIS THAT THERE ARE VARIOUS METHODS OF TRANSFER OF FUNDS FROM ONE BANK ACCOUNT TO ANOTHER AND IN SOME OF THE CASES, IT CAN BE INSTANT PARTICULARLY W HEN BOTH THE ACCOUNT HOLDERS ARE IN THE SAME BRANCH. IN THIS REGARD, HE DRAWN O UR ATTENTION TO PAGE NO. 16 OF THE APPEAL MEMO AS PER WHICH THE AMOUNT IN QUESTION OF RS. 45,000/- WAS WITHDRAWN BY THE ASSESSEE FROM UCO BANK AND THE SAM E WAS DEPOSITED IN THE BANK ACCOUNT OF THE SISTER CONCERN M/S. PRADHAN HER BAL COMPANY IN ICICI BANK. HE SUBMITTED THAT SINCE THE BANK ACCOUNTS OF THE ASSESSEE AND THE SISTER CONCERN WERE NOT IN THE SAME BANK, THE TRANS FER BY WAY OF CHEQUE COULD NOT BE INSTANT AND THEREFORE, IT SHOULD BE ACCEPTED AS A REASONABLE CAUSE FOR MAKING CASH PAYMENT OF REPAYMENT OF LOAN AND HENCE, UNDER THE PROVISIONS OF SECTION 271E PENALTY SHALL BE DELETED IN VIEW OF TH E PROVISIONS OF SECTION 273B. THE LD. DR OF REVENUE SUPPORTED THE ORDER OF CIT (A ). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. FOR T HE SAKE OF READY REFERENCE, WE REPRODUCE PARA NOS. 8 AND 8.1 FROM THE ORDER OF CIT (A). THE SAME ARE AS UNDER. 8. THERE IS NO DISPUTE FROM THE APPELLANT SIDE THAT THE LOAN WAS REPAID, IN CASH AND ALSO THERE IS NO DISPUTE REGARD ING THE AMOUNT OF LOAN REPAID. THE ONLY CONTENTION PUT FORWARD BY THE APPELLANT IS THAT THE AMOUNT OF RS.45,000/- WAS DEPOSITED IN THE ICIC I BANK OF THE SISTER CONCERN M/S PRADHAN HERBAL COMPANY DUE TO UN AVOIDABLE BUSINESS EXIGENCY. IT IS TRUE THAT PENALTY FOR NON- COMPLIANCE OF SECTION 269T OF THE ACT AS PROVIDED UNDER SECTION 271E OF T HE ACT, IS NOT ITA NO. 1817/BANG/2016 PAGE 3 OF 4 AUTOMATIC AS SECTION 273B PROVIDES THAT NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE FOR ANY VIOLATION REF ERRED TO UNDER SECTION 269T OF THE ACT, IF HE PROVES THAT THERE WA S REASONABLE CAUSE FOR SUCH FAILURE. THE HONBLE SUPREME COURT IN THE CASE OF ADIT VS. KUMARI A.R. SHANTI (2008) 255 ITR 258 (SC), IT HAS BEEN HELD THAT THE MAIN OBJECT OF SECTION 269SS WAS TO CURB THE MENACE OF FALSE ENTRIES IN THE BOOKS AND WHERE THE TRANSACTIONS ARE GENUINE , THE PROVISIONS OF SECTION 26955 AND 269TT ARE NOT ATTRACTED. THE COUR TS HAVE TAKEN LENIENT VIEWS ON THE PENA1TY U/S 271E OF THE ACT SU BJECT TO OF SOME REASONABLE CAUSE. IN THE CASE OF COMMISSIONER OF IN COME-TAX, MYSORE V. CANARA HOUSING DEVELOPMENT CO [2015] 62TAXMANN.C OM 250 (KARNATAKA), THE HONBLE HIGH COURT OF KARNATAKA HA S OBSERVED THAT NORMALLY COURT SHOULD TAKE A LIBERAL VIEW IN MATTER S WHERE THERE IS ONLY SOME VIOLATION OF PROVISIONS OF THE ACT, BUT T HE COURTS HAVE ALSO TO CONSIDER THAT THE PROVISIONS OF LAW ARE SUBSTANT IALLY COMPLIED. IT WAS FURTHER OBSERVED THAT ONE ODD NON-COMPLIANCE MA DE BY THE ASSESSEE SHOULD NORMALLY NOT ATTRACT PENAL PROVISIO NS BUT, THAT IS IN A CASE WHERE BECAUSE OF SOME EXTREME URGENCY, THE VIO LATION HAD BEEN COMMITTED FOR GENUINE AND VALID REASON. 8.1 HOWEVER, IN THE INSTANT CASE, THE APPELLANT NAR RATE A SITUATION WHERE THE DEPOSIT IN CASH TO THE BANK OF THE M/S PR ADHAN HERBAL COMPANY BECOME ESSENTIAL TO ENABLE THE COMPANY TO C LEARTHE INCOMING CHEQUES. IN THE PRESENT WORLD OF TECHNOLOG Y, THERE ARE VARIOUS METHODS OF TRANSFER OF FUNDS FROM ONE BANK ACCOUNT TO ANOTHER. SOME OF THESE TRANSFER FACILITY ARE INSTAN T PARTICULARLY WHEN BOTH THE ACCOUNT HOLDERS ARE IN THE SAME BRANCH. TH E APPELLANT HAS NOT DEPICTED ANY CIRCUMSTANCES TO SHOW THAT HE WAS UNABLE TO OR WAS RESTRICTED TO AVAIL THESE TRANSFER MODES OF THE BAN KING TRUNCATIONS. IF THE BENEFIT OF SECTION 273B OF THE ACT IS GIVEN IN CASES AS THE PRESENT ONE, THE VERY PURPOSE OF ENACTING SECTION 269T OF T HE ACT WOULD BE FRUSTRATED OR LOST. 5. AS PER THE ABOVE PARAS REPRODUCED FROM THE ORDER OF CIT (A), IT IS SEEN THAT DECISION IS ON THIS BASIS THAT IN THE PRESENT WORLD OF TECHNOLOGY, THERE ARE VARIOUS METHODS OF TRANSFER OF FUNDS FROM ONE BANK ACCOUNT TO ANOTHER AND SOME OF THESE TRANSFER FACILITY ARE INSTANT PARTICU LARLY WHEN BOTH ACCOUNT HOLDERS ARE IN THE SAME BRANCH. THE LD. AR OF ASSE SSEE HAS SHOWN TO US THAT THE ASSESSEE WAS HAVING BANK ACCOUNT WITH UCO BANK AND THE SISTER CONCERN WAS HAVING BANK ACCOUNT IN ICICI BANK. HENCE IT IS SEEN THAT IN THE PRESENT CASE, NEITHER THE BRANCH IS SAME NOR THE BANK IS SA ME. WE ALSO FIND THAT LD. CIT(A) IN PARA NO. 8 OF ITS ORDER HAS REFERRED TO A JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE OF CIT VS . CANARA HOUSING DEVELOPMENT CO AS REPORTED IN 62 TAXMANN.COM 250 WH EREIN IT WAS OBSERVED BY HON'BLE KARNATAKA HIGH COURT THAT NORMALLY COURT SHOULD TAKE A LIBERAL VIEW ITA NO. 1817/BANG/2016 PAGE 4 OF 4 IN MATTERS WHERE THERE IS ONLY SOME VIOLATION OF PR OVISIONS OF THE ACT, BUT THE COURTS HAVE ALSO TO CONSIDER THAT THE PROVISIONS OF LAW ARE SUBSTANTIALLY COMPLIED AND IT WAS FURTHER OBSERVED THAT ONE ODD N ON-COMPLIANCE MADE BY THE ASSESSEE SHOULD NORMALLY NOT ATTRACT PENAL PROV ISIONS. 6. IN THE PRESENT CASE, THIS IS ONLY ONE REPAYMENT OF LOAN IN CASH IN VIOLATION OF SECTION 269T AND THIS IS NOT THE CASE OF THE REVENU E THAT THE ASSESSEE IS REGULARLY AND REPEATEDLY VIOLATING THE PROVISIONS O F SECTION 269T OF IT ACT. HENCE IN THE FACTS OF THE PRESET CASE AND IN THE LI GHT OF THIS JUDGMENT OF HON'BLE KARNATAKA HIGH COURT, WE HOLD THAT IN THE PRESENT C ASE, THE ASSESSEE DESERVES LIBERAL VIEW AND BY ADOPTING LIBERAL VIEW, WE HOLD THAT IN THE FACTS OF THE PRESENT CASE, THE PENALTY U/S. 271E IS NOT JUSTIFIED BECAUS E IN OUR CONSIDERED OPINION, THE ASSESSEE HAS BEEN ABLE TO SHOW REASONABLE CAUSE FOR REPAYMENT OF LOAN IN CASH AND THEREFORE, AS PER THE PROVISIONS OF SECTIO N 273B OF IT ACT, PENALTY U/S. 271E IS NOT IMPOSABLE. WE THEREFORE DELETE THE PEN ALTY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 10 TH NOVEMBER, 2017. /MS/ COPY TO: 1. APP ELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.