ITO, Sirhind V. M/s Kumar Bus Service (Regd.), Sirhind

ITA 188/CHANDI/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 8987 (ITAT-CHANDIGARH)
• Duration Of Justice: 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-11-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Next Hearing Date: 05-09-2016
• Assessment Year: 2010-2011
• Appeal Filed On: 04-03-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS INOSHI SHARMA
• Assessee Lawyers: RAKESH MARWAHA
• Keywords: Bonafide belief; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND MS. ANNAPURNA GUPTA, ACCOUNTANT MEMBER ITA NO.188/CHD/2016 (ASSESSMENT YEAR : 2010-11) THE INCOME TAX OFFICER, VS. M/S KUMAR BUS SERVICE(REGD.) WARD-SIRHIND. SIRHIND. PAN: AABFK6781D (APPELLANT) (RESPONDENT) APPELLANT BY : MRS.INOSHI SHARMA, DR RESPONDENT BY : SHRI RAKESH MARWAHA DATE OF HEARING : 08.11.2016 DATE OF PRONOUNCEMENT : 09.11.2016 O R D E R PER ANNAPURNA GUPTA, A.M . : THIS APPEAL HAS BEEN FILED BY THE REVENUE AGAINST THE ORDER OF LEARNED COMMISSIONER OF INCOME TAX (APPEALS), PATIALA DATED 30.12.2015 FOR ASSESSMENT YEAR 2010-11, DELETING THE PENALTY LEVIED UNDER SECTION 271E OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. THE ONLY ISSUE IN THE PRESENT APPEAL RELATES TO DELETION OF PENALTY LEVIED UNDER SECTION 271E OF TH E ACT. 3. BRIEF FACTS RELATING TO THE CASE ARE THAT THE ASSESSEE IS PARTNERSHIP FIRM ENGAGED IN THE BUSINES S OF PLYING BUSES. AT THE TIME OF ASSESSMENT PROCEEDING S, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FIRM H AD 2 RAISED LOANS TO PURCHASE BUSES FROM TWO COMPANIES, NAMELY TATA MOTORS LTD. AND M/S MAGMA FINANCE CORPORATION LUDHIANA AND MADE REPAYMENT OF LOANS TO THESE COMPANIES IN CASH EXCEEDING RS.20,000/- DURIN G THE YEAR. NOTICE FOR LEVYING PENALTY UNDER SECTION 271 E OF THE ACT FOR VIOLATION OF THE PROVISIONS OF SECTION 269 T WAS ISSUED TO THE ASSESSEE, IN RESPONSE TO WHICH THE AS SESSEE SUBMITTED THAT IT HAD GOT ITS BUSES FINANCED IN TER MS OF HIRE PURCHASE AGREEMENTS AND, THEREFORE, THE PAYMEN T MADE TO THE FINANCE COMPANIES WAS NOT ON ACCOUNT OF ANY LOANS RAISED FROM THESE COMPANIES. THE ASSESSEE FU RTHER STATED THAT THE PAYMENT IN CASH WAS MADE AT THE INS TANCE OF THE FINANCE COMPANIES AND IN CASE OF FAILURE TO DO SO, THE FINANCE COMPANIES WOULD HAVE TAKEN POSSESSION O F THE VEHICLES EFFECTING THE ASSESSEES BUSINESS SEVERELY . THE ASSESSEE, THEREFORE, STATED THAT THERE WAS REASONAB LE CAUSE FOR MAKING THE PAYMENT IN CASH, AND HENCE, PE NALTY UNDER SECTION 271E OF THE ACT COULD NOT BE LEVIED. FURTHER, THE ASSESSEE STATED THAT THE REPAYMENT HAD BEEN MADE IN THE ORDINARY COURSE OF BUSINESS AND HENCE, WOULD NOT COME WITHIN THE MISCHIEF OF SECTION 269T OF THE ACT, THE REPAYMENTS HAVE NOT BEEN DOUBTED BY THE ASSESSI NG OFFICER. THE ASSESSING OFFICER REJECTED ALL THE CO NTENTIONS RAISED BY THE ASSESSEE AND STATED THAT SINCE THE AS SESSEE HAD FAILED TO FURNISH COPY OF HIRE PURCHASE AGREEME NT, THE TRANSACTIONS COULD NOT BE TERMED TO BE IN THE NATUR E OF HIRE PURCHASE, THAT THE ASSESSEE FAILED TO PROVE AN Y REASONABLE CAUSE FOR MAKING REPAYMENT IN CASH AND T HE 3 IMPUGNED TRANSACTION/REPAYMENT WAS SQUARELY COVERED IN THE DEFINITION OF SECTION 269T OF THE ACT. HE, THE REFORE, LEVIED PENALTY UNDER SECTION 271E OF THE ACT TO THE EXTENT OF 100% OF THE DEFAULT MADE AMOUNTING TO RS.10,86,8 00/-. 4. THE MATTER WAS CARRIED IN APPEAL BEFORE THE LD. CIT (APPEALS) WHERE THE ASSESSEE REITERATED ITS SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER, REPRODUCED AT PARAS 4.4 AND 4.5 OF THE CIT (APPEALS )S ORDER. THE LD. CIT (APPEALS) AFTER CONSIDERING TH E ASSESSEES SUBMISSIONS HELD THAT THE IMPUGNED TRANSACTIONS HAD BEEN CONSIDERED IN THE APPEAL FILE D BEFORE HIM IN QUANTUM PROCEEDINGS WHEREIN IT WAS HE LD THAT THE TRANSACTIONS WERE IN THE NATURE OF HIRE PU RCHASE AND NOT REPAYMENT OF LOAN OR DEPOSIT. HE, THEREFOR E, REJECTED THE OBSERVATION OF THE ASSESSING OFFICER T HAT THE TRANSACTIONS BEING IN THE NATURE OF LOANS OR DEPOSI TS AND THE ASSESSEE HAVING MADE REPAYMENTS OF THE SAME, TH ERE WAS VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT. THE LD. CIT (APPEALS) HELD THAT SINCE THE TRANSACTI ON WAS MADE IN PURSUANCE TO HIRE PURCHASE AGREEMENT IT DID NOT FALL WITHIN THE MISCHIEF OF SECTION 269T OF THE ACT . FURTHER THE LD. CIT (APPEALS) HELD THAT THE ASSESSE E HAD DEMONSTRATED REASONABLE CAUSE FOR CONTRAVENTION OF THE PROVISIONS OF SECTION 269T OF THE ACT BY EXPLAINING THAT IT HARBOURED A BELIEF THAT THE IMPUGNED TRANSACTIONS W ERE IN THE NATURE OF HIRE PURCHASE TRANSACTIONS AND NOT LO AN TRANSACTIONS. THE LD. CIT (APPEALS) HELD THE SAME TO BE A 4 BONAFIDE BELIEF OF THE ASSESSEE AND, THEREFORE, THE BREACH OF THE PROVISIONS OF SECTION 269T OF THE ACT, IF AN Y, WERE HELD TO BE WITHOUT ANY INTENTION TO AVOID OR EVADE TAX. THE LD. CIT (APPEALS) HELD THE DEFAULT TO BE TECHNI CAL OR VENIAL INVOLVING NO TAX AVOIDANCE OR TAX EVASION. HE FURTHER, HELD THAT THE GENUINENESS OF THE TRANSACTI ONS HAD NOT BEEN DOUBTED AT ALL. HE, THEREFORE, DELETED TH E PENALTY LEVIED. 5. AGGRIEVED BY THE SAME, THE REVENUE FILED THE PRESENT APPEAL BEFORE US. THE LD. DR RELIED UPON T HE ORDER OF THE ASSESSING OFFICER, WHILE THE LEARNED C OUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT (AP PEALS). 6. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE ORDERS OF AUTHORITIES BELOW. WE FIND NO MERIT IN THE PRESENT APPEAL OF THE REVENUE. UNDOUBTEDLY, THE LD. CIT (APPEALS) IN QUANTUM PROCEEDINGS IN THE CASE OF AS SESSEE HAS HELD THE IMPUGNED TRANSACTION TO BE ON ACCOUNT OF HIRE PURCHASE AGREEMENT ENTERED INTO WITH HIRE PURC HASE FINANCE COMPANIES. ON QUERY RAISED AT BAR, WHETHER ANY APPEAL HAD BEEN FILED AGAINST THE ORDER OF THE CIT (APPEALS), THE LD. DR DENIED FILING OF ANY SUCH APP EAL BY THE REVENUE. IT, THEREFORE, STANDS SETTLED THAT TH E TRANSACTIONS UNDERTAKEN BY THE ASSESSEE PERTAINED T O PAYMENTS MADE ON ACCOUNT OF HIRE PURCHASE AGREEMENT S ENTERED INTO. HAVING SAID SO, THE VERY BASIS FOR L EVY OF PENALTY GETS DEMOLISHED SINCE IT RESTED ON THE PREM ISE THAT THE ASSESSEE HAD TAKEN LOAN FROM FINANCE COMPA NIES. 5 EVEN OTHERWISE, WE ARE IN CONFORMITY WITH THE ORDER OF THE LD. CIT (APPEALS) HOLDING THAT THE ASSESSEE WAS UND ER A BONAFIDE BELIEF THAT THE IMPUGNED TRANSACTIONS WERE IN THE NATURE OF HIRE PURCHASE TRANSACTIONS AND NOT LOAN TRANSACTIONS AND, THEREFORE, THERE WAS NO BREACH OF THE PROVISIONS OF SECTION 269T OF THE ACT. THE BREACH IF ANY OF THE PROVISION OF THE SECTION 269T OF THE INCOME TAX ACT IS, THEREFORE, MERELY TECHNICAL OR VENIAL AND NOT LIABL E TO PENALTY UNDER SECTION 271E OF THE ACT. FURTHER, TH E FACT THAT THE GENUINENESS OF THE TRANSACTION HAD NOT BEE N DOUBTED, COUPLED WITH BONAFIDE BELIEF OF THE ASSESS EE AND ALSO THE FACT THAT THERE WAS NO REVENUE LEAKAGE, WO ULD CONSTITUTE REASONABLE CAUSE UNDER SECTION 273B FOR NOT INVOKING THE PROVISIONS OF SECTION 271E OF THE ACT. IN VIEW OF THE ABOVE, WE DISMISS THE APPEAL OF THE REV ENUE AND UPHOLD THE ORDER OF THE LD. CIT (APPEALS) IN DE LETING THE PENALTY LEVIED UNDER SECTION 271E OF THE ACT, AMOUNTING TO RS.10,,86,800/-. 7. THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (BHAVNESH SAINI) (ANNAPURNA GUPTA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 9 TH NOVEMBER, 2016 *RATI* COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4. THE CIT 5. THE DR ASSISTANT REGISTRAR, ITAT, CHANDIGARH 6