T.R. Amar, Tumakuru V. Assistant Commissioner Of Income Tax,Tumakuru Range, Tumakuru

ITA 1882/BANG/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 1098 (ITAT-BANGALORE)
• Duration Of Justice: 8 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 19-03-2020
• Assessment Year: 2015-2016
• Appeal Filed On: 03-09-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R. PREMI
• Assessee Lawyers: SHRIH. GURUSWAMY
• Keywords: Principle of natural justice; Reassessment proceedings; Set aside
• Section: 147; 68; 143(3); 133A; 271E; 250; 201; 101; 20

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCHES C BENCH: BANGALORE BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER ITA NO S . 1882 & 1883 /BANG/201 9 (ASSESSMENT YEAR S : 20 15 - 16 & 16 - 17 ) SHRI T.R. AMAR, PROP. TUMAKUR PIPE TRADERS, NEAR JAIN TEMPLE, M G ROAD, TUMAKURU - 572101 .APPELLANT ITA NO. 1884 /BANG/201 9 (ASSESSMENT YEAR : 20 15 - 16 ) SMT. SHARMILA CHAVAN, OM SAI PALACE, 3 RD CROSS, SHANKARAPURAM, TUMAKURU - 572 101 .APPELLANT. VS. ASSISTANT COMMISSIONER OF INCOME TAX, TUMAKUR RANGE, TUMAKURU. RESPONDENT. ASSESSEE BY: SHRI H. GURUSWAMY, ITP. REVENUE BY: S MT. R. PREMI, JCIT (D.R) DATE OF HEARING : 19.03 .20 20. DATE OF PRONOUNCEMENT : 29.05 .20 20. O R D E R PER SHRI PAVAN KUMAR GADALE, JM : T HE APP E ALS ARE FILED BY THE ASSESSES AGAINST SEPARATE ORDERS OF COMMISSIONER OF INCOME TAX (APPEALS) - 7, BENGALURU PASSED UNDER SECTION 271E AND 250 OF THE 2 ITA NOS.1882 TO 1884/BANG/2019 INCOME TAX ACT, 1961 (IN SHORT 'THE ACT'). SINCE ALL THESE APPEALS HA VE COMMON AND IDENTICAL ISSUES, THEY ARE CLUBBED AND HEARD TOGETHER AND CONSOLIDATED ORDER IS PASSED. 2. FOR THE SAKE OF CONVENIENCE, WE SHALL TAKE UP ITA NO.1882/BANG/2019 AND FACTS NARRATED THEREIN. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL : 3 ITA NOS.1882 TO 1884/BANG/2019 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PROPRIETOR OF TUM KUR PIPE TRADERS AND FILED THE RETURN OF INCO ME FOR THE ASST YEAR 2015 - 16 ON 8.3.2016 WITH TOTAL INCOME OF RS.3,65,440 / - . SURVEY OPERATIONS UNDER SECTION 133A OF THE ACT WERE CONDUCTED IN THE BUSINESS PREMISES OF THE ASSESSEE AND THE ASSESSMENT WAS REOPENED UNDER SECTION 147 OF THE ACT. THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAS MADE INVESTMENT S IN IMMOVABLE PROPERTY AND SOURCES WERE CALLED FOR. THE ASSESSEE HAS AVAILE D LOAN FROM PANDURANGA CREDIT CO - OPERATIVE SOCIETY LTD., TUMKUR AND THE LOAN W A S REPAID IN F.Y. 2014 - 15 BY CA SH AGGREGATING TO RS.55 LAKHS. IN THE REASSESSMENT PROCEEDINGS LDAR APPEARED FROM TIME TO TIME AND SUBMIT TED THE DETAILS AND FINANCIAL STATEMENTS. ON VERIFICATION TH E ASSESSING OFFICER , FOUND ERRORS AND OMISSIONS IN THE STATEMENTS AND THE ASSESSEE COULD NOT EXPLAIN OR RECONCILED THE SAME, THEREFORE ADDITIONAL INCOME OF RS 7 ,75,000 / - WAS OFFERED BY THE ASSESSEE AND A SSESSED THE TOTAL INCOME OF RS.11,40,440 AND PASSED THE ORDER UNDER SECTION 143(3) R.W.S. 147 OF THE ACT. SUBSEQUENTLY, THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS UNDER SECTION 271E OF THE ACT. IN THE COURSE OF PENALTY PROCEE DINGS, THE ASSESSING OFFICER FI ND THAT THE ASSESSEE HAS AVAILED RS45LAKHS LOAN FROM PANDURANGA CR EDIT CO - OPERATIVE SOCIETY LTD TUMKUR AND 4 ITA NOS.1882 TO 1884/BANG/2019 WAS REPAID IN THE F .Y. 2014 - 15 IN CASH CONTRAVENING THE PROVISIONS OF SECTION 269 T OF TH E ACT. THE ASSESSEE HAS FILED WRITTEN SUBMISSIONS ON 5.3.2018 AND EXPLAINED THE REASONS FOR REPAYMENT IN CASH REFERRED AT PAGE S 2 TO 4 OF THE PENALTY ORDER. SINCE T HE ASSESSING OFFICER HAS TO VERIFY THE LOAN REPAYMENT BY THE ASSESSEE WHETHER BY CASH OR NOT , MADE ENQUIRIES UNDER THE PROVISIONS OF SECTI ON 131(1D) WITH PANDURANGA CREDIT CO - OPERATIVE SOCIETY LT D TUMKUR. THE ENQUIRY REPORT WAS SUBMITTED ON 23.07.2018 WHERE A STATEMENT OF MR. K.R. HANUMANTHA RAO, MANAGER OF PANDURANGA CREDIT CO - OPERATIV E SOCIETY LTD., TUMKUR WAS RECORDED. THE MANAGER ACCE PTED THAT THE LOAN WAS REPAID IN CASH DIRECTLY INTO THE LOAN ACCOUNT BY THE ASSESSEE. SUBSEQUENTLY, THE LEARNED AUTHORIZED REPRESENTATIVE FILED SUBMISSIONS AND EXPLAINED THAT THE ABOVE LOAN WAS OBTAINED FROM FINANCIAL INSTITUTIONS ON THE FIRM BELIEF THAT IT IS AT PAR WITH ANY OTHER BANK S AND THE PROVISIONS OF SECTION 269T OF TH E ACT SHALL NOT BE APPLICABLE. THE ASSESSING OFFICER W AS NOT SATISFIED WITH THE EXPLANATION S AND RELIED ON THE STATEMENT OF THE MANAGER OF PANDURANGA CR EDIT CO - OPE RATIVE SOCIETY LTD. TUMKUR AND OBSERVED THAT THERE IS VIOLATION OF PROVISIONS OF SECTION 269T OF THE ACT AND LEVIED THE PENALTY AND PASSED THE ORDER UNDER SECTION 271E OF THE ACT DT.30.08.2018. AGGRIEVED BY THE ORDER, THE ASSESSEE HAS FILE D AN APPEAL WITH THE CIT (APP EALS). THE CIT (APPEALS), CONSIDERIN G THE GROUNDS OF APPEAL, SUBMISSIONS OF THE ASSESSEE, THE FINDINGS OF THE ASSESSING OFFICER CONCURRED WITH THE ACTION OF THE ASSESSING 5 ITA NOS.1882 TO 1884/BANG/2019 OFFICER IN LEVYING THE PENALTY AND DISMISSED THE APPEAL. AGGRIEVED BY THE ORDER OF CIT (APPEALS), THE ASSESSEE HAS FILED AN APPEAL WITH THE TRIBUNAL. 4. A T THE TIME OF HEARING, THE LEARNED AUTHORIZED REPRESENTATIVE SUBMITTED THAT THE CIT (APPEALS) HAS ERRED IN CONFIRMING THE PENALTY UNDER SECTION 271E OF THE ACT. FURT HER THE EXPLANATIONS IN THE PENALTY PROCEEDINGS ARE OVERLOOKED AND THE BENEFIT OF CROSS EXAMINATION OF MANAGER OF PANDURANGA CREDIT CO - OPERATIVE SOCIETY LTD W A S NOT PROVIDED TO TH E ASSESSEE NOR ENQUIRY REPORT. HE EMPHAS IZED THAT THE MEMBERS OF THE CO OPERA TIVE SOCIETY ARE FOLLOWING SIMILAR CUSTOM OF DEPOSITING DIRECTLY CASH INTO THE LOAN ACCOUNT AND THE ASSESSEE IS NOT AN EXCEPTION. FURTHER THE ASSESSEE WAS DEPRIVED AN OPPORTUNITY TO CROSS EXAMINE THE MANAGER , WHOSE STATEMENT WAS CONSIDERED FOR L EVYING THE PENALTY AND PRAYED FOR AN OPPORTUNI TY TO CROSS EXAMINE THE MANAGER OF THE SOCIETY AND ALLOW THE ASSESSEE APPEAL. CONTRA, THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED ON THE ORDERS OF THE CIT (APPEALS). 5. WE HEARD THE RIVAL CONTENTIONS AND P ERUSED THE MATERIAL ON RECORD. PRIMA FACIE, THE SOLE D ISPUTED ISSUE, BEING LEVY OF PENALTY UNDER SECTION 271E OF THE ACT. THE LD. ARS CON TENTION THAT THE ASSESSEE IS A M EMBER OF PANDURANGA CREDIT CO - OPERATIVE SOCIETY LTD. AND HAS OBTAINED LOAN F ROM TH E SOCIETY, AND THE LOAN WAS REPAID IN CASH DIRECTLY TO THE LOAN ACCOUNT IN CASH DURING F.Y. 2014 - 15. THE ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) R. W.S. 147 OF THE ACT AND THERE 6 ITA NOS.1882 TO 1884/BANG/2019 WAS NO GRIEVANCE IN RESPECT OF SOU RCE OF DEPOSITS OF CASH IN LOAN ACCOUNT OF THE ASSESSEE, BUT THE A O MADE ADDITION IN RESPECT OF CASH CREDIT UNDER SECTION 68 OF THE A CT FOR OMISSION OF INCOME. T HE ASSESSEE HAS FILED EXPLANATIONS FOR REPAYME NT OF LOAN OF RS.30LAKHS AND RS.15 LAKHS IN THE F.YS 201 4 - 15 AND 2015 - 16 RESPECT IVELY, AND R EPAID THE LOAN BY CASH DEPOSIT S DIRECTLY INTO THE LOAN ACCOUNT WHICH THE ASSESSING OFFICER FI ND , THE CONTRAVENTION OF PROVISIONS OF S ECTION 269T OF THE ACT . FURTHER IT WAS CONTENDED THAT THE RE PAYMENT OF LOAN IN CASH COVERED UNDER CLAUSE (II) OF SECOND PROVISO TO SECTION 269T OF THE ACT , WHERE THE REPAYMENT OF ANY LOAN IN CASH TAKEN FROM ANY CO - OPERATIVE BANK, DOES NOT COME UNDER THE PURVIEW OF PROVISIONS OF SECTION 269T OF THE ACT. IN THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER OBSERVED T HAT THE LOAN R EPAYMENT WAS DONE IN CASH AND WAS CONFIRM IN ENQUIRY CONDUCTED UNDER PROVISIONS OF SECTION 1 31(1D) OF THE ACT AND THE ENQUIRY REPORT WAS SUBMITTED ON 23.07.2018 TO THE AD DL. CIT, TUMKUR , WHERE STATEMENT OF MR. K.R. HANUMANTHA RAO, MANAGER OF PANDURANGA CREDIT CO - OPERATIVE SOCIETY LT D W AS ALSO RECORDED AND HE ACCEPTED THE FACT THAT THE LOAN WAS REPAID IN CASH DIRE CTLY TO THE LOAN ACCOUNT. BASED ON THE ENQUIRY REPORT, THE ASSESSING OFFICER HAS LEVIED THE PENALTY UNDER SECTION 271E OF THE A CT. THE LD. ARS CONTENTION THAT THE ENQUIRY REPORT WAS USED AGAINST THE ASSESSEE FOR LEVY OF PENALTY AND THE COPY OF ENQUIRY REPORT WAS NOT PROVIDED TO THE ASSESSEE TO DEFEND HIS CASE. FUR THER IT IS CUSTOMARY OR A TRADITION FOLLOWED BY THE MEMBERS OF 7 ITA NOS.1882 TO 1884/BANG/2019 THE CO - OPERATIVE SOCIETY TO DEPOSIT THE CASH DIRECTLY IN THE LOAN ACCOUNT AND THE ASSESSEE IS NOT AN EXCEPTION. THE LEARNED AUTHORIZED REPRESENTATIVE PRAYED FOR CRO SS EXAMINATION OF THE MANAGER OF THE SOCIETY ON WHOSE STATEMENT / DEPOSITION, THE ASSESSING OFFICER HAS RELIED AND LEVIED PENALTY. WE CONSIDERING THE FACTS AND CIRCUMSTANCES AND PRINCIPLES OF NATURAL JUSTICE ARE OF THE OPINION THAT THE ASSESSEE SHOULD BE PROVIDED AN OPPORTUNITY TO DEFEND HIS CASE AND EVIDENCES COLLECTED AGAINST HIM RELIED BY THE AO IN THE PROCEEDINGS. THEREFORE , IN THE INTEREST OF SUBSTANTIAL JUSTICE, WE PROVIDE OPPORTUNITY TO THE ASSESSEE TO CROSS EXAMINE THE MANAGER OF PANDURANGA CREDIT CO - OPERATIVE SOCIETY LTD. ACCORDINGLY, WE SET ASIDE THE ORDER OF THE CIT(APPEALS) AND RESTO RE THE ENTIRE DISPUTED ISSUE TO THE FILE OF THE ASSESSING OFFICER TO ADJUDICATE AFRESH ON MERITS IN THE PENALTY PROCEEDINGS AND THE ASSESSEE SHOULD BE PROVIDED ADEQUATE OPPORTUNITY OF HEARING TO SUBSTANTIATE THE CASE AND CROSS EXAMINE THE MANAGER OF THE S OCIETY AND THE ASSESSEE SHOULD COOPERATE IN SUBMIT TING THE INFORMATION AN D DETAILS AT THE EARLIEST AND ALLOW THE GROUNDS OF APPEAL OF THE ASSESSEE FOR STATISTICAL PURPOSE . 6. SIMILARLY, IN APPEALS ITA NOS.1883 & 1884/BANG/2019 , THE FACTS ARE IDENTICAL , TO THE ITA NO.1882/BANG/2019 AND THE DECISION TAKEN IN THIS CASE IS EQUALLY APPLICABLE. ACCORDINGLY, THE ORDER OF THE CIT (APPEALS) IS SET ASIDE AND RESTORE 8 ITA NOS.1882 TO 1884/BANG/2019 THE DISPUTED ISSUES TO THE FILE OF ASSESSING OFFICER WITH SIMILAR DIRECTIONS AND ALLOW THE GROUNDS OF APPEAL OF ASSESSEE FOR STATISTICAL PURPOSES 7. IN THE RESULT, THE ASSESSEE'S APPEALS IN ITA NOS.1882 TO 1884/BANG/2019 ARE ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION P AGE. S D / - S D / - ( B.R. B ASKARAN ) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 9 . 0 5 . 20 20 . *REDDY GP COPY TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT (A) 4. PR. CIT 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLA TE TRIBUNAL BANGALORE