Prakash Harinarayan Mantri, Jalna V. Additional Commissioner of Income-tax,

ITA 1905/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93836 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 7 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-06-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 18-06-2015
• Assessment Year: 2006-2007
• Appeal Filed On: 25-10-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MODI
• Section: 133A; 132; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO.1905/PN/2013 (ASSESSMENT YEAR : 2006-07) SHRI PRAKASH HARINARAYAN MANTRI, PROP. : JAGDAMBA AGRO ENGINEERING, LAKKADKOT, AURANGABAD ROAD, JALNA 431 203. PAN NO. ABEPM0391B .. APPELLANT VS. ADDL. COMMISSIONER OF INCOME TAX, RANGE 1, AURANGABAD. .. RESPONDENT ASSESSEE BY : WRITTEN SUBMISSION REVENUE BY : SHRI A.K. MODI DATE OF HEARING : 18-06-2015 DATE OF PRONOUNCEMENT : 24-06-2015 ORDER PER R.K. PANDA, AM: THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 14.08.2013 OF THE CIT(A), AURANGABAD RELATING TO ASSESSMENT YEAR 2006-07. 2. LEVY OF PENALTY OF RS.1,00,000/- UNDER SECTION 2 71D OF THE I.T. ACT BY THE ASSESSING OFFICER AND CONFIRMED BY THE CIT(A) IS THE ONLY ISSUE RAISED BY THE ASSESSEE IN VARIOUS GR OUNDS OF APPEAL. 3. DESPITE SERVICE OF NOTICE NONE APPEARED ON BEHAL F OF THE ASSESSEE. HOWEVER, A WRITTEN SUBMISSION HAS BEEN F ILED ON BEHALF OF THE ASSESSEE. THEREFORE, THIS APPEAL IS BEING D ECIDED ON THE BASIS 2 OF WRITTEN SUBMISSION FILED BY THE ASSESSEE AND AFT ER HEARING THE LD. DEPARTMENTAL REPRESENTATIVE. 4. FACTS OF THE CASE, IN BRIEF, ARE THAT THE ASSESS EE IS AN INDIVIDUAL AND PROPRIETOR OF M/S JAGDAMBA AGRO ENGI NEERING, JALNA. A SEARCH ACTION UNDER SECTION 132 OF THE I. T. ACT WAS CONDUCTED IN THE CASE OF RUDRANEE GROUP OF CASES OF AURANGABAD. ON THE BASIS OF MATERIAL FOUND, A SURVEY ACTION UND ER SECTION 133A OF THE I.T. ACT WAS CONDUCTED IN THE CASE OF SHRI K ACHRULAL NATHMAL MUTHA (K.N. MUTHA) ENGAGED IN MONEY LENDING ACTIVIT Y. SHRI K.N. MUTHA HAS GIVEN CASH LOAN ON HUNDIES AND HAS OBTAIN ED DATED/UNDATED DULY SIGNED CHEQUES OF THE BORROWERS AS SECURITY. ONE SUCH CHEQUE DULY SIGNED BY THE ASSESSEE DATED 0 6.08.2005 BEARING CHEQUE NO.997116 OF THE CHIKHALI URBAN COOP ERATIVE BANK LTD. WAS FOUND WITH SHRI K.N. MUTHA. THE ASSE SSING OFFICER, THEREFORE, WAS OF THE OPINION THAT THE ASSESSEE HAS ACCEPTED CASH LOAN OF RS.1,00,000/- FROM SHRI K.N. MUTHA IN VIOLA TION OF THE PROVISIONS OF SECTION 269SS OF THE I.T. ACT. HE, T HEREFORE, REFERRED THE MATTER TO THE ADDL. CIT, WHO ISSUED NOTICE TO T HE ASSESSEE TO EXPLAIN THE CASE. IT WAS SUBMITTED BY THE ASSESSEE THAT HE HAS NOT TAKEN ANY CASH LOAN FROM SHRI K.N. MUTHA. HE HAS S IGNED THE CHEQUE AND HUNDI AND HAS GIVEN THE SAME TO SHRI K.N . MUTHA FOR OBTAINING LOAN. HOWEVER, NO SUCH CASH LOAN WAS GIV EN BY SHRI K.N. MUTHA. 3 5. THE ADDL. CIT WAS NOT SATISFIED WITH THE EXPLANA TION GIVEN BY THE ASSESSEE. HE OBSERVED THAT SHRI K.N. MUTHA HAS ACCEPTED THE ABOVE MODUS OPERENDY AND ADMITTED THAT HIS BUSI NESS IS OF GIVING LOANS IN CASH AND ACCEPTING THE REPAYMENT IN CASH. HE HAS ACCEPTED THAT THE ENTIRE MONEY SO GIVEN, AGAINST TH E CHEQUES DEPOSITED WITH HIM, WAS UNEXPLAINED INCOME. ACCORD ING TO THE ADDL. CIT, IF THE ASSESSEE ACCEPTS LOANS/DEPOSITS I N CASH AND REPAYS THE SAME IN CASH IT WOULD BE IMPOSSIBLE TO ACCEPT T HAT THE ENTRY OF THE SAME WOULD BE MADE IN THE BOOKS OF ACCOUNTS OF THE ASSESSEE. THE CHEQUES WOULD BE RETURNED WHEN THE HUNDIES WERE CANCELLED OR MONEY WAS REPAID. IF THE LOAN WAS EXTENDED FOR A F URTHER PERIOD THEN THE CHEQUE RECEIVED AS SECURITY WOULD BE REVAL IDATED FOR A PERIOD COVERING THE TENURE OF DEBT BY MAKING A CHAN GE IN THE DATE OF ISSUE OF THE CHEQUE. IF ANY INVALIDATED CHEQUE REMAINED WITH SHRI K.N. MUTHA AND THE TIME PERIOD FOR PRESENTATIO N VIS--VIS THE DATE MENTIONED ON CHEQUE EXPIRED, THEN IT MEANT THA T THE DEBTOR HAD REPAID THE AMOUNT BORROWED UNDATED. REJECTING THE EXPLANATION GIVEN BY THE ASSESSEE AND OBSERVING THAT ASSESSEE H AD TAKEN LOAN AGGREGATING TO RS.1,00,000/- IN CASH FROM SHRI K.N. MUTHA AND SINCE THE CHEQUE WAS NOT CANCELLED AND THE PERIOD O F VALIDITY SUBSISTS THE AMOUNT COULD NOT HAVE BEEN RETURNED BY THE ASSESSEE TO MONEY LENDER SHRI K.N. MUTHA. HE THEREFORE LEVIED PENALTY OF RS.1,00,000/- UNDER SECTION 271D FOR CONTRAVENTION OF PROVISIONS OF SECTION 269SS OF THE I.T. ACT. 4 6. BEFORE THE CIT(A), THE ASSESSEE SUBMITTED THAT H E HAS APPROACHED SHRI K.N. MUTHA WITH THE PROPOSAL OF LOA N AND HE HAS HANDED OVER A CHEQUE OF RS.1,00,000/- AS SECURITY T O SHRI K.N. MUTHA. HOWEVER, AFTER DUE ENQUIRIES WITH BANKS ETC. SHRI K.N. MUTHA REFUSED THE LOAN PROPOSAL. IT WAS CLAIMED TH AT SHRI K.N. MUTHA HAS NOT RETURNED THE SAID CHEQUE EVEN AFTER V ARIOUS REQUESTS AND VISITS TO HIS OFFICE BY THE ASSESSEE. 6.1 HOWEVER, THE CIT(A) WAS ALSO NOT SATISFIED WITH THE EXPLANATION GIVEN BY THE ASSESSEE AND UPHELD THE PE NALTY OF RS.1,00,000/- LEVIED BY THE ADDL. CIT. WHILE DOING SO, HE OBSERVED THAT THE SUBMISSION OF THE ASSESSEE THAT H E HAS GIVEN DULY SIGNED CHEQUE OF RS.1,00,000/- TO SHRI K.N. MUTHA W ITHOUT OBTAINING CASH LOAN OF RS.1,00,000/- APPEARS TO BE IMPROBABLE AND THEREFORE CANNOT BE ACCEPTED. FURTHER, WHEN THE LO AN WAS NOT SANCTIONED BY SHRI K.N. MUTHA, THERE WAS NO QUESTIO N OF NOT RETURNING THE CHEQUE DESPITE THE REQUESTS OF THE AS SESSEE. THEREFORE, HE HELD THAT THE ASSESSING OFFICER WAS J USTIFIED IN HOLDING THAT THE ASSESSEE HAS ACCEPTED CASH LOAN OF RS.1,00,000/- FROM SHRI K.N. MUTHA. SINCE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS THEREFORE PENALTY LEVIED UNDER SEC TION 271D OF THE I.T. ACT IS JUSTIFIED. 7. AGGRIEVED WITH SUCH ORDER OF THE CIT(A), THE ASS ESSEE IS IN APPEAL BEFORE US. 5 8. THE ASSESSEE IN HIS WRITTEN SUBMISSION HAS STATE D THAT BEFORE THE ADDL. CIT IT WAS CATEGORICALLY STATED THAT THE ASSESSEE HAD APPROACHED SHRI K.N. MUTHA FOR SEEKING LOAN AND FOR THIS PURPOSE HE HAD HANDED OVER A SIGNED CHEQUE. HOWEVER, AT TH AT POINT OF TIME THE ASSESSEE WAS HAVING EXISTING LOAN LIABILITY OF CHIKLI URBAN COOPERATIVE BANK TO THE TUNE OF RS.16,00,000/-. SH RI K.N. MUTHA AFTER DISCREET ENQUIRIES WITH THE SAID BANK AND ON HAVING COME TO KNOW OF THIS FACT REFUSED TO GRANT LOAN TO THE ASSE SSEE. HOWEVER, HE DID NOT RETURN THE SAME AND THE VALIDITY OF THE SAI D CHEQUE WAS OVER. THEREFORE, THE ASSESSEE DID NOT PURSUE THE MATTER W ITH SHRI K.N. MUTHA SINCE THE CHEQUE BECAME STALE. IT IS STATED IN THE WRITTEN SUBMISSION THAT THE REVENUE DID NOT FURNISH ANY COG ENT DIRECT EVIDENCE TO SUBSTANTIATE THAT THE ASSESSEE HAD IN-F ACT ACCEPTED CASH LOAN IN VIOLATION OF THE PROVISIONS OF SECTION 269S S OF THE I.T. ACT. THE ASSESSEE HAD CATEGORICALLY DENIED RECEIVING ANY CASH LOAN FROM SHRI K.N. MUTHA. THERE IS NOTHING ON RECORD TO SUG GEST THAT ANY SUCH STATEMENT HAS BEEN RECORDED FROM EITHER OF THE PERSONS SO AS TO PROVE THAT SUCH CASH LOAN HAS BEEN GIVEN OR TAKEN. THE ENTIRE PROCESS IS ON THE BASIS OF SURMISES AND PRESUMPTION S. IT HAS FURTHER BEEN SUBMITTED BY THE ASSESSEE IN HIS WRITTEN SUBMI SSION THAT UNDER IDENTICAL FACTS AND CIRCUMSTANCES, THE TRIBUNAL IN THE CASE OF LATE SHRI MADANLAL N. SINGALKAR, THROUGH LEGAL HEIR SHRI MANJEET M. SINGALKAR VS. ADDL. CIT VIDE ITA NO.2183/PN/2013, O RDER DATED 19.09.2014 DELETED THE PENALTY LEVIED UNDER SECTION 271D OF THE I.T. ACT, WHICH WAS UPHELD BY THE CIT(A). 6 9. THE LD. DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND WHILE SUPPORTING THE ORDER OF THE CIT(A) SUBMITTED THAT T HE CHEQUE IS NOT BARRED BY LIMITATION. 10. WE HAVE CONSIDERED THE WRITTEN SUBMISSION MADE BY THE ASSESSEE AND ARGUMENT OF THE LD. DEPARTMENTAL REPRE SENTATIVE. WE HAVE ALSO PERUSED THE ORDERS OF THE ASSESSING OFFIC ER AND THE CIT(A). WE FIND IN THE INSTANT CASE THE ADDL. CIT LEVIED THE PENALTY OF RS.1,00,000/- UNDER SECTION 271D OF THE I.T. ACT ON THE GROUND THAT THE ASSESSEE HAS ACCEPTED CASH LOAN OF RS.1,00,000/- FROM SHRI K.N. MUTHA IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE I.T. ACT. THE SAME WAS BASED ON THE B ASIS OF A SIGNED CHEQUE BEARING NO.997116 OF THE CHIKHALI URBAN COOP ERATIVE BANK LTD. DATED 06.08.2005 FOUND FROM THE PREMISES OF SH RI K.N. MUTHA DURING THE COURSE OF SURVEY ACTION UNDER SECTION 13 3A OF THE I.T. ACT ON 02.02.2006. DURING THE COURSE OF PENALTY PR OCEEDINGS, THE ASSESSEE SUBMITTED THAT HE HAS NOT OBTAINED ANY SUC H CASH LOAN FROM SHRI K.N. MUTHA AND THAT HE HAD ONLY GIVEN THE SIGN ED CHEQUE IN ANTICIPATION OF LOAN. HOWEVER, NO SUCH LOAN WAS GI VEN BY SHRI K.N. MUTHA SINCE ASSESSEE HAD ALREADY OBTAINED LOAN OF RS.16,00,000/- FROM CHIKHALI URBAN COOPERATIVE BANK LTD.. HOWEVER, THE ABOVE SUBMISSION WAS REJECTED BY THE A DDL. CIT WHO LEVIED PENALTY OF RS.1,00,000/- UNDER SECTION 271D OF THE I.T. ACT, WHICH HAS BEEN UPHELD BY THE CIT(A). 7 11. WE FIND IDENTICAL ISSUE HAD CAME UP BEFORE THE TRIBUNAL IN THE CASE OF LATE SHRI MADANLAL N. SINGALKAR, THROUG H LEGAL HEIR SHRI MANJEET M. SINGALKAR VS. ADDL. CIT (SUPRA), WH EREIN THE TRIBUNAL CANCELLED THE PENALTY SO LEVIED UNDER SECT ION 271D OF THE I.T. ACT ON THE GROUND THAT NO DIRECT EVIDENCE WAS BROUGHT ON RECORD BY THE REVENUE WHEN THE ASSESSEE WAS DENYING CATEGORICALLY OF ACCEPTING SUCH LOAN AND NO STATEMENT WAS RECORDE D FROM EITHER OF THE PERSONS SO AS TO PROVE THAT SUCH CASH LOAN H AS BEEN GIVEN OR TAKEN. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL A T PARA 7 READ AS UNDER :- 7. WE HAVE CONSIDERED THE RIVAL ARGUMENTS MADE BY BOTH THE SIDES, PERUSED THE ORDERS OF THE AO AND THE CIT(A) AND THE PAPER BOOK FILED ON BEHALF OF THE ASSESSEE. WE HAVE ALSO CONSIDERED THE VARIOUS DECISIONS RELIED ON BY BOTH THE SIDES. WE FIND THE AO REFERRED THE MATTER TO THE ADDL.CIT FOR INITIATION OF PENALTY PR OCEEDINGS U/S.271D AND 271E OF THE I.T. ACT SINCE A NUMBER OF SIGNED D ATED/UNDATED CHEQUES WERE IMPOUNDED FROM THE PREMISES OF ONE SHR I KACHRULAL NATHMAL MUTHA ACCORDING TO WHICH THE ASSESSEE APPEA RS TO HAVE TAKEN A CASH LOAN OF RS.6 LAKHS FROM SHRI KACHRULAL NATHMAL MUTHA DURING THE A.Y. 2006-07. WE FIND BEFORE THE CIT(A) THE ASSESS EE SUBMITTED THAT HE HAS ONLY APPROACHED SHRI KACHRULAL NATHMAL MUTHA WITH THE PROPOSAL OF LOAN FOR WHICH HE HAD HANDED OVER THE C HEQUES AND HUNDIES OF RS.6 LAKHS AS SECURITY. HOWEVER, THE SAID PROPO SAL DID NOT MATERIALISE. HOWEVER, THE SAID HUNDIES REMAINED WI TH SHRI KACHRULAL NATHMAL MUTHA. WE FIND THE LD.CIT(A) DID NOT ACCEP T THE CONTENTION OF THE ASSESSEE ON THE GROUND THAT THE SAME APPEARS TO BE IMPROBABLE FOR WHICH THE ARGUMENT OF THE ASSESSEE WAS REJECTED . THE OTHER CONTENTION OF THE ASSESSEE THAT THERE IS NO ENTRY E ITHER IN THE BOOKS OF SHRI KACHRULAL NATHMAL MUTHA OR IN THE BOOKS OF THE ASSESSEE WAS ALSO REJECTED BY THE CIT(A). 7.1 IN OUR OPINION, FOR IMPOSING PENALTY U/S.271D T HERE MUST BE SOME DIRECT EVIDENCE TO SUBSTANTIATE THAT THE ASSES SEE HAS INFACT ACCEPTED CASH LOAN IN VIOLATION OF THE PROVISIONS O F SECTION 269SS. IN THE INSTANT CASE, THERE IS NO DIRECT EVIDENCE BROUG HT ON RECORD BY THE REVENUE. THE ASSESSEE WAS CATEGORICALLY DENYING OF ANY SUCH CASH LOAN FROM SHRI KACHRULAL NATHMAL MUTHA. THERE IS N OTHING ON RECORD TO SUGGEST THAT ANY SUCH STATEMENT HAS BEEN RECORDE D FROM EITHER OF THE PERSONS SO AS TO PROVE THAT SUCH CASH LOAN HAS BEEN GIVEN OR TAKEN. THE ENTIRE PROCESS IS ON THE BASIS OF SURMISES AND PRES UMPTIONS. IT IS ALSO A FACT THAT THE ASSESSEE IS NO MORE AND HAS EXPIRED. CONSIDERING THE TOTALITY OF THE FACTS OF THE CASE, WE ARE OF THE OP INION THAT IT IS NOT A FIT 8 CASE FOR LEVY OF PENALTY U/S.271D OF THE I.T. ACT I N ABSENCE OF ANY DIRECT EVIDENCE TO SHOW THAT THE ASSESSEE, IN THE I NSTANT CASE, HAS ACCEPTED CASH LOAN IN VIOLATION OF PROVISIONS OF SE CTION 269SS. IN THIS VIEW OF THE MATTER, WE SET-ASIDE THE ORDER OF THE C IT(A) AND DIRECT THE AO TO CANCEL THE PENALTY LEVIED U/S.271D OF THE I.T . ACT, 1961. SINCE THE ASSESSEE SUCCEEDS ON MERIT, WE REFRAIN OURSELVE S FROM DECIDING THE LEGAL ARGUMENTS ADVANCED BY THE LD. COUNSEL FOR THE ASSESSEE TO THE PROPOSITION THAT THE PENALTY ORDER IS BARRED BY LIM ITATION. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 12. SINCE IN THE INSTANT CASE THE ASSESSEE WAS CATE GORICALLY DENYING FROM THE VERY BEGINNING REGARDING ACCEPTANC E OF SUCH CASH LOAN FROM SHRI K.N. MUTHA AND SINCE THERE IS NO DIR ECT EVIDENCE TO SUBSTANTIATE THAT THE ASSESSEE HAS IN-FACT ACCEPTED THE SAID CASH LOAN AND SINCE NO STATEMENT WAS RECORDED FROM EITHER OF THE PARTIES, THEREFORE, FOLLOWING THE DECISION OF THE CO-ORDINAT E BENCH OF THE TRIBUNAL UNDER IDENTICAL FACTS AND CIRCUMSTANCES IN THE CASE OF LATE SHRI MADANLAL N. SINGALKAR (SUPRA), WE HOLD THAT TH IS IS NOT A FIT CASE FOR LEVY OF PENALTY UNDER SECTION 271D OF THE I.T. ACT. WE ACCORDINGLY SET-ASIDE THE ORDER OF CIT(A) AND DIREC T THE ASSESSING OFFICER TO CANCEL THE PENALTY. THE GROUNDS RAISED BY THE ASSESSEE ARE ACCORDINGLY ALLOWED. 13. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 24.06.2015 SD/- SD/- (VIKAS AWASTHY) (R.K. P ANDA) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE DATED: 24 TH JUNE, 2015 SUJEET 9 COPY OF THE ORDER FORWARDED TO: 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A), AURANGABAD 4. THE CIT, AURANGABAD 5. THE D.R., B PUNE BENCH 6. GUARD FILE BY ORDER //TRUE COPY// SR. PRIVATE SECRETARY ITAT, PUNE BENCHES, PUNE