Sri Pintu Karmakar, Nadia V. J.C.I.T Range - Nadia, Nadia

ITA 1911/KOL/2012

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 0544 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2005-2006
• Appeal Filed On: 27-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PIJUSH MUKHERJEE
• Keywords: Non-deduction of tax; Reasonable cause
• Section: 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOLKATA [BEFORE SHRI P. K. BANSAL, AM & SHRI MAHAVIR SINGH, JM ] I.T.A NO. 1911 /KOL/201 2 ASSESSMENT YEAR : 200 5 - 0 6 SHRI PINTU KARMAKAR VS. JOINT COMMISSIONER OF INCOME - TAX VILL & P.O. HANSKHALI, DIST. NADIA RANGE - NADIA PIN - 71505 (PAN:A FVPK 6266L ) ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 0 8 .0 7 .2015 DATE OF PRONOUNCEMENT: 08 . 0 7 . 2015 FOR THE APPELLANT: SHRI S UNIL SURANA , FCA FOR THE RESPONDENT: S HRI PIJUSH MUKHERJEE , J CIT - SR - DR ORDER PER SHRI MAHAVIR SINGH, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) - XXXVI, KOLKATA IN APPEAL NO.684/CIT(A) - XXXVI/KOL/2009 - 10 /1695 DATED 03 . 1 2 .20 1 2. ASSESSMENT WAS FRAMED BY ITO, WD - 4 , KRISHNAGAR, NADIA U/S. 1 43(3) OF THE INCOME - TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) FOR ASSESSMENT YEAR 200 5 - 0 6 VIDE HIS ORDER DATED 31 . 1 0 .20 07 . PENALTY UNDER DISPUTE WAS LEVIED BY JCIT, RANGE - NADIA U/S. 271D OF THE ACT. 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY U/S. 271D OF THE ACT BY THE JCIT, RANGE - NADIA. 3. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINST THE ORDER OF CIT(A) CONFIRMING THE PENALTY IMPOS ED BY J CIT, RANGE - NADIA U/S. 271D OF THE ACT IN CONTRAVENTION TO PROVISIONS OF SECTION 269SS OF THE ACT. BRIEFLY STATED FACTS OF THE CASE ARE THAT ASSESSING OFFICER OBSERVED DURING THE ASSESSMENT PROCEEDING THAT THE ASSESSEE HAD ACCEPTED LOANS TOTALING TO RS. 2,20,000 / - IN CASH FROM ELEVEN PERSONS FOR AN AMOUNT OF RS.20,000/ - IN EACH CASE . WHILE IMPOSING PENALTY THE J CIT HELD THAT THE ASSESSEE DID NOT DENY RECEIVING LOANS IN CASH IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. HENCE, HE IMPOSED THE PENALTY U/S. 271D OF THE ACT. AGGRIEVED, ASSESSEE PREFERRED APPEAL BEFORE CIT(A), WHO UPHELD THE ACTION OF J CIT. BEING FURTHER AGGRIEVED, ASSESSEE IS NOW IN APPEAL BEFORE US. 2 ITA NO. 1911 /K/201 2 SH. PINTU KARMAKAR AY 200 5 - 0 6 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US LD. COUNSEL FOR THE ASSESSEE ADMITTED THE FACT THAT THE ASSESSEE HAD RECEIVED A SUM O F RS.20,000/ - FROM EACH OF ELEVEN CREDITORS TOTALING TO RS. 2 ,20,000/ - IN CASH. THE REASONABLE CAUSE FOR RECEIPT OF THIS CASH LOAN WAS THAT THE ASSESSEE RECEIVED CASH LOAN FROM RELATIVES, WHO ARE NEITHER INCOME TAX ASSESSEE NOR HAVING ANY BANK ACCOUNT. HE NCE, HE HAS NO OTHER ALTERNATIVE EXCEPT TO RECEIVE LOANS IN CASH FOR AN AMOUNT OF RS.20,000/ - FROM EACH OF THEM. THESE FACTS ARE UNDISPUTED BUT BEFORE US LD. COUNSEL FOR THE ASSESSEE RELIED ON CBDT CIRCULAR NO.572 DATED 03.08.1990 REPORTED IN (1999) 87 CT R (ST.) 1, AND STATED THAT THIS CIRCULAR HAS CLEARLY BROUGHT OUT THE PROVISION OF SECTION 269SS EXPLAINING THAT FOR TAKING OR ACCEPTING ANY LOAN OR DEPOSIT IN EXCESS OF RS.20,000/ - LD. COUNSEL FOR THE ASSESSEE STATED THAT THE WORD IN EXCESS OF AMOUNTS EX CEEDING RS.20,000/ - . HE ALSO RELIED ON THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MADHUKAR B. PAWAR (2008) 218 CTR 59, WHEREIN HON BLE BOMBAY HIGH COURT VIDE PARA 4 CONSIDERED THE ISSUE AS UNDER: 4. IT IS NOW WELL SETTLED THAT CIRC ULARS ISSUED BY CBDT ARE STATUTORY CHARACTER AND ARE BINDING ON THE DEPARTMENTAL AUTHORITIES. THE AUTHORITIES INCLUDING AO AND OTHER CONSEQUENTLY WOULD BE BOUND BY THAT CIRCULAR. IN THE INSTANT CASE, CBDT FOR THE PURPOSE OF ATTRACTING S. 271D HAS SET OUT T HAT THE LOAN OR DEPOSIT SHOULD BE IN EXCESS OF RS. 20000/ - IS TRUE THAT WHAT CBDT HAS STATED MAY BE CONTRARY TO THE EXPRESSED LANGUAGE OF S. 269SS WHICH USES THE EXPRESSION TWENTY THOUSAND RUPEES OR MORE . THE LAW AND THE CBDT CIRCULARS CAN BE SPELLED OUT FROM THE FOLLOWING JUDGMENTS OF THE SUPREME COURT. IN NVNIT LAL. C. JAVERI VS. K.K. SEN. AAC (1965) 56 ITR 198 (SC), A CONSTITUTION BENCH OF THE SUPREME COURT OBSERVED IT IS CLEAR THAT A CIRCULAR OF THE KIND WHICH WAS ISSUED BY THE BOARD WOULD BE BINDIN G ON ALL OFFICERS AND PERSONS EMPLOYED IN THE EXECUTION OF THE ACT UNDER S. 5(8) OF THE ACT. NAVNIT LAL (SUPRA) WAS FOLLOWED IN ELLERMAN LINES LTD. VS. CIT 1972 CTR (SC) 71 : (1971) 82 ITR 913 (SC). IN UCO BANK VS. CIT (1999) 154 CTR (SC) 88: (1999) 237 1TR 889 (SC), THE LAW WAS RESTATED AND IT WAS HELD THAT CIRCULAR OF CBDT ARE LEGALLY BINDING ON THE REVENUE AND THIS BINDING CHARACTER ATTACHES TO THE CIRCULARS EVEN IF THEY BE FOUND NOT IN ACCORDANCE WITH THE CORRECT INTERPRETATION OF THE SECTION AND THEY DEPART OR DEVIATE FROM SUCH CONSTRUCTION, WHEN THEY ARE ISSUED IN EXERCISE OF THE STATUTORY POWERS UNDER S. 119. IT WAS HOWEVER CLARIFIED THAT THE BOARD CANNOT PRE - EMPT A JUDICIAL INTERPRETATION OF THE SCOPE AND AMBIT OF THE PROVISION AND FURTHER COULD NO T IMPOSE A BURDEN ON THE TAXPAYER HIGHER THAN WHAT THE ACT ITSELF, ON A TRUE INTERPRETATION, ENVISAGES. IT WAS OBSERVED THAT THE BOARD HAS THE STATUTORY POWER UNDER S. 119 TO TONE DOWN THE RIGOUR OF THE LAW FOR THE BENEFIT OF THE ASSESSEE BY ISSUING CIRCUL ARS TO ENSURE A PROPER ADMINISTRATION OF THE FISCAL STATUTE. IN CST VS. INDRA INDUSTRIES (2001) 168 CTR (SC) 50: (2001) 248 ITR 338 (SC), THE COURT FURTHER OBSERVED THAT THE TAXING AUTHORITY CANNOT BE HEARD TO ADVANCE AN ARGUMENT THAT IT IS CONTRARY TO THA T INTERPRETATION. 3 ITA NO. 1911 /K/201 2 SH. PINTU KARMAKAR AY 200 5 - 0 6 5. CONSIDERING ABOVE, WE FIND THAT THE FACTS ARE EXACTLY IDENTICAL WHAT WAS BEFORE THE HON BLE BOMBAY HIGH COURT (SUPRA) AND IN EACH OF CASE CASH LOAN IS NOT EXCEEDING RS.20,000/ - RATHER IT IS EXACTLY RS.20,000/ - . SINCE THERE IS A CIR CULAR AND WHICH IS A BENEFICIAL CIRCULAR UNDER SECTION 269SS OF THE ACT AND HON BLE BOMBAY HIGH COURT HAS INTERPRETED CIRCULAR NO. 572 DATED 3 RD AUGUST 1990 (SUPRA) WHEREIN VIDE PARA 3 RELEVANT PORTION OF CLAUSE 43 IS AS UNDER: 43. SECS. 271C, 271D AND 2 71E, WHICH WERE INSERTED IN THE I T ACT W.E.F. 1ST APRIL, 1989, BY THE DIRECT TAX LAWS (AMENDMENT) ACT, 1987, PROVIDED FOR THE LEVY OF PENALTIES FOR CERTAIN DEFAULTS. PENALTY UNDER S. 271C WAS LEVIED FOR FAILURE TO DEDUCT TAX AT SOURCE. PENALTY UNDER S. 27 1D MAY BE LEVIED FOR FAILURE TO COMPLY WITH THE PROVISIONS OF S. 269SS I.E. FOR TAKING OR ACCEPTING ANY LOAN OR DEPOSIT IN EXCESS OF RS. 20,000 OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR BANK DRAFT. PENALTY UNDER S. 271E MAY BE LEVIED FOR FAILURE TO COMP LY WITH THE PROVISIONS OF S. 269T RELATING TO REPAYMENT BY A COMPANY, INCLUDING A BANKING COMPANY, A CO - OPERATIVE SOCIETY OR A FIRM, OF DEPOSITS, INCLUDING INTEREST, EXCEEDING RS. 10,000/ - THE AGGREGATE OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR BANK D RAFT. AS THE ISSUE IS SQUARELY COVERED BY THE DECISION OF HON BLE BOMBAY HIGH COURT, CITED SUPRA AND BOARD CIRCULAR NO. 572 DATED 03.08.1990, WE DELETE THE PENALTY SO LEVIED BY J CIT AND UPHELD BY CIT(A). 6 . IN THE RESULT, APPEAL OF ASSESSEE IS ALLOWED . 7 . ORDER IS PRONOUNCED IN THE OPEN COURT . S D / - S D / - ( P. K. BANSAL ) (MAHAVIR SINGH) ACCOUNTANT MEMBER J UDICIAL MEMBER DATED: 8TH JU LY , 201 5 *DKP/ P.S. COPY OF THE ORDER FORWARDED TO: 1 . A PPELLANT SHRI PINTU KARMAKAR, VILL & P.O. HANSKHALI, DIST. NADIA - 711505, W.B 2 RESPONDENT JCIT, R A NGE - NADIA - 722202, W.B. 3 . THE CIT (A), NADIA 4. 5. CIT, NADIA . DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .