ACIT 9(3), MUMBAI V. REAL TIME ESTATE & MANAGEMENT P. LTD, MUMBAI

ITA 1954/MUM/2011

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 88225 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-02-2015
• Appeal Filed By: Department
• Bench Allotted: J
• Next Hearing Date: 10-02-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 10-03-2011
• Court: TRIBUNAL
• Department Lawyers: HARIGOVIND SINGH
• Keywords: Reasonable cause

Judgement Text

IN THE INCO ME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI D. KARUNAKARA RAO, ACCOUNTANT MEMBER ./I.T.A. NO. 1954/M/2011 ( / ASSESSMENT YEAR : 2007 - 2008 ) ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 9(3), MUMBAI. / VS. M/S. REAL TIME ESTATE & MANAGEMENT PVT LTD., LALANI AURA, 7 TH FLOOR, 34 TH ROAD, BEHIND NATIONAL COLLEGE, OFF. S.V.ROAD, BANDRA (W), MUMBAI 400050. ./ PAN : AAACR5432L ( / APPELLANT) .. ( / RESPONDENT ) / APPELLANT BY : SHRI HARI GOVIND SINGH, DR / RESPONDENT BY : NONE / DATE OF HEARING : 10.2 .201 5 / DATE OF PRONOUNCEMENT : 10 .2.2015 / O R D E R PER D. KARUNAKARA RAO, AM: THIS APPEAL FILED BY THE REVENUE ON 10.9.2011 IS AGAINST THE ORDER OF THE CIT (A) - 20, MUMBAI DATED 22.12.2010 FOR THE AY 2007 - 2008. IN THIS APPEAL, REVENUE RAISED THE FOLLOWING GROUNDS WHICH READ AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD CIT (A) ERRED IN CANCELLING THE PENALTY U/S 271D OF THE ACT, OVERLOOKING THE FACT THAT THE LOAN HAS BEEN OBTAINED OTHERWISE THAN THROUGH ACCOUNT PAYEE CHEQUE / ACCOUNT PAYE E DEMAND DRAFT AND THAT THE TRANSACTION HAS ITS ORIGIN IN CASH PAYMENT OF RS. 6,51,000/ - WHICH GOES AGAINST THE PROVISIONS OF SECTION 269SS OF THE ACTG. 2. THE APPELLANT PRAYS THAT THE ORDER OF THE CIT (A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 2. BRIEFLY STATED RELEVANT FACTS ARE THAT THE ASSESSEE TOOK LOAN OF RS. 6,51,000/ - AND THE SAME WAS PAID IN CASH ON BEHALF OF THE ASSESSEE - COMPANY BY ITS DIRECTOR TOWARDS STAMP DUTY FOR PURCHASE OF PROPERTY AT PUNE. IN THE P&L ACCOUNT, THE SAID AMOUNT WAS SHOWN AS LOAN. IN THE ASSESSMENT, ASSESSING OFFICER OPINED THAT THE ASSESSEE AVA ILED THE LOAN IN CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS AS THE 2 SAID LOAN WAS NOT TAKEN THROUGH THE ACCOUNT PAYEE CHEQUE OR BANK DRAFT. HE, THEREFORE, INITIATED THE PENALTY PROCEEDINGS AND PASSED THE ORDER U/S 271D OF THE ACT, DATED 3.5.2010. MA TTER TRAVELLED TO THE CIT (A). 3. DURING THE PROCEEDINGS BEFORE THE FIRST APPELLATE AUTHORITY, CIT (A) CONSIDERED THE SUBMISSIONS OF THE ASSESSEE AND ALLOWED THE APPEAL. AGGRIEVED, REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. 4. BEFORE US, LD DR NARRATED THE FACTS AND RELIED ON THE ORDER OF THE ASSESSING OFFICER. FURTHER, LD DR HAS NOT BROUGHT ANYTHING ON RECORD TO SHOW THAT IT IS NOT A CASE OF LOAN TAKEN BY WAY OF BOOK ENTRY AND THE SAME IS NOT FOR THE PURPOSE OF PAYING TO THE GOVERNMENT ACCOUNT. 5. ON THE HAND, NONE APPEARED ON BEHALF OF THE ASSESSEE TO REPRESENT THE ASSESSEE CASE. 6. WE HAVE HEARD THE LD DR AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES. AFTER HEARING THE LD DR AND ON PERUSAL OF THE CIT (A)S ORDER IN GENERAL AND PARA 3 OF IN PARTICULA R, WE FIND THE SAID PARA IS RELEVANT IN THIS REGARD AND THEREFORE, THE SAME IS EXTRACTED AS FOLLOWS: 3. I HAVE CONSIDERED THE ISSUE. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE LOAN WAS GIVEN BY THE DIRECTOR BY WAY OF MERE BOOK ENTRY. SECTION 269S S IS VERY CATEGORICAL. IT PRESCRIBES THAT NO PERSON SHALL TAKE OR ACCEPT FROM ANY OTHER PERSON ANY LOAN OR DEPOSIT OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR BANK DRAFT IF THE AMOUNT OF SUCH LOAN OR DEPOSIT RS. 20,000/ - OR MORE. ADMITTEDLY, THE APPELLA NT HAD TAKEN LOAN OF MONEY IN EXCESS OF RS. 20,000/ - BY WAY OF BOOK ENTRY. EVEN A BOOK ENTRY IS PROHIBITED AS IT AMOUNT S TO TAKING LOAN OTHERWISE THAN BY AN ACCOUNT PAYEE CHEQUE OR BANK DRAFT. THE APPELLANT HAS THUS COMMITTED A BREACH OF THE PROVISIONS O F SECTION 269SS. BUT THE PENALTY FOR SUCH BREACH IS NOT AUTOMATIC. IT IS TO BE SEEN WHETHER THE APPELLANT HAD REASONABLE CAUSE FOR THE BREACH. AS SAID BEFORE, THERE WAS NO ACTUAL RECEIPT OF LOAN BY THE APPELLANT. THE AMOUNT OF QUESTION WAS PAID ON ITS BEHALF BY ITS DIRECTOR T O THE GOVERNMENT BY WAY OF STAMP DUTY. THE APPELLANT WAS UNDER BONA FIDE BELIEF THAT ANY PAYMENT IN CASH MADE O N ITS BEHALF TO GOVERNMENT EVEN THOUGH IT MIGHT BE LOAN IN ITS HAND WOULD NOT BE IN VIOLATION OF THE PROVISIONS OF SECTI ON 269SS. IN MY OPINION THIS IS A REASONABLE CAUSE FOR THE FAILURE TO STRICTLY COMPLY WITH THE PROVISIONS OF SECTION 269SS. THERE WAS NO CASE FOR LEVY OF PENALTY U/S 271D. I, THEREFORE, CANCEL THE PENALTY IN COURSE OF RS.6,51,000/ - 7. FROM THE ABOVE, I T IS EVIDENT THAT IT IS A CASE OF BOOK ENTRY AND THE ASSESSEE DID NOT TAKE CASH DIRECTLY FROM THE DIRECTORS. THUS, THERE IS NO ACTUAL RECEIPT OF LOAN I N C A S H . IT IS AN UNDISPUTED FACT THAT THE LOAN IN QUESTION WAS TAKEN THROUGH BOOK ENTRIES FOR THE PURPOSE OF PA YMENT TO THE GOVERNMENT ACCOUNT BY WAY OF STAMP 3 DUTY. CONSIDERING THE SAME, WE ARE OF THE OPINION THAT THE ORDER OF THE CIT (A) IS FAIR AND REASONABLE AND IT DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUNDS RAISED BY THE REVENUE ARE DISMISSED. 8. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUN CED IN THE OPEN COURT ON 1 0 T H FEBRUARY, 2015. S D / - S D / - (VIJAY PAL RAO) (D. KARUNAKARA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; 1 0 .2.2015 . . ./ OKK , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . //TRUE COPY// / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI