THE DCIT, Kakinada V. M/s Sudha Agro Oil & Chemical Industries Ltd., Samalkot

ITA 196/VIZ/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 2009 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 year(s) 11 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 28-03-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Non-deduction of tax; Reasonable cause; Tax effect

Judgement Text

ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NOS.191/VIZAG/2013 ( / ASSESSMENT YEAR: 2006-07) M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD. SAMALKOT VS. ADDL. CIT, KAKINADA [PAN: AADCS 1177N ] ( / APPELLANT) ( / RESPONDENT) ./I.T.A.NOS.196/VIZAG/2013 ( / ASSESSMENT YEAR: 2006-07) ADDL. CIT, KAKINADA VS. M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD. SAMALKOT [PAN: AADCS 1177N ] ( / APPELLANT) ( / RESPONDENT) / APPELLANT BY : SHRI G.V.N. HARI, AR / RESPONDENT BY : SHRI M.N. MURTHY NAIK, DR / DATE OF HEARING : 21.03.2016 / DATE OF PRONOUNCEMENT : 24.03.2016 ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 2 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THESE CROSS APPEALS FILED BY THE ASSESSEE, AS WELL AS REVENUE ARE DIRECTED AGAINST THE ORDER OF CIT(A), VISAKHAPATNAM DATED 24.1.2013 AND IT PERTAINS TO THE ASSESSMENT YEAR 2006-07. ITA.NO. 191/V/2013 2. THE BRIEF FACTS OF THE CASE ARE THAT, FROM THE A SSESSMENT RECORDS, IT WAS NOTICED THAT THE ASSESSEE HAS ACCEPTED DEPOS ITS IN CONTRAVENTION OF SECTION 269SS OF THE INCOME TAX ACT, 1961 (HEREI NAFTER CALLED AS THE ACT) FOR WHICH PENALTY PROCEEDINGS U/S 271D OF THE ACT WAS INITIATED BY THE ADDL. CIT KAKINADA. THE ADDITIONAL CIT, AFTER C ONSIDERING THE SUBMISSIONS OF ASSESSEE, LEVIED PENALTY OF RS.11,80 ,000/- U/S 271D OF THE ACT, FOR CONTRAVENTION OF THE PROVISIONS OF SEC TION 269SS OF THE ACT. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE AS SESSEE HAS REITERATED THE SUBMISSIONS MADE BEFORE THE A.O.. THE ASSESSEE FURTHER SUBMITTED THAT, A.O. WAS NOT CORRECT IN LEVYING THE PENALTY U /S 271D OF THE ACT, AS THE DEPOSITS ACCEPTED BY THE COMPANY ARE FROM THE C LOSE RELATIVES OF THE DIRECTORS AND FEW DEPOSITS WERE RENEWAL OF THE EXISTING DEPOSITS ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 3 HELD BY THE COMPANY. ACCORDINGLY, THE ASSESSEE HAS CLASSIFIED DEPOSITS IN TO 3 PARTS -(1) DEPOSIT ACCEPTED FROM FRIENDS AN D RELATIVES OF DIRECTORS (2) RENEWAL OF EXISTING DEPOSITS HELD BY THE COMPAN Y AND (3) FRESH DEPOSITS ACCEPTED DURING THE FINANCIAL YEAR. IN RES PECT OF DEPOSIT ACCEPTED FROM RELATIVES OF THE DIRECTOR, IT WAS SUB MITTED THAT THE ASSESSEE HAS ACCEPTED CASH DEPOSITS FROM GREAT GRAN D CHILDREN OF MANAGING DIRECTOR AND THE DEPOSITORS HAVE DIRECTLY DEPOSITED THE CASH INTO THE BANK ACCOUNT OF THE COMPANY. THE ASSESSEE FURTHER SUBMITTED THAT THE IDENTITY OF THE DEPOSITORS AND GENUINENESS OF THE TRANSACTION HAS BEEN PROVED. THEREFORE, THE A.O. CANNOT LEVY PE NALTY U/S 271D OF THE ACT. SIMILARLY, IN RESPECT OF RENEWAL OF DEPOSI TS, THE ASSESSEE SUBMITTED THAT THE A.O. WAS ERRED IN HOLDING THAT E VEN FOR RENEWAL OF EXISTING DEPOSITS THE PENALTY IS LEVIABLE U/S 271D OF THE ACT. IT WAS FURTHER SUBMITTED THAT IT HAS RENEWED THE EXISTING DEPOSIT BY PASSING NECESSARY JOURNAL ENTRIES IN THE BOOKS OF ACCOUNTS AND THE JOURNAL ENTRIES CANNOT BE CONSIDERED AS ACCEPTANCE OF FRESH DEPOSITS. THE ASSESSEE FURTHER SUBMITTED THAT IN RESPECT OF FRESH DEPOSITS ACCEPTED DURING THE YEAR, THE DEPOSITORS HAVE INSISTED FOR C ASH PAYMENTS. THEREFORE, IT WAS OBLIGED TO ACCEPT THE DEPOSITS IN CASH. HOWEVER, IT HAS COLLECTED THE IDENTITY AND CREDITWORTHINESS OF THE DEPOSITORS WHICH WAS NOT DOUBTED BY THE A.O. ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 4 4. THE CIT(A) AFTER CONSIDERING THE EXPLANATIONS FU RNISHED BY THE ASSESSEE CONFIRMED THE PENALTY IN RESPECT OF DEPOSI TS ACCEPTED FROM RELATIVES AND FRESH DEPOSITS DURING THE YEAR. THE C IT(A) HELD THAT THE COPIES OF THE BANK ACCOUNT FILED BY THE ASSESSEE CL EARLY SHOWS THAT THE ASSESSEE HAS ACCEPTED CASH DEPOSITS OF RS.20,000/- AND ABOVE. THE ASSESSEE COULD NOT GIVE ANY REASONS FOR NOT HAVING ACCEPTED THE DEPOSITS BY WAY OF CHEQUE. SIMILARLY, IN RESPECT O F FRESH DEPOSITS ACCEPTED DURING THE YEAR, THE CIT(A) HELD THAT THE DEPOSITS WERE ACCEPTED IN CASH AND THE ASSESSEE HAS NOT FURNISHED ANY REASONS FOR NOT ACCEPTING THE DEPOSITS BY WAY OF CHEQUE. THE CONTEN TION OF THE ASSESSEE THAT THE DEPOSITORS WERE INSISTED FOR CASH DEPOSITS IS NOT ACCEPTABLE. THE ASSESSEE HAS CLEARLY VIOLATED THE P ROVISIONS OF SECTION 269SS OF THE ACT, CONSEQUENTLY PENALTY IS LEVIABLE U/S 271D OF THE ACT. AS REGARDS, THE RENEWAL OF EXISTING DEPOSIT, THE CI T(A) HELD THAT THE ASSESSEE HAS FILED LEDGER EXTRACT OF TRANSACTIONS, WHICH CLEARLY INDICATE THAT THESE WERE RENEWALS AND NOT CASH DEPOSITS. ACC ORDINGLY, THE PENALTY LEVIED TO THE TUNE OF RS.4,20,000/-, IN RES PECT OF RENEWALS OF EXISTING DEPOSITS HAS BEEN DELETED. AGGRIEVED BY T HE CIT(A) ORDER, THE REVENUE AS WELL AS ASSESSEE ARE IN APPEAL BEFORE US . ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 5 5. THE LD. A.R. OF THE ASSESSEE SUBMITTED THAT THE CIT(A) WAS ERRED IN CONFIRMING THE PENALTY LEVIED IN RESPECT OF DEPO SIT ACCEPTED FROM THE FAMILY MEMBERS OF MANAGING DIRECTOR. THE A.R. FURTH ER SUBMITTED THAT THE ASSESSEE HAS PROVED THE GENUINENESS OF THE TRAN SACTIONS AND FURNISHED THE IDENTITY OF THE DEPOSITORS. THE DEPOS ITORS HAVE DIRECTLY DEPOSITED THE CASH INTO THE BANK ACCOUNT OF THE ASS ESSEE, THEREFORE, IT CANNOT BE HELD THAT THERE WAS A VIOLATION OF SECTIO N 269SS OF THE ACT. THOUGH, ASSESSEE HAS RECEIVED CASH DEPOSITS OF RS.2 0,000/- AND MORE, THE REASONABLENESS OF THE EXPLANATIONS OFFERED BY T HE ASSESSEE TO BE CONSIDERED. THE ASSESSEE HAS EXPLAINED THAT ONCE, T HE GENUINENESS OF THE TRANSACTION IS NOT DOUBTED, JUST BECAUSE CASH D EPOSIT HAS BEEN ACCEPTED, PENALTY CANNOT BE LEVIED. THE ASSESSEE FU RTHER SUBMITTED THAT IN RESPECT OF FRESH DEPOSITS, THE DEPOSITORS HAVE I NSISTED FOR CASH PAYMENTS, THEREFORE, THE ASSESSEE WAS OBLIGED TO AC CEPT THE DEPOSITS IN CASH. SINCE, THE DEPOSITORS HAVE INSISTED FOR CASH PAYMENT, IT CANNOT BE HELD THAT THERE WAS A VIOLATION OF THE PROVISIONS O F SECTION 269SS OF THE ACT. THE A.R. FURTHER SUBMITTED THAT IN CASE PENALT Y IS LEVIABLE, THE UPPER LIMIT PROVIDED U/S 269SS OF THE ACT SHOULD BE EXCLUDED FOR LEVYING THE PENALTY U/S 271D OF THE ACT. IN SUPPORT OF HIS ARGUMENTS RELIED UPON THE JUDGEMENT OF HONBLE HIGH COURT OF BOMBAY, IN T HE CASE OF CIT VS. MADHUKAR B. PAWAR 319 ITR 255 AND ALSO ITAT KOLKATA BENCH DECISION, ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 6 IN THE CASE OF SRI PINTU KARMAKAR VS. JCIT ITA NO.1 911/KOLKATA/2012 AND SUBMITTED THAT PENALTY U/S 271D OF THE ACT IS T O BE COMPUTED ON THE AMOUNT OF LOAN WHICH EXCEEDS RS.20,000/- AS PER MISSIBLE U/S 269SS OF THE ACT. 6. THE LD. D.R. SUBMITTED THAT THE CIT(A) HAS RIGHT LY CONFIRMED THE PENALTY IN RESPECT OF DEPOSITS FROM RELATIVES AND F RESH DEPOSITS, AS THE ASSESSEE HAS ACCEPTED CASH DEPOSITS OF RS. 20,000/- AND MORE IN VIOLATION OF SEC. 269SS. THE D.R. FURTHER SUBMITTED THAT THE ASSESSEE, DURING THE COURSE OF PROCEEDINGS BEFORE THE A.O., N OT FURNISHED ANY EVIDENCE TO JUSTIFY HIS CLAIM THAT THERE WAS NO CAS H DEPOSITS. THE D.R. FURTHER SUBMITTED THAT THE ACT IS CLEARLY SPECIFIES FOR LEVY OF PENALTY, WHERE THE ASSESSEE HAS ACCEPTED CASH DEPOSITS OF RS .20,000/- AND MORE. THE CASE LAW RELIED UPON BY THE ASSESSEE ARE UNDER DIFFERENT SET OF FACTS, WHICH CANNOT BE APPLIED TO THE FACTS OF T HE ASSESSEE CASE. THEREFORE, REQUESTED TO UPHOLD THE PENALTY ORDER PA SSED BY THE A.O. 7. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE A.O. LEVIED PENALTY U/S 271D OF THE ACT, FOR CONTRA VENTION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. THE A.O. HA S CLASSIFIED THE VIOLATIONS INTO 3 PARTS. (1) THE DEPOSITS FROM CLOS E RELATIVES OF MANAGING ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 7 DIRECTOR (2) RENEWAL OF EXISTING DEPOSITS AND (3) F RESH DEPOSIT ACCEPTED DURING THE FINANCIAL YEAR. THE A.O. WAS OF THE OPIN ION THAT THE ASSESSEE HAS NOT PROVED THE REASONABLE CAUSE FOR ACCEPTING T HE CASH DEPOSITS. IT WAS THE CONTENTION OF THE ASSESSEE THAT IT HAS ACCE PTED DEPOSITS FROM CLOSE RELATIVES AND THE PARTIES ARE IDENTIFIABLE AN D THE TRANSACTION WAS GENUINE. THE A.O. CANNOT LEVY PENALTY, MERELY BECAU SE IT WAS ACCEPTED IN CASH, UNLESS PROVE THE TRANSACTION IS NOT GENUIN E. THE ASSESSEE FURTHER SUBMITTED THAT PENALTY CANNOT BE LEVIED FOR TECHNICAL MISTAKES. WE DO NOT FIND FORCE IN THE ARGUMENTS OF THE ASSESSE E, FOR THE REASON THAT THE ASSESSEE SHOULD PROVE BEYOND DOUBT THAT TH ERE WAS NO VIOLATION REFERRED TO SECTION 269SS OF THE ACT, SO AS TO SEEK IMMUNITY FROM LEVY PENALTY U/S 271D OF THE ACT. IN THE PRESENT CASE O N HAND, IT WAS PROVED BEYOND DOUBT THAT THE ASSESSEE HAS ACCEPTED CASH DE POSITS OF RS. 20,000/- AND MORE, IN CONTRAVENTION OF SECTION 269S S. THE ASSESSEE HAS FAILED TO FURNISH ANY EXPLANATION FOR THE VIOLATION S REFERRED TO IN SECTION 269SS OF THE ACT. THEREFORE, WE ARE OF THE OPINION THAT THE A.O. HAS RIGHTLY LEVIED PENALTY U/S 271D OF THE ACT, IN RESP ECT OF CASH DEPOSITS FROM RELATIVES AND FRESH DEPOSITS. 8. COMING TO THE ALTERNATIVE ARGUMENTS OF THE ASSES SEE. THE ASSESSEE SUBMITTED THAT PENALTY U/S 271D OF THE ACT , CAN BE LEVIED ON ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 8 THE AMOUNT WHICH IS IN EXCESS OF RS.20,000/-. IN OT HER WORDS, NO PENALTY CAN BE LEVIED FOR THE AMOUNT UP TO RS.20,00 0/-. IN CASE, EACH LOAN AMOUNT EXCEEDS RS.20,000/-, THE PERMISSIBLE AM OUNT OF RS.20,000/- HAS TO BE ADJUSTED WHILE LEVYING PENALT Y U/S 271D OF THE ACT. IN SUPPORT OF ITS ARGUMENTS, RELIED UPON THE J UDGEMENT OF HONBLE HIGH COURT OF BOMBAY, IN THE CASE OF CIT VS. MADHUK AR B. PAWAR REPORTED IN 319 ITR 255 (2009). WE HAVE GONE THROUGH THE CASE LAW RELIED UPON BY THE ASSESSEE, IN THE LIGHT OF FACTS OF THE PRESENT CASE AND FINDS THAT THE HONBLE BOMBAY HIGH COURT HAS CONSID ERED THE ISSUE OF LEVY OF PENALTY U/S 271D OF THE ACT AND HELD THAT T HE PENALTY IS LEVIABLE ONLY IN RESPECT OF AMOUNT IN EXCESS OF RS.20,000/-. THE RELEVANT PORTION IS REPRODUCED HEREUNDER: IT IS NOW WELL SETTLED THAT CIRCULARS ISSUED BY CBD T ARE STATUTORY IN CHARACTER AND ARE BINDING ON THE DEPARTMENTAL AUTHO RITIES. THE AUTHORITIES INCLUDING AO AND OTHER CONSEQUENTLY WOU LD BE BOUND BY THAT CIRCULAR. IN THAT INSTANT CASE, CBDT FOR THE PURPOS E OF ATTRACTING S. 271D HAS SET OUT THAT THE LOAN OR DEPOSIT SHOULD BE IN E XCESS OF RS.20000. IT IS TRUE THAT WHAT CBDT HAS STATED MAY BE CONTRARY TO T HE EXPRESS LANGUAGE OF S. 269SS WHICH USES THE EXPRESSION TWENTY THOUS AND RUPEES OR MORE. THE LAW AND THE CBDT CIRCULARS CAN BE SPELLED OUT F ROM THE FOLLOWING JUDGEMENTS OF THE SUPREME COURT. IN NAVNIT 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 W HICH WAS ISSUED BY THE BOARD WOULD BE BINDING ON ALL OFFICERS AND PERSONS EMPLOYED IN THE EXECUTION OF THE ACT UNDER S.5(8) OF THE ACT. NAV NIT LAL (SUPRA) WAS FOLLOWED IN ELLERMAN LINES LTD. VS. CIT 1972 CTR (S C) 71: (1971) 82 ITR 913 (SC). IN UCO BANK VS. CIT (1999) 154 CTR (SC) 8 8: (1999) 237 ITR 889 (SC), THE LAW WAS RESTATED AND IT WAS HELD THAT CIRCULARS OF CBDT ARE LEGALLY BINDING ON THE REVENUE AND THIS BINDING CHA RACTER ATTACHES TO THE CIRCULARS EVEN IF THEY BE FOUND NOT IN ACCORDANCE W ITH THE CORRECT INTERPRETATION OF THE SECTION AND THEY DEPART OR DE VIATE FROM SUCH ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 9 CONSTRUCTION, WHEN THEY ARE ISSUED IN EXERCISE OF T HE STATUTORY POWERS UNDER S. 119. IT WAS HOWEVER CLARIFIED THAT THE BO ARD CANNOT PRE-EMPT A JUDICIAL INTERPRETATION OF THE SCOPE AND AMBIT OF T HE PROVISION AND FURTHER COULD NOT IMPOSE A BURDEN ON THE TAXPAYER HIGHER TH AN WHAT THE ACT ITSELF, ON A TRUE INTERPRETATION, ENVISAGES. IT WA S OBSERVED THAT THE BOARD HAS THE STATUTORY POWER UNDER S. 119 TO TONE DOWN T HE RIGOUR OF THE LAW FOR THE BENEFIT OF THE ASSESSEE BY ISSUING CIRCULAR S TO ENSURE A PROPER ADMINISTRATION OF THE FISCAL STATUTE. IN CST VS. IN DRA INDUSTRIES (2001) 168 CTR (SC) 50 : (2001) 248 ITR 338 (SC), THE COUR T FURTHER OBSERVED THAT THE TAXING AUTHORITY CANNOT BE HEARD TO ADVANC E AN ARGUMENT THAT IT IS CONTRARY TO THAT INTERPRETATION. 9. THE ITAT KOLKATA BENCH, IN THE CASE OF SHRI PINT OO KARMAKAR VS. JCIT (SUPRA) HAS CONSIDERED SIMILAR ISSUE. THE COOR DINATE BENCH, BY FOLLOWING THE JUDGEMENT OF BOMBAY HIGH COURT, DECID ED THE ISSUE IN FAVOUR OF THE ASSESSEE AS UNDER: 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUG H FACTS AND CIRCUMSTANCES OF THE CASE. BEFORE US LD. COUNSEL FO R THE ASSESSEE ADMITTED THE FACT THAT THE ASSESSEE HAD RECEIVED A SUM OF RS20,000/- FROM EACH OF ELEVEN CREDITORS TOTALING TO RS.2,20,0 00/- 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 HAVMG ANY BANK ACCOUNT. HENCE, HE HAS NO OTHER ALTERNATIVE EXCEPT TO RECEIVE LOANS IN CASH FOR AN AMOUNT OF RS20,000/ - FROM EACH OF THEM. THESE FACTS ARE UNDISPUTED BUT BEFORE US LD. COUNSE L FOR THE ASSESSEE RELIED ON CBDT CIRCULAR NO572 DATED 0308.1990 REPOR TED IN (1999) 87 CTR (ST.) 1, AND STATED THAT THIS CIRCULAR HAS CLEA RLY BROUGHT OUT THE PROVISION OF SECTION 269SS EXPLAINING THAT FOR TAKI NG OR ACCEPTING ANY LOAN OR DEPOSIT IN EXCESS OF RS.20,000/-' LD. COUNSEL FO R THE ASSESSEE STATED THAT THE WORD IN EXCESS OF AMOUNTS EXCEEDING RS.20, 000/-. HE ALSO RELID ON THE DECISION OF HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MADHUKAR B. PAWAR (2008) 218 CTR 59, WHEREIN HON'BL E BOMBAY HIGH COURT VIDE PAN 4 CONSIDERED THE ISSUE AS UNDER: '4. IT IS NOW WELL SETTLED THAT CIRCULARS ISSUED BY CBDT ARE STATUTORY CHARACTER AND ARE BINDING ON THE DEPARTME NTAL AUTHORITIES. THE AUTHORITIES INCLUDING AO AND OTHER CONSEQUENTLY WOULD BE BOUND BY THAT CIRCULAR. IN THE INSTANT CASE , CBDT FOR THE PURPOSE OF ATTRACTING 271D HAS SET OUT THAT THE L OAN OR DEPOSIT SHOULD BE IN EXCESS OF RS. 20000/- IS TRUE THAT WHA T CBDT HAS STATED MAY BE CONTRARY TO THE EXPRESSED LANGUAGE OF S. 269S5 WHICH USES THE EXPRESSION 'TWENTY THOUSAND RUPEES O R MORE'. THE ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 10 LAW AND THE CBDT CIRCULARS CAN BE SPELLED OUT FROM THE FOLLOWING JUDGMENTS OF THE SUPREME COURT IN NAVNIT LAL C. JAV ERI VS. KK SEN. AAC (1965) 561TR 198 (SC), A CONSTITUTION BENC H OF THE SUPREME COURT OBSERVED 'IT IS CLEAR THAT A CIRCULAR OF THE &1S WHICH WAS ISSUED BY THE BOARD WOULD BE BINDING ON A LL OFFICERS AND PERSONS EMPLOYED IN THE EXECUTION OF THE ACT UN DER S. 5(8) OF THE ACT' NAVAIT LAL (SUPRA) WAS FOLLOWED IN ELLENNA N LINES LTD. VS. CIT 1972 CTR (SC) 71 :(1971) 82 ITR 913 (SC). IN U CO BANK VS. CIT (1999) 154 CTR (SC) 88:(1999) 237 ITR 889 (SC), THE LAW WAS RESTATED AND IT WAS HELD THAT CIRCULAR OF CBDT ARE LEGALLY BINDING ON THE REVENUE AND THIS BINDING CHARACTER A TTACHES TO THE CIRCULARS EVEN IF THEY BE FOUND NOT IN ACCORDANCE W ITH THE CORRECT INTERPRETATION OF THE SECTION AND THEY DEPART OR DE VIATE FROM SUCH CONSTRUCTION, WHEN THEY ARE ISSUED IN EXERCISE OF T HE STATUTORY POWERS UNDER A. 119. IT WAS HOWEVER CLARIFIED THAT THE BOARD CANNOT PRE-EMPT A JUDICIAL INTERPRETATION OF THE SC OPE AND AMBIG OF THE PROVISION AND FURTHER HER COULD NOT 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 S TATUTORY POWER UNDER S. 119 TO TONE DOWN THE RIGOUR OF THE L AW FOR THE BENEFIT OF THE ASSESSEE BY ISSUING CIRCULARS TO ENS URE A PROPER ADMINISTRATION OF THE FISCAL STATUTE. IN CST VS. IN DRA INDUSTRIES (2001) 168 CT!? (SC) 50: (2001) 248 FIR 338 (SC), T HE COURT FURTHER OBSERVED THAT THE TAXING AUTHORITY CANNOT B E HEARD TO ADVANCE AN ARGUMENT THAT IT IS CONTRARY TO THAT INT ERPRETATION. 5. CONSIDERING ABOVE, WE FIND THAT THE FACTS ARE EX ACTLY IDENTICAL WHAT WAS BEFORE THE HON'BLE BOMBAY HIGH COURT (SUPR A) AND IN EACH OF CASE CASH LOAN IS NOT EXCEEDING RS.20,000/- RATHER IT IS EXACTLY RS.20,000/-. SINCE THERE IS A CIRCULAR AND WHICH IS A BENEFICIAL CIRCULAR UNDER SECTION 269S8 OF THE ACT AND HONBLE BOMBAY H IGH COURT HAS INTERPRETED CIRCULAR NO. 572 DATED 3 AUGUST 1990 (S UPRA) WHEREIN VIDE PARS, 3 RELEVANT PORTION OF CLAUSE 43 IS AS UNDER: '43. SECS. 271C, 271D AND 271E, WHICH WERE INSERTED IN THE IT ACT W.E.F. 1ST APRIL, 1989, BY THE DIRECT TAX LAWS (AME NDMENT) ACT, 1987, PROVIDED FOR THE LEVY OF PENALTIES FOR CERTAI N DEFAULTS. PENALTY UNDER S. 271C WAS LEVIED FOR FAILURE TO DEDUCT TAX AT SOURCE. PENALTY UNDER S. 271D 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 A N ACCOUNT PAYEE CHEQUE OR BANK DRAFT. PENALTY7 UNDER S. 271E MAY BE LEVIED FOR FAILURE TO COMPLY WITH THE PROVISIONS OF S. 269 T 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 DRAFT. ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 11 10. THE ASSESSEE RELIED UPON HONBLE RAJASTHAN HIGH COURT, JUDGEMENT, IN CASE OF CIT VS. AJANTA DYING & PRINTI NG MILLS (2003) 264 ITR 505. THE HONBLE HIGH COURT, AFTER CONSIDERING THE RELEVANT FACTS HELD THAT PENALTY U/S 271D OF THE ACT IS TO BE COMP UTED ON THE AMOUNT OF LOAN WHICH EXCEEDS RS.20,000/- AS PERMISSIBLE U/ S 269SS OF THE ACT. 11. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND ALSO RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE B ENCH, WE ARE OF THE OPINION THAT PENALTY CAN BE LEVIED ON THE AMOUNTS O F LOAN WHICH EXCEEDS THE AMOUNT OF RS.20,000/-. THEREFORE, THE A .O. IS DIRECTED TO EXCLUDE RS.20,000/- AS PERMISSIBLE U/S 269SS OF THE ACT, WHILE LEVYING PENALTY U/S 271D OF THE ACT. ACCORDINGLY, WE DIRECT THE A.O. TO RE- COMPUTE THE PENALTY, AFTER EXCLUDING RS.20,000/- IN EACH CASES AS PERMISSIBLE U/S 269SS OF THE ACT. 12. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ITA 196/VIZAG/2013: 13. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A), VISAKHAPATNAM DATED 24.1.2013 FOR THE ASSESSMENT YE ARS 2006-07. 14. WHEN THIS APPEAL IS TAKEN UP FOR HEARING, THE LD . COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE TAX EFFECT INVOLVED IN THIS APPEAL IS ITA NOS.191&196/VIZAG/2013 M/S. SUDHA AGRO OIL & CHEMICAL INDUSTRIES LTD., SAM ALKOT 12 BELOW RS.10 LAKHS. AS PER THE LATEST CIRCULAR NO.2 1/2015 DATED 10.12.2015 OF CBDT BEING RETROSPECTIVE IN NATURE, T HE APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. THE LD. D.R. HAS NOT RAISED ANY OBJECTION. IN VIEW OF THE ABOVE, THIS APPEAL FILED BY THE REVENUE IS NOT MAINTAINABLE. HENCE, THE SAME IS DISMISSED. 15. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED AND THE APPEAL FILED BY THE REVENUE IS DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 24 TH MAR16. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 24.03.2016 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT M/S. SUDHA AGRO OIL & CHEMICAL I NDUSTRIES LTD., SAMALKOT, 2. / THE RESPONDENT THE ACIT, KAKINADA 3. + / THE PRINCIPAL CIT-2, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM