ITO, Pondicherry V. Late Shri Muthukaruppan, Pondicherry

ITA 1963/CHNY/2013

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 9463 (ITAT-CHENNAI)
• Duration Of Justice: 2 year(s) 5 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-04-2016
• Appeal Filed By: Department
• Bench Allotted: D
• Assessment Year: 2010-2011
• Appeal Filed On: 07-11-2013
• Court: TRIBUNAL
• Keywords: Sale consideration of property below Jantri Value; Search and seizure; Reasonable cause
• Section: 273B; 27

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, CHENNAI , ! ' # , $ %& BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./ ITA NOS. 1959 TO 1964/MDS/2013 / ASSESSMENT YEARS : 2006-07 TO 2011-12 THE INCOME-TAX OFFICER, WARD-I(1), D.P.THOTTAM, MUTHIALPET, PONDICHERRY 605 003. ( /APPELLANT) VS LATE K. MUTHUKARUPPAN R/BY M PALANI ADAIKALAM NO.115, MUTHIAH MUDALIAR STREET, MUTHIALPET, PONDICHERRY 605 003. PAN AAJPM4750C ( /RESPONDENT) / APPELLANT BY : MS. VIJAYA PRABHA, JCIT / RESPONDENT BY : SHRI S. SRIDHAR, ADVOCATE / DATE OF HEARING : 18.02.2016 ! / DATE OF PRONOUNCEMENT : 22.04.2016 ' / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER THESE APPEALS BY THE REVENUE ARE DIRECTED AGAINS T DIFFERENT ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS) FOR THE ASSESSMENT YEARS 2006-07 TO 2011-12. THE APPE ALS ARISE - - ITA 1959 TO 1964/13 2 OUT OF THE ORDERS OF PENALTY PASSED U/S.271D AND 27 1E OF THE I.T. ACT, 1961. THE REVENUE HAS RAISED THE GROUND IN A LL THESE APPEALS WITH REGARD TO DELETION OF PENALTIES U/S.27 1D OF THE ACT. 2. THE FACTS OF THE CASE ARE THAT A SURVEY U/S.133A OF THE ACT WAS CONDUCTED IN THE BUSINESS PREMISES OF SHRI A. K ANNAN, PROP. OF VADAMALAYAN FINANCE ON 8.10.2011 BY INCOME TAX OFFICER, WARD-I(1), PUDUCHERRY. M/S. VADAMALAYAN F INANCE GAVE MONEY TO DIFFERENT PERSONS AFTER DEDUCTING INTEREST FOR 10 MONTHS. THE AMOUNT IS DIVIDED INTO 10 MONTHLY INSTALMENTS. ONCE THE REPAYMENT OF 10 MONTHLY INSTALMENTS ARE OVER, AGAIN THE SAME PERSON TOOK FURTHER LOAN. HE CHARGED INTEREST ON T HE LOAN AT 1% PER MONTH. THE WHOLE TRANSACTION WAS DONE BY CASH ONLY I.E. NO CHEQUES OR DRAFTS CAME INTO PLAY. HENCE, THE PERSO NS WHO HAD TAKEN AND REPAID THE LOANS VIOLATED BOTH THE PROVIS IONS OF 269SS & 269T OF THE IT ACT FOR WHICH THEY WERE LIABLE FOR PENALTY U/S & 271E OF THE IT ACT. DURING THE COURSE OF SURVEY IT WAS NOTICED THAT M/S VADAMALAYAN FINANCE (PROP. SRI A.K ANNAN) HAD ADVANCED THE FOLLOWING LOANS TO THE ASSESSEE IN CASH ON VARIOUS DATES AND A L SO RECEIVED THE CASH ON VARIOUS DATES FROM THE ASSESSEE: - - ITA 1959 TO 1964/13 3 A.Y. 2006 - 07 CASH LOAN: 11.12.2005 20 LAKHS CASH REPAYMENT: RS.2 LA KHS A.Y. 2007 -08 CASH LOAN: 06.12.2006 20 LAKHS CASH REPAYMENT: RS.24 L AKHS A.Y. 2008 -09 CASH LOAN: 06.10.2007 20 LAKHS CASH REPAYMENT: RS.24 L AKHS A.Y. 2009 -10 CASH LOAN: 07.08.2008 20 LAKHS CASH REPAYMENT: RS.24 L AKHS A.Y. 2010 -11 CASH LOAN: 06.06.2009 20 LAKHS CASH REPAYMENT: RS.24 L AKHS A.Y. 2 011-12 CASH LOAN: 07.04.2010 20 LAKHS CASH REPAYMENT: RS.24 L AKHS 19.08.2010 50 LAKHS THE INFORMATION COLLECTED AT THE T I ME OF SURVEY ACTION WAS PASSED ON TO THE JOINT COMMISSIONER OF INCOME TAX, PUDUCHERRY RANGE, PUDUCHERRY VIDE LETTER DATED 12.1 2.2011 . CONSEQUENT TO THE REFERENCE, THE JOINT COMMISSIONER OF INCOME TAX, PUDUCHERRY RANGE, PUDUCHERRY ISSUED A S HOW CAUSE NOTICES U/S 271D & 271E OF THE IT ACT TO THE ASSESSEE VIDE LETTER DATED 16.12.2011 AND HEARD THE SUBMISSI ONS OF THE ASSESSEE FROM TIME TO TIME. IN THE COURSE OF PENAL PROCEEDINGS BEFORE THE JOINT COMMISSIONER OF INCOME TAX, THE AR OF THE ASSESSEE VIDE LETTER DATED 23.02 .2012 STATED THAT PENAL PROCEEDINGS RELATES TO THE TRANSA CTIONS - - ITA 1959 TO 1964/13 4 MADE BY LATE SRI K.MUTHUKARUPPAN WHO HAD PASSED AWA Y ON 16.2.2012 AND WANTED CERTAIN TIME TO FURNISH REQUIR ED INFORMATION. THEREAFTER, THE ASSESSEE COMPLIED WITH THE PENAL PROCEEDINGS BEFORE THE JOINT COMMISSIONER OF INCOME TAX, PUDUCHERRY AND FILED VARIOUS DETAILS. NOT SATISFIED WITH THE SUBMISSIONS OF THE ASSESSEE, JOINT COMMISSIONER OF INCOME TAX, PUDUCHERRY RANGE, PUDUCHERRY PASSED PENALTY O RDERS U/S 271D & 271E OF THE IT ACT, 1961 IN THE CASE OF LATE SRI K.MUTHUKARUPPAN THROUGH LEGAL HEIR SRI PALANI ADAICALAM, NO.115, MUTHIAH MUDALI ST., MUTHIAPET, PUDUCHERRY LEVYING PENALTIES OF ` 20 LAKHS & ` 2 LAKHS RESPECTIVELY FOR THE A.Y. 2006-07. AGGRIEVED BY TH E ACTION OF THE JOINT COMMISSIONER OF INCOME TAX, THE ASSESSEE CARRIED THE MATTER BEFORE THE CIT(APPEALS) , WHO DELETED THE PENALTY U/S.271D OF THE ACT AND CONFIRM ED THE PENALTY U/S.271E OF THE ACT. 3. BEFORE US, THE LD. AR SUBMITTED THAT PENALTY OR DER PASSED BY THE CIT(APPEALS) DATED 28.8.2013 IS HAVIN G TWO PARTS. ONE IS LEVY OF PENALTY U/S.271D AND ANOTHER U/S.271E OF THE ACT. THE LD. AR FURTHER SUBMITTED THAT IN T HAT ORDER, THE - - ITA 1959 TO 1964/13 5 CIT(APPEALS) CONFIRMED THE PENALTY U/S.271E AND DEL ETED THE PENALTY U/S.271D OF THE ACT. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. THE LD. AR SUBMITTED THAT SIMI LAR ISSUE CAME FOR CONSIDERATION BEFORE THE TRIBUNAL IN ASSES SEES OWN CASE IN ITA NOS.1820 TO 1825/MDS/2013. THE TRIBUNAL VIDE ORDER DATED 31.10.2013 DELETED THE PENALTY U/S. 271 E OF THE ACT AND HAS GIVEN A FINDING THAT CIT(APPEALS) OUGHT TO HAVE DELETED THE PENALTIES LEVIED U/S. 271E, WHEN IN FAC T, FOR GOOD REASONS, HE WAS DELETING THE PENALTIES LEVIED U/S.2 71D OF THE ACT. THUS, HE SUBMITTED THAT THE ABOVE FINDING OF THE TRIBUNAL IS BEARING ON THIS ISSUE, MORE SO, THE TRIBUNAL DEL ETED THE PENALTY U/S.271E BY OBSERVING AS FOLLOWS: 15. WE HEARD SHRI S. SRIDHAR, THE LEARNED COUNSEL APPEARING FOR THE ASSESSEES AND SHRI T.N. BETGIRI, THE LEARNED JOINT COMMISSIONER OF INCOME TAX, APPEARING FOR THE REVENUE. 16. IT IS TO BE SEEN THAT THE PARTICULARS OF LOANS TAKEN BY THE ASSESSEES AND REPAYMENTS OF LOANS MADE BY THE ASSESSEES, WERE COLLECTED IN THE COURSE OF SURVEY CONDUCTED IN THE PREMISES OF SHRI A. KANNAN, WHO IS CARRYING ON THE BUSINESS OF MONEY LENDING UNDER THE NAME AND STYLE OF VADAMALAYAN FINANCE. IT IS SEEN FROM THE RECORDS, AS OBSERVED BY THE ASSESSING OFFICER, THAT SHRI A. KANNAN HAD NO LICEN CE - - ITA 1959 TO 1964/13 6 TO CARRY ON MONEY LENDING BUSINESS, BUT, STILL HE W AS CARRYING ON THE SAID BUSINESS. THE DETAILS AVAILAB LE IN THE RECORD SHOW THAT SHRI A. KANNAN HAD BEEN ADVANCING LOANS TO THE PARTIES IN CASH, AGAINST PRONOTES. THE PRONOTES ARE CANCELLED WHEN THE LOAN S ARE REPAID. THE NATURE OF THE BUSINESS CARRIED ON BY SHRI A. KANNAN SHOWS THAT THE TRANSACTIONS OF MONEY LENDING WERE, BY AND LARGE, MADE BY WAY OF CASH TRANSACTIONS. WHEN THE ASSESSEES WERE ACCEPTING LOANS FROM SHRI A. KANNAN AND REPAYING LOANS TO HIM , IT IS OBVIOUS THAT THE TRANSACTIONS MUST BE IN CASH AS INSISTED BY SHRI A. KANNAN. THAT ACTS AS A REASONA BLE CAUSE IN THE CASE OF THESE ASSESSEES REGARDING ACCEPTANCE AND REPAYMENT OF LOANS TO SHRI A. KANNAN , WHO IS THE PROPRIETOR OF M/S VADAMALAYAN FINANCE. 17. WHILE CONSIDERING THE CIRCUMSTANCES LEADING TO ACCEPTING THE LOANS IN CASH, AND WHILE DELETING THE PENALTY LEVIED ON ASSESSEES UNDER SECTION 271D, THE COMMISSIONER OF INCOME TAX (APPEALS) MIGHT HAVE CONSIDERED THIS CIRCUMSTANCE ALSO WHILE COMING TO A CONCLUSION THAT THE ASSESSEES HAD REASONABLE CAUSE FOR ACCEPTING LOANS IN CASH. 18. THE EXPLANATIONS GIVEN BY THE ASSESSEES TIME AND AGAIN BEFORE THE LOWER AUTHORITIES HAVE EQUALLY ESTABLISHED SIMILAR CIRCUMSTANCES UNDER WHICH THEY WERE CONSTRAINED TO REPAY THE LOANS IN CASH. IN CE RTAIN CASES, THE CREDITORS INSIST REPAYMENT OF LOANS IN C ASH. IN CERTAIN CASES, THE REPAYMENT OF LOANS IS PRESSED AND LOANS HAVE TO BE REPAID URGENTLY WITHOUT WAITIN G FOR ANY BANKING FORMALITY. EQUALLY IS THE CIRCUMSTANCE CREATED BY THE MODE OF MONEY LENDING BUSINESS CARRIED ON BY SHRI A. KANNAN. 19. THE COMMISSIONER OF INCOME TAX (APPEALS), WHILE DELETING THE PENALTY LEVIED UNDER SECTION 271 D, HAS APPRECIATED THE CIRCUMSTANCE WHICH COMPELLED TH E ASSESSEES TRANSACTION IN CASH; BUT HE HAS SOMEHOW FAILED TO TAKE THE SAME YARDSTICK IN APPRECIATING T HE - - ITA 1959 TO 1964/13 7 CIRCUMSTANCES IN WHICH THE ASSESSEES WERE COMPELLED TO MAKE THE REPAYMENTS OF LOANS IN CASH. 20. THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. V. STATE OF ORISSA (83 ITR 26) HAS OBSERVED THAT AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARIL Y BE IMPOSED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CO NDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF ITS OBLIGATION. THE COURT OBSERVED TH AT PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT WAS LAWFUL TO DO SO. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATION IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDI CIALLY AND ON A CONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. 21. WHEN WE EXAMINE THE FACTS AND CIRCUMSTANCES OF THE CASES PLACED BEFORE US, WE FIN D THAT THE COMMISSIONER OF INCOME TAX (APPEALS), WHO HAS JUSTIFIABLY DELETED THE PENALTY LEVIED UNDER SE CTION 271D, HAS ACTED AGAINST THE PRINCIPLE DECLARED BY HONBLE SUPREME COURT IN THE ABOVE JUDGMENT OF HINDUSTAN STEEL LTD. V. STATE OF ORISSA. 22. IN THE CASE OF ASSISTANT DIRECTOR OF INSPECTION (INVESTIGATION) V. KUM. A.B. SHANTHI, THE HONBLE SUPREME COURT HAS EXAMINED THE OBJECT OF INTRODUCIN G SECTION 269SS IN THE INCOME-TAX ACT, 1961. THE COU RT HELD THAT IT IS TO ENSURE THAT A TAXPAYER IS NOT AL LOWED TO GIVE FALSE EXPLANATION FOR HIS UNACCOUNTED MONEY, O R IF HE HAS GIVEN SOME FALSE ENTRIES IN HIS ACCOUNTS, HE SHALL NOT ESCAPE BY GIVING FALSE EXPLANATION FOR TH E SAME. THE COURT OBSERVED THAT DURING SEARCH AND SEIZURES, UNACCOUNTED MONEY WAS UNEARTHED AND THEY WOULD USUALLY GIVE THE EXPLANATION THAT HE HAD BORROWED OR RECEIVED DEPOSITS FROM HIS RELATIVES OR FRIENDS THAT IT IS EASY FOR THE SO-CALLED LENDER AL SO TO - - ITA 1959 TO 1964/13 8 MANIPULATE HIS RECORDS LATER TO SUIT THE PLEA OF TH E TAXPAYER. THE HONBLE APEX COURT OBSERVED THAT THE MAIN OBJECT OF SECTION 269SS WAS TO CURB THIS MENAC E. 23. IN THE PRESENT CASE, NO ADVERSE CIRCUMSTANCES EXISTED AGAINST THESE ASSESSEES AS APPREHENDED BY HONBLE SUPREME COURT IN THE ABOVE DECISION. IN TH E PRESENT CASE, ALL THE TRANSACTIONS HAVE BEEN DULY RECORDED IN THE BOOKS OF THE CREDITOR AS WELL AS IN THE BOOKS OF THE ASSESSEES. THE LOANS ACCEPTED BY THE ASSESSEES HAVE BEEN MERGED IN THE BUSINESS FINANCE OF THE ASSESSEES REFLECTING IN THEIR BOOKS OF ACCOU NT. THE FUNDS REQUIRED FOR REPAYMENT OF LOANS WERE ALSO GENERATED OUT OF THE BUSINESS AS REFLECTED IN THEIR BOOKS OF ACCOUNT. THE DETAILS OF THE PARTIES ARE AVAILABLE ON RECORD. THE ASSESSEES AS WELL AS LEND ERS ARE ALL REGULARLY ASSESSED TO INCOME-TAX. THE IDEN TITY OF THE PARTIES ARE BEYOND DOUBT. THE FACTUM OF LOA N AND REPAYMENTS ARE BEYOND DOUBT. THE GENUINENESS OF THE TRANSACTIONS IS ALSO NOT IN DOUBT. IT IS AL SO ESTABLISHED BY THE ASSESSEES THAT THERE EXISTED SIM ILAR EMERGENCY FOR REPAYING THE LOAN IN CASH, AS THE EMERGENCY WHICH PROMPTED THEM TO TAKE LOANS IN CASH . THEREFORE, THIS IS A CASE WHERE THERE IS A REASONAB LE CAUSE FOR THE ASSESSEES TO REPAY THE LOANS IN CASH. IN SUCH CIRCUMSTANCES, IT IS TO BE SEEN THAT THE VIOLA TION OF SECTION 269T IS TECHNICAL. THEREFORE, WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT HAVE DELETED THE PENALTIES LEVIED UNDER SECTION 271E, WH EN IN FACT, FOR GOOD REASONS, HE WAS DELETING THE PENA LTIES LEVIED UNDER SECTION 271D. (EMPHASIS APPLIED) 24. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WE DELETE THE PENALTIES LEVIED IN ALL THESE CASES UNDE R SECTION 271E OF THE INCOME-TAX ACT, 1961. 5. WE HAVE CAREFULLY GONE THROUGH THE ORDER OF THE TRIBUNAL. THE ABOVE FINDINGS OF THE TRIBUNAL IS ONLY PASSING REMARKS AND IT - - ITA 1959 TO 1964/13 9 CANNOT BE SAID IT IS FINDING ON THE ISSUE BEFORE US . IN THE PRESENT CASE, THERE WAS A SURVEY U/S.133A OF THE ACT CONDUC TED AT THE BUSINESS PREMISES OF SRI A. KANNAN, PROP. OF VADAMA LAYAN FINANCE ON 8.10.2011 BY THE INCOME-TAX OFFICER, WAR D-I(1), PUDUCHERRY. DURING THE COURSE OF SURVEY IT WAS FOU ND THAT SRI KANNAN WAS HAVING MONEY LENDING BUSINESS AND HE CHO SE TO GIVE LOANS TO ONLY SELECTED GROUP OF PERSONS. HE GAVE M ONEY TO PERSONS AFTER TAKING INTEREST FOR 10 MONTHS. THE A MOUNT IS DIVIDED INTO 10 MONTHLY INSTALMENTS. ONCE THE REPAYMENT OF 10 INSTALEMENTS ARE OVER, AGAIN THE SAME PERSONS TOOK FURTHER LOANS. HE CHARGED INTEREST ON THE LOANS AT 1% PER MONTH. THE WHOLE TRANSACTION WAS DONE BY CASH ONLY I.E. NO CHEQUES O R DRAFT WAS USED. HENCE, THE AO INVOKED THE PROVISIONS OF SEC. 271D AND 271E FOR VIOLATION OF PROVISIONS OF SEC. 269SS AND 271E OF THE ACT. THE DETAILS OF LOANS TAKEN BY THE ASSESSEE AN D PAID BY CASH ARE AS FOLLOWS: A.Y. 2006 - 07 CASH LOAN: 11.12.2005 20 LAKHS CASH REPAYMENT: RS.2 LA KHS A.Y. 2007 -08 CASH LOAN: 06.12.2006 20 LAKHS CASH REPAYMENT: RS.24 L AKHS A.Y. 2008 -09 CASH LOAN: 06.10.2007 20 LAKHS CASH REPAYMENT: RS.24 L AKHS A.Y. 2009 -10 - - ITA 1959 TO 1964/13 10 CASH LOAN: 07.08.2008 20 LAKHS CASH REPAYMENT: RS.24 L AKHS A.Y. 2010 -11 CASH LOAN: 06.06.2009 20 LAKHS CASH REPAYMENT: RS.24 L AKHS A.Y. 2011 -12 CASH LOAN: 07.04.2010 20 LAKHS CASH REPAYMENT: RS.24 L AKHS 19.08.2010 50 LAKHS 5.1 THE ASSESSEE HAS TAKEN A PLEA BEFORE THE A O THAT THE LOAN TAKEN BY THE ASSESSEE WAS USED AS A CAPITAL CONTRIB UTION IN A FIRM, WHERE HE WAS A PARTNER AND HAS TAKEN SUPPORT OF THE PROVISIONS OF SEC.273B OF THE ACT TO SAY THAT ON ACCOUNT OF BUSIN ESS EXPEDIENCY, THE AMOUNT WAS BORROWED IN CASH AND REP AID IN CASH. THE ASSESSEE IS LIABLE TO AUDIT U/S.44AB OF THE ACT AND THE ASSESSEE IS AWARE OF PROVISIONS OF SEC.269SS OF THE ACT. CASH BORROWAL BY THE ASSESSEE IS NOT A SINGLE OCCASION B UT THE ASSESSEE CONTINUOUSLY BORROWING MONEY FROM SAME PER SONS IN CASH. IT IS ALSO ON RECORD THAT THE ASSESSEE IS H AVING BANK ACCOUNT AS SEEN IN THE ASST. YEAR 2006-07, THE ASSE SSEE BORROWED ` 20 LAKHS AND DEPOSITED IN BANK ACCOUNT NO.781 WITH UCO BANK. THEREAFTER, THE SAID AMOUNT WAS TRANSFER RED TO M/S. NEW INDIA PALMER FOODS PVT. LTD. IN THE ASST. YEAR 2007-08, THE ASSESSEE BORROWED ` 20 LAKHS AND DEPOSITED IN BANK ACCOUNT - - ITA 1959 TO 1964/13 11 NO.32 WITH UCO BANK. THIS IS THE BANK ACCOUNT OF M UTHU SILK HOUSE. THEREAFTER THE AMOUNT WAS TRANSFERRED TO M/ S. ICICI BANK ACCOUNT, WHICH BELONGS TO THE FIRM. FOR THE ASST. YEAR 2008-09, THE ASSESSEE BORROWED ` 20 LAKHS AND DEPOSITED BY THE ASSESSEE IN BANK ACCOUNT NO.32 WITH UCO BANK. THEREAFTER T HE AMOUNT WAS TRANSFERRED TO M/S. ICICI BANK ACCOUNT. SIMILA RLY FOR THE ASST. YEAR 2009-10, THE ASSESSEE BORROWED ` 20 LAKHS AND DEPOSITED WITH UCO BANK AND M/S. ICICI BANK. FOR THE ASST YE AR 2010-11 ALSO, THE ASSESSEE BORROWED ` 20 LAKHS IN CASH AND DEPOSITED BY HIM IN UCO BANK AND M/S. SBI. FOR THE ASST. YEAR 2001-12, THE ASSESSEE BORROWED ` 20 LAKHS AND ` 50 LAKHS AND DEPOSITED IN THE ACCOUNT OF SBI. THOUGH THE ASSESSEE IS HAVING BANK ACCOUNT, HE BORROWED THE MONEY IN CASH AND LATER DEPOSITED T HE SAME IN THE BANK ACCOUNTS. THE LD. AR PLEADED THAT DUE TO URGENCY AND COMPULSION, MONEY WAS REPEATEDLY BORROWED IN CASH. THE ASSESSEE HAS NOT EXPLAINED THE NATURE OF URGENCY OR COMPULSION. THE PROVISIONS OF SEC.273B OF THE ACT COMES TO THE RESCUE OF THE ASSESSEE, IF THE ASSESSEE SHOW REASONABLE CAUSE FOR BORROWING THE MONEY IN CASH. - - ITA 1959 TO 1964/13 12 5.2 THIS IS THE CASE, WHERE THE ASSESSEE IS HA VING BANK ACCOUNT, REPEATEDLY BORROWING THE MONEY IN CASH WIT H GROSS VIOLATION OF THE ACT. THE PLEA OF THE LD. AR IS TH AT THE CREDITORS ARE GENUINE AND CONFIRMED BY THE PARTIES AND THERE WAS NO REVENUE LOSS TO THE DEPARTMENT. HAD IT BEEN, THE CREDITORS ARE NOT GENUINE, THE AO WOULD HAVE INVOKED THE PROVISIONS O F SEC.68 OF THE ACT. THE QUESTION OF REVENUE LOSS IS NOT A REA SON TO CONSIDER THE LEVY OF PENALTY U/S.271D OF THE ACT. THE PROVI SIONS OF SEC.269SS OF THE ACT IS CONSTITUTIONALLY VALID IN V IEW OF THE JUDGMENT OF THE HIGH COURT IN THE CASE OF ADIT V. KUM A.B.SHANTHI (255 ITR 258), WHEREIN IT WAS OBSERVED AS UNDER : SECTION 269SS OF THE INCOME-TAX ACT, 1961, PRESCRIBING THE MODE OF TAKING OR ACCEPTING CERTAIN LOANS OR DEPOSITS, IS NOT DISCRIMINATORY AND IS NOT VIOLATIVE OF ARTICLE 14 OF THE CONSTITUTION OF INDI A ; NOR WAS IT ENACTED BY PARLIAMENT WITHOUT LEGISLATIVE COMPETENCE. IT CANNOT BE SAID THAT SECTION 269SS DEALS WITH A SUBJECT OUTSIDE THE SCOPE OF THE INCOM E- TAX ACT OR THAT IT RELATES TO A TOPIC NOT WITHIN TH E COMPETENCE OF PARLIAMENT. NOR ARE THE PROVISIONS OF SECTION 269SS OR SECTION 271D OR SECTION 276DD UNCONSTITUTIONAL ON THE GROUND THAT THE PROVISIONS ARE DRACONION OR EXPROPRIATORY. THE OBJECT OF INTRODUCING SECTION 269SS IS TO ENSUR E THAT A TAXPAYER IS NOT ALLOWED TO GIVE FALSE EXPLAN ATION FOR HIS UNACCOUNTED MONEY, OR IF HE MAKES SOME FALS E ENTRIES, HE SHALL NOT ESCAPE BY GIVING FALSE EXPLAN ATION FOR THE SAME. DURING SEARCH AND SEIZURES, - - ITA 1959 TO 1964/13 13 UNACCOUNTED MONEY IS UNEARTHED AND THE TAXPAYER WOULD USUALLY GIVE THE EXPLANATION THAT HE HAD BORROWED OR RECEIVED DEPOSITS FROM HIS RELATIVES OR FRIENDS AND IT IS EASY FOR THE SO-CALLED LENDER ALS O TO MANIPULATE HIS RECORDS TO SUIT THE PLEA OF THE TAXP AYER. THE MAIN OBJECT OF SECTION 269SS WAS TO CURB THIS MENACE OF MAKING FALSE ENTRIES IN THE ACCOUNT BOOKS AND LATER GIVING AN EXPLANATION FOR THE SAME. THE UNDUE HARDSHIP OF THE PROVISIONS OF SECTION 271 D , WHICH REPLACED SECTION 276DD PROVIDING FOR A PENALT Y, IS SUBSTANTIALLY MITIGATED BY THE INCLUSION OF SECT ION 273B PROVIDING THAT IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND THE TAXPAYER COULD NOT GET A L OAN OR DEPOSIT BY ACCOUNT-PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONA FIDE REASON, THE AUTHORITY VESTED WIT H THE POWER TO IMPOSE PENALTY HAS A DISCRETIONARY POW ER NOT TO LEVY THE PENALTY. IT IS SETTLED LAW THAT THE HEADS OF LEGISLATION GIV EN IN THE LISTS IN THE SEVENTH SCHEDULE TO THE CONSTITUTI ON SHOULD NOT BE CONSTRUED IN A NARROW OR PEDANTIC WAY . IF ANY LEGISLATURE MAKES AN ANCILLARY OR SUBSIDIARY PROVISION WHICH INCIDENTALLY TRANSGRESSES ITS JURISDICTION FOR ACHIEVING THE OBJECT OF SUCH LEGIS LATION, IT WOULD BE A VALID PIECE OF LEGISLATION. THE ENTRI ES IN A LEGISLATIVE LIST SHOULD BE GIVEN THEIR FULLEST MEAN ING AND WIDEST AMPLITUDE AND BE HELD TO EXTEND TO ALL ANCILLARY AND SUBSIDIARY MATTERS WHICH CAN FAIRLY A ND REASONABLY BE SAID TO BE COMPREHENDED IN THEM. IT I S ONLY WHEN A LEGISLATURE WHICH HAS NO POWER TO LEGISLATE, OR THE LEGISLATION IS CAMOUFLAGED IN SUC H A WAY AS TO APPEAR TO BE WITHIN ITS COMPETENCE WHEN I T KNOWS THAT IT IS NOT, THAT IT CAN BE SAID THAT THE LEGISLATION SO ENACTED IS A COLOURABLE LEGISLATION AND THAT THERE IS NO LEGISLATIVE COMPETENCE. IF ANY LEGISLATION WHICH IS INTENDED TO ACHIEVE THE COLLEC TION OF INCOME-TAX AND TO MAKE IT EASIER AND SYSTEMATIC IS ENACTED, SUCH LEGISLATION WOULD CERTAINLY BE WITHIN THE COMPETENCE OF PARLIAMENT. - - ITA 1959 TO 1964/13 14 WHEN A PROVISION IN A STATUTE IS CHALLENGED ON THE GROUND OF COLOURABLE LEGISLATION, WHAT HAS TO BE PR OVED TO THE SATISFACTION OF THE COURT IS THAT THOUGH THE STATUTE OSTENSIBLY IS WITHIN THE LEGISLATIVE COMPETENCE OF THE LEGISLATURE IN QUESTION, IN SUBSTANCE AND IN REALIT Y, IT COVERS A FIELD WHICH IS OUTSIDE ITS LEGISLATIVE COMPETENCE. 5.3 FURTHER, BUSINESS EXIGENCIES SHALL BE SUPP ORTED BY EVIDENCE. THE ASSESSEE HAS NOT BROUGHT ON RECORD A NY MATERIAL TO SHOW THAT DUE TO BUSINESS COMMITMENT, THE ASSESS EE HAS BORROWED MONEY IN CASH. THERE WAS NO SUFFICIENT BA LANCE ON THE DATE OF BORROWING OF CASH AND HE HAS NOT PLACED ANY EVIDENCE TO ESTABLISH THAT THERE WAS BANK BALANCE ON THE DATE O F BORROWING. IT WAS MENTIONED LATER ON THAT MR. KANNAN, PROP. OF VADAMALAYAN FINANCE ADVANCING THE MONEY IN CASH ONLY. IN OUR O PINION, THE ISSUE IN DISPUTE IS SQUARELY COVERED BY THE JUDGMEN T OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF P. MUTHUKA RUPAN V. JCIT (375 ITR 243), WHEREIN IT WAS HELD, DISMISSING THE APPEALS : (I) THAT THE ENTIRE TRANSACTIONS TOOK PLACE IN PON DICHERRY, A MAJOR CITY AND THERE WAS NO REASON WHY THE ASSESSEE SHOULD NOT HAVE REPAID THE AMOUNT BY CHEQUE OR DEMA ND DRAFT THROUGH THE BANK, ASSUMING HE HAD RECEIVED TH E LOAN IN CASH. THE ENTIRE TRANSACTION BETWEEN THE ASSESSE E, A FINANCIER AND THE FINANCIER WHO WAS ALSO FINANCING A LARGE NUMBER OF PERSONS, WAS APPARENTLY TO EVADE TAX, WHI CH CAME TO LIGHT AFTER A SURVEY WAS CONDUCTED AND SOME DOCUMENTS AND RECORDS WERE SEIZED. THEREFORE, IT WA S A CASE OF INFRACTION OF LAW AND COULD NOT BE SAID TO BE A MERE - - ITA 1959 TO 1964/13 15 TECHNICAL OR VENIAL BREACH. INDEED, IT WAS A CLEAR CASE OF PREJUDICE CAUSED TO THE REVENUE BECAUSE THE NATURE OF TRANSACTIONS CONDUCTED BY THE FINANCIER WITH THE AS SESSEE AND THIRD PARTIES WERE CLEARLY NOT IN ACCORDANCE WI TH THE PROVISIONS OF THE ACT. IN ONE STATEMENT THE FINANCI ER CLEARLY STATED THAT HE USED TO CONDUCT MONEY-LENDING BUSINE SS IN THE NAMES OF THIRD PARTIES. THE ASSESSEE ON HIS PAR T HAD REPEATEDLY, FOR EVERY ASSESSMENT YEAR, CONDUCTED TH E BUSINESS IN THE SAME MANNER RECEIVING AND REPAYING THE LOAN AMOUNT IN CASH. HENCE, THESE COULD NOT BE CALL ED BONA FIDE TRANSACTIONS AND THERE WAS NO REASONABLE CAUSE . THE CONDUCT OF THE PARTIES IS IMPORTANT TO EXERCISE THE DISCRETION UNDER SECTION 273B . AS THE ASSESSEE HAD NOT PASSED THE TEST OF REASONABLE CAUSE SHOWING HIS BONA FIDES, TH E PROVISIONS OF SECTION 273B WERE NOT ATTRACTED, ESPE CIALLY SINCE NO EXPLANATION HAD BEEN OFFERED IN SPITE OF R EPEATED CHANCES THEREFOR HAVING BEEN AFFORDED. ON THE FACTS , THERE WAS NO JUSTIFICATION TO CLAIM THE BENEFIT OF SECTIO N 273B . (II) THAT THE ASSESSING OFFICER, AFTER GIVING REPEA TED REASONABLE OPPORTUNITIES, FINDING NO EXPLANATION WHATSOEVER, WAS UNABLE TO EXERCISE HIS DISCRETION U NDER SECTION 273B AND, ACCORDINGLY, IMPOSED THE PENALTY UNDER SECTIONS 271D AND 271E . THIS FINDING HAD BEEN AFFI RMED BY BOTH THE APPELLATE AUTHORITY AND THE TRIBUNAL. W HEN THE FINDING OF FACTS HAD BEEN REACHED BY ALL THE AUTHOR ITIES BELOW, TAKING NOTE OF THE CONDUCT OF THE ASSESSEE, WHO WAS GIVEN SUFFICIENT OPPORTUNITIES BY THE ASSESSING OFF ICER, THE PRAYER FOR REMANDING THE MATTER TO ANY OF THE AUTHO RITIES BELOW COULD NOT BE ACCEPTED. (III) THAT AFTER TAKING REPEATED ADJOURNMENTS BEFOR E THE ASSESSING AUTHORITY, THE ASSESSEE NEITHER CAME FORW ARD TO FILE ANY REPLY NOR BOTHERED TO TAKE PART IN THE ENQ UIRY TO EXPLAIN THE GENUINENESS OF THE TRANSACTION. IN ADDI TION THERETO, AS THE FINANCIER HAD BEEN CARRYING ON MONE Y- LENDING BUSINESS FOR 30 YEARS GIVING AND TAKING BAC K LOANS IN CASH, THERE HAD BEEN A HUGE REVENUE LOSS TO THE EXCHEQUER. IT WAS NOT A CASE OF BUSINESS EXIGENCY. HENCE. THE CONTENTION THAT THERE WAS NO REVENUE LOSS TO TH E - - ITA 1959 TO 1964/13 16 EXCHEQUER WAS NOT TENABLE PLEA. THEREFORE, THE PENA LTY ORDERS PASSED BY THE ASSESSING AUTHORITY WERE IN CONSONANCE WITH LAW.' 5.4 THE RATIO OF THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE IN DELETING THE PENALTY U/S.271E OF THE ACT, C ANNOT BE APPLIED IN VIEW OF THE JUDGMENT OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF P. MUTHUKARUPAN V. JCIT(SUPRA). IF THAT DECISIO N WAS AVAILABLE BEFORE THE TRIBUNAL FOR CONSIDERATION, ON THAT EV ENT, THE DECISION OF THE TRIBUNAL MUST HAVE DIFFERENT. HENCE, CONSID ERING THE FACTS OF THE PRESENT CASE, WE ARE INCLINED TO REVERSE THE ORDER OF THE CIT(APPEALS) IN DELETING THE PENALTY AND CONFIRMING THE PENALTY LEVIED U/S.271D OF THE ACT FOR ALL THESE ASSESSMENT YEARS. 6. IN THE RESULT, THE APPEALS OF THE REVENUE ARE AL LOWED. ORDER PRONOUNCED ON FRIDAY, THE 2 2 ND OF APRIL, 2016 AT CHENNAI. SD/- SD/- ( '# $%& ' ) ( ' & ( ) ) *+,-..-/-01234-54-6-37 *+,-234-5889-4 :7 % '; /JUDICIAL MEMBER ';<=>>8?2@-2@A1BC14 '% /CHENNAI, D' /DATED, THE 22 ND APRIL, 2016. MPO* - - ITA 1959 TO 1964/13 17 'E FGHG /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. I*7 /CIT(A) 4. I /CIT 5. GJ$ K /DR 6. $LM /GF.