The ITO, Ward-5(4), Surat V. Shri Samir Jormal Mehta, Surat

ITA 1972/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9874 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-10-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2006-2007
• Appeal Filed On: 08-06-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K TIWARI SRDR
• Keywords: Question of law; Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH D AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.1972/AHD/2010 ASSESSMENT YEAR :2006-07 DATE OF HEARING:1.10.10 DRAFTED:4.10.10 INCOME TAX OFFICER, WARD-5(4), ROOMNO.316, AAYAKAR BHAVAN, MAJURA GATE, SURAT V/S . SHRI SAMIR JORMAL MEHTA, NO.307, MAHAVIR APPT., ATHWA GATE, SURAT, PAN NO.ABBPM1483D (APPELLANT) .. (RESPONDENT) APPELLANT BY :- SHRI A.K. TIWARI, SR-DR RESPONDENT BY:- NONE O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-IV, SURAT IN APPEAL NO.CAS- IV/III/14/2009-10 DATED 11-03-2010. THE PENALTY UNDER DISPUTE WAS LEVIED BY JCIT, RANGE-5, SURAT U/S.271D OF THE INCOME-TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS THE ACT) VIDE HIS ORDER DATED 30-03-2009. 2. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGAI NST THE ORDER OF CIT(A) IN DELETING THE PENALTY LEVIED BY JCIT, RANGE-5,SUR AT U/S.271D OF THE ACT. FOR THIS, REVENUE HAS RAISED FOLLOWING GROUND NO.1 :- [1] ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A)-IV, SURAT HAS ERRED IN DELETING THE PENALTY OF RS.2,05,518/- LEVIED U/S.271D OF THE ACT BY THE JT. CIT., RANGE-5 , SURAT. ITA NO.1972/AHD/2010 A.Y.2006-07 ITOWD-5(4) SRT V. SH. SAMIR J MEHTA PAGE 2 3. THE BRIEF FACTS ARE THAT THE ASSESSEE FILED RETU RN OF INCOME FOR ASSESSMENT YEAR 2006-07 ON 01-11-2004 DECLARING TOT AL INCOME AT RS.1,13,393/-. THE ASSESSEE IS EARNING INCOME FROM DIAMOND LABOUR AND ASSESSMENT U/S.143(3) OF THE ACT WAS FINALIZED ON 1 5-12-2008 DETERMINING TOTAL INCOME AT RS.1,35,144/-. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER NOTICED THAT AN AMOUNT OF RS. 2,05,518/- WERE ACCEPTED ON VARIOUS DATES AS LOAN IN CASH I.E. OTHERWISE THA N BY DD OR ACCOUNT PAYEE CHEQUES FROM HIS WIFE SMT. RITA MEHTA. AFTER CAREFU L CONSIDERATION OF ASSESSEES SUBMISSIONS, JCIT LEVIED THE PENALTY AMO UNTING TO RS.2,05,518/- U/S.271D OF THE ACT. THE CIT(A) DELETED THE PENALTY BY CONSIDERING THE FOLLOWING SUBMISSIONS OF ASSESSEE:- BEFORE ME AT THE APPELLATE SAGE APPELLANT STATED T HAT THE TRANSACTIONS WERE ENTERED FOR A REASONABLE CAUSE TO MEET FINANCI AL OBLIGATION. HE FURTHER INFORMED THAT HER WIFE IS ASSESSED TO TAX, HER BALANCE SHEET, COPY OF RETURN, CONFIRMATION OF LOAN WERE PRODUCED BEFORE THE A.O. THE GENUINENESS OF THE TRANSACTION WAS NOT DOUBTED BY T HE A.O. FOR HIS RELIANCE THE APPELLANT CITED CASE LAWS, SUCH ASS CI T V/S. NASTVARLAL PARSOTTAMDAS PAREKH, 303 ITR-5 (GUJ.H.C.) JITU BUIL DER VS. ACIT (AHMEDABAD BENCH) 125 TTJ 721. AT THE END HE REQUES TED TO CONFER THE BENEFIT U/S.273-B AS THE VIOLATION U/S.269-SS W AS NOT DELIBERATE. I HAVE CONSIDERED THE RIVAL CONTENTIONS. I FINDING THE LIGHT OF RATIOS LAID DOWN BY THE JURISDICTIONAL HIGH COURT, THE ASSESSIN G OFFICER'S ACTION IS NOT JUSTIFIED. AND THE SAME IS THEREFORE DIRECTED T O BE DELETED. AGGRIEVED, NOW REVENUE CAME IN APPEAL BEFORE THE TR IBUNAL. 4. BEFORE US IT WAS CONTENDED BY LD. SR-DR, SHRI A. K. TIWARI THAT THE DECISION OF CIT(A) IS NOT ACCEPTABLE AS HE HAS ACCE PTED THE CONTENTION OF THE ASSESSEE THAT HE WAS DOING DIAMOND JOB WORK AND ON THOSE DATES HE WAS REQUIRED TO MAKE PAYMENTS TO LABOURER SO IT WAS WIT HIN THE MITIGATION PROVISIONS U/S.273B OF THE ACT AND HE ERRED IN DELE TING THE PENALTY U/S.271D OF THE ACT AS IT IS NOT A REASONABLE CAUSE TO MAKE PAY MENTS TO LABOURER. APART FROM THAT ON SAME OF THE OCCASIONS THERE WAS CREDIT BALANCE IN ASSESSEES ITA NO.1972/AHD/2010 A.Y.2006-07 ITOWD-5(4) SRT V. SH. SAMIR J MEHTA PAGE 3 OWN BANK ACCOUNT AND THEREFORE REASON GIVEN BY THE ASSESSEE IS NOTING BUT AN AFTER-THOUGHT. 5. AFTER HEARING THE LD. SR-DR, WE FIND THAT ASSESS EE HAS TAKEN LOAN FROM HIS WIFE AMOUNTING TO RS.2,21,518/- IN CASH BUT IT IS A FACT THAT THE ASSESSEE HAS TAKEN THIS LOAN UNDER THE URGENT NEED TO PAY TO THE LABOURERS AS ASSESSEE WAS NOT HAVING CASH AS CLAIMED. FURTHERMORE, IT IS A FACT THAT THE ASSESSEE HAS TAKEN LOAN FROM HIS WIFE AND WIFE BEING CLOSE R ELATIVE, THE PROVISIONS OF SECTION 269SS OF THE ACT WILL NOT APPLY IN VIEW OF THE FACTS THAT THIS ISSUE IS COVERED IN FAVOUR OF ASSESSEE AND AGAINST THE REVEN UE BY THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT V. IDHAYAM PUBLICATIONS LTD. (2006) 285 ITR 221 (MAD), WHEREIN THE HONBLE HIGH COURT HAS HELD:- WE HEARD THE ARGUMENTS OF LEARNED COUNSEL FOR THE REVENUE. WE HAVE PERUSED THE MATERIALS AVAILABLE IN RECORD. ADMITTED LY MR. S.V.S., MANIAN WAS NOT OF THE DIRECTORS. THEREFORE THE ORDER OF TH E LOWER AUTHORITY CLEARLY SHOWS THAT THERE WAS A RUNNING CURRENT ACCO UNT IN THE BOOKS OF ACCOUNT OF THE ASSESSEE IN THE NAME OF MR. S.V.S. M ANIAN, MR. S.V.S. MANIAN USED TO PAY THE MONEY IN THE CURRENT ACCOUNT AND USED TO WITHDRAW THE MONEY ALSO FROM THE CURRENT ACCOUNT. T HE REVENUE SHOULD ESTABLISH THAT WHAT WAS RECEIVED BY THE ASSESSEE IS A LOAN OR DEPOSIT WITHIN THE MEANING OF SECTION 269SS. THE DEPOSIT AN D THE WITHDRAWAL OF THE MONEY FROM THE CURRENT ACCOUNT COULD NOT BE CON SIDERED AS A LOAN OR ADVANCE. FURTHER, IT WAS ALSO FOUND THAT THE ASS ESSEE FILED A LETTER DATED SEPTEMBER 29, 1997, AND IN THAT LETTER HE EXP LAINED THAT THE AMOUNT RECEIVED FROM MR. S.V.S. MANIAN HAD BEEN SHO WN AS UNSECURED LOAN FROM DIRECTORS IN THE BALANCE-SHEET. AS PER THE COMPANIES ACT, UNDER THE COMPANIES (ACCEPTANCE OF D EPOSITS) RULES, 1975, UNDER RULE 2(B)(IX), DEPOSIT DOES NOT INCLUDE ANY AMOUNT RECEIVED FROM A DIRECTOR OR A SHAREHOLDER OF A PRIVATE LIMIT ED COMPANY. THEREFORE THE TRANSACTION BETWEEN THE APPELLANT AND THE DIREC TOR CUM SHAREHOLDER IS NOT A LOAN OR DEPOSIT AND IT IS ONLY A CURRENT A CCOUNT IN NATURE AND NO INTEREST IS BEING CHARGED FOR THE ABOVE TRANSACTION . IN THE FOREGOING CONCLUSIONS, WE ARE OF THE VIEW TH AT SINCE THE SAID TRANSACTION DOES NOT FALL WITHIN THE MEANING OF LOA N OR ADVANCE, THERE IS NO VIOLATION OF SECTION 269SS OF THE INCOME-TAX ACT . WE FIND NO ERROR IN THE ORDER OF THE TRIBUNAL AND THE SAME REQUIRES NO INTERFERENCE. HENCE, NO SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERA TION OF THIS COURT. ACCORDINGLY, WE DISMISS THE ABOVE TAX CASE. ITA NO.1972/AHD/2010 A.Y.2006-07 ITOWD-5(4) SRT V. SH. SAMIR J MEHTA PAGE 4 FURTHER THE HONBLE JURISDICTIONAL HIGH COURT IN TH E CASE OF CIT V, NATVARLAL PARSOTTAMDAS PAREKH (2008) 303 ITR 5 (GUJ) HAS FURTHER HELD THAT THE TRANSACTIONS ON BEHALF OF FAMILY MEMBERS WILL NOT B E COVERED U/S 269SS OF THE ACT .WE FIND THAT THIS ISSUE IS COVERED IN FAVOUR O F ASSESSEE AND AGAINST THE REVENUE AND ACCORDINGLY WE DISMISS THIS ISSUE OF RE VENUES APPEAL. 6. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 01/10/2010 SD/- SD/- (D.C.AGRAWAL) (MAHAVIR SIN GH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 01/10/2010 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE ASSESSEE. 2. THE REVENUE. 3. THE CIT(APPEALS)-IV, SURAT 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD