Shri Amit Sengupta, Kolkata V. Addl. CIT, Range - 55, Kolkata, Kolkata

ITA 1973/KOL/2010

• Counselvise Citation: 197323514 RSA 2010
• Duration Of Justice: 9 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-08-2011
• Appeal Filed By: Assessee
• Bench Allotted: A
• Assessment Year: 2002-2003
• Appeal Filed On: 27-10-2010
• Court: TRIBUNAL
• Department Lawyers: P K CHAKRABORTY
• Assessee Lawyers: SANDEEP MOOSADDEE
• Keywords: Reasonable cause

Judgement Text

1 , A , , IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH- A , KO LKATA [ . . . . . .. . , ,, , . . . . . .. . !' !' !' !', , , , # ] BEFORE SHRI B.R.MITTAL, JUDICIAL MEMBER & SRI S.V.MEHROTRA, ACCOUNTANT MEMBER $ $ $ $ / ITA NO. 1973 (KOL) OF 2010 %& '( / ASSESSMENT YEAR 2002-03 AMIT SENGUPTA, KOLKATA. (PAN-AJWPS2043N) ADDL.COMMISSIONER OF I.T., RANGE-55, KOLKATA. (+, / APPELLANT ) - % - - VERSUS - (/0+,/ RESPONDENT ) +, 1 2 / FOR THE APPELLANT: / SRI SANDEEP MOOSADDEE /0+, 1 2 / FOR THE RESPONDENT: / SRI P.K.CHAKRABORTY 3 / ORDER ( . . . . . .. . ), (B.R.MITTAL), JUDICIAL MEMBER : THE ASSESSEE HAS FILED THIS APPEAL FOR ASSESSMENT YEAR 2002-03 AGAINST THE ORDER OF LD. C.I.T.(A) -XXXVI, KOLKATA DATED 30/08/2010 O N THE FOLLOWING GROUNDS :- 1. FOR THAT ON THE FACTS AND IN THE CIRCUMS TANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ORDER OF THE LD. ADDL. CIT IMPOSING A PENALTY U/S. 271D OF THE INCOME TAX ACT FOR ` 1,29,000/-. 2. FOR THAT ON THE FACTS AND IN THE CIRCUMST ANCES OF THE CASE THE ORDER OF PENALTY BE QUASHED. 2. THE RELEVANT FACTS ARE THAT THE A.O. OBSERVED T HAT THE ASSESSEE TOOK CASH LOAN AMOUNTING TO ` 1,29,000/- FROM VARIOUS PARTIES, THE DETAILS OF WHI CH ARE GIVEN AT PAGE-1 OF THE PAPER BOOK. THE A.O. FURTHER OBSERVED THAT EACH OF THE LOAN IN THE FINANCIAL YEAR IS EXCEEDING ` 20,000/- AND IN VIEW OF VIOLATION OF SEC. 269SS OF THE ACT, LEVIED PENALTY U/S. 271D OF THE ACT OF ` 1,29,000/-. IT IS RELEVANT TO STATE THAT THE ASSES SEE FILED WRITTEN SUBMISSION BEFORE THE A.O. THE A.O. HAS STATED THA T IN THE WRITTEN SUBMISSION, THE ASSESSEE IS SILENT ABOUT THE REASONS FOR TRANSACTIO NS (BOTH BORROWINGS AND PAYMENTS) IN CASH. THE A.O. HAS ALSO STATED THAT THE ASSESSEE H AS NOT ESTABLISHED THAT THE CASH 2 TRANSACTIONS, BOTH INFLOW AND OUTFLOW, WERE MUST AN D UNAVOIDABLE. BEING AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE FIRST APPELLATE AU THORITY. 3. THE LD. C.I.T.(A) AFTER CONSIDERING THE SUBMISS IONS AND ALSO THE CASES CITED BY THE LD. A/R BEFORE HIM, VIZ. CIT VS. BHAGWATI PROSA D BAJORIA (HUF) [263 ITR 487 (GAU)]; CIT VS. MANOJ LALWANI [260 ITR 590 (RAJ)]; AND CIT VS. PARMANAND [266 ITR 255 (DEL)], HAS HELD THAT THERE WAS NO REASONABLE C AUSE TO TAKE CASH LOAN IN CONTRAVENTION OF PROVISIONS OF SEC. 269SS OF THE AC T. THUS THE LD. C.I.T.(A) HAS CONFIRMED THE PENALTY OF ` 1,29,000/- LEVIED BY THE A.O. HENCE THE ASSESSEE I S IN FURTHER APPEAL BEFORE THE TRIBUNAL. 4. DURING THE COURSE OF HEARING, LD. A/R SUBMITTED THAT THE ASSESSEE TOOK CASH LOAN TO PURCHASE PROPERTY AND TO BUILD UP BANK BALANCE. HE SUBMITTED THAT THE LOANS TAKEN BY THE ASSESSEE ARE GENUINE AND NOT SHAM AND THUS PENA LTY LEVIED IS NOT JUSTIFIED. THE LD. A/R RELIED ON THE CASES (SUPRA) WHICH WERE CITED BE FORE THE LD. C.I.T.(A) AND SUBMITTED THAT IF THE LOANS ARE GENUINE, NO PENALTY COULD BE LEVIED U/S. 271D OF THE ACT, EVEN IF THE CASH LOAN IS EXCEEDING ` 20,000/-. IN REPLY TO QUERY, LD. A/R CONCEDED THAT THE ASSESSEE HAD TO TAKE CASH LOAN TO BUILD UP BANK BALANCE AND THEREAFTER TO MAKE PAYMENT FOR THE PROPERTY PURCHASED BY HIM. HE SUBMITTED THAT THE P ENALTY LEVIED SHOULD BE CANCELLED AS THE CASH LOANS WERE TAKEN FOR A REASONABLE CAUSE. 5. ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTAT IVE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. HE SUBMITTED THAT THE ASSESSEE HAD TAKEN CASH LOANS EXCEEDING ` 20,000/- IN THE FINANCIAL YEAR FROM CLOSE RELATIVES . ALL THE LOAN CREDITORS WERE RESIDENT OF KOLKATA AND ASSESSEE COULD TAKE LOAN EASILY BY C HEQUES WHICH COULD BE CREDITED TO THE ASSESSEES ACCOUNT ON THE SAME DAY AND/OR NEXT DAY. HE SUBMITTED THAT THE ASSESSEE HIMSELF HAS STATED IN THE WRITTEN SUBMISSION FILED BEFORE THE A.O. THAT HE HAD BUILT UP SUFFICIENT BANK BALANCE FOR MAKING PAYMENT FOR PURC HASE OF PROPERTY. LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT IT COULD NOT BE A REA SONABLE CAUSE TO UNABLE THE ASSESSEE TO COMPLY THE PROVISIONS OF SEC. 269SS OF THE ACT. HE FURTHER SUBMITTED THAT THE CASES CITED BY THE LD. A/R BEFORE THE LD. C.I.T.(A) AS WE LL AS BEFORE THE TRIBUNAL ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE . HE FURTHER SUBMITTED THAT THE A.O. 3 HAS NOT GONE ON THE QUESTION OF GENUINENESS OF LOAN , BUT HAS LEVIED THE PENALTY FOR INFRINGEMENT OF PROVISIONS OF SEC. 269SS OF THE ACT . 6. WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS OF THE LEARNED REPRESENTATIVES OF THE PARTIES,S THE ORDERS OF THE AUTHORITIES BELOW A S WELL AS THE CASES CITED SUPRA BY LD. A/R. WE HAVE ALSO GONE THROUGH THE WRITTEN SUBMISS ION FILED BY THE ASSESSEE BEFORE THE A.O., A COPY OF WHICH IS PLACED AT PAGES 1 & 2 OF T HE PAPER BOOK. ON PERUSAL OF THE WRITTEN SUBMISSION FILED BY THE ASSESSEE AS ALSO ON CONSIDERATION OF THE SUBMISSIONS OF THE LD. A/R, IT IS NOT IN DISPUTE THAT THE ASSESSEE HAD TAKEN CASH LOAN FROM HIS CLOSE RELATIVES EXCEEDING ` 20,000/- IN THE ASSESSMENT YEAR UNDER CONSIDERATION TO BUILD UP BANK BALANCE AND THEREAFTER TO MAKE PAYMENT TO THE SELLER OF THE PROPERTY PURCHASED BY THE ASSESSEE. THE QUESTION ARISES AS TO WHETHER TH E ASSESSEE HAD TAKEN THE SAID CASH LOAN DUE TO ANY URGENCY OR NOT. CONSIDERING THE FACTS O F THE CASE, WE AGREE WITH THE LD. DEPARTMENTAL REPRESENTATIVE THAT THE PURPOSE FOR WH ICH THE ASSESSEE HAD TAKEN THE CASH LOANS IN CONTRAVENTION OF SEC. 269SS OF THE ACT DOE S NOT CONSTITUTE A REASONABLE CAUSE. WE ALSO AGREE WITH LD. DEPARTMENTAL REPRESENTATIVE THAT THE A.O. HAS NOT LEVIED PENALTY QUESTIONING GENUINENESS OF LOAN BUT FOR CONTRAVENTI ON OF SEC. 269SS OF THE ACT. 6.1. WE ALSO OBSERVE THAT THE CASES CITED BY THE LD . A/R (SUPRA) ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. IN THE CASE OF CIT VS. MANOJ LALWANI (SUPRA), WE OBSERVE THAT THE ASSESSEE HAD TAKEN LOAN TO MEET UR GENCY FOR HIS 100% EXPORT ORIENTED BUSINESS AND, ACCORDINGLY, IT WAS HELD BY HONBLE R AJASTHAN HIGH COURT THAT THERE WAS A REASONABLE CAUSE TO TAKE CASH LOAN. THUS THE ORDER OF THE TRIBUNAL CANCELING THE LEVY OF PENALTY U/S. 271D OF THE ACT WAS CONFIRMED. 6.2. FURTHER, IN THE CASE OF CIT VS. BHAGWATI PROS AD BAJORIA (HUF) (SUPRA), THE HONBLE GAUHATI HIGH COURT OBSERVED THAT THERE WAS PRESSING NEED FOR FUND AND THE ASSESSEE COULD NOT TAKE LOAN FROM NATIONALIZED BANK AND IN VIEW THEREOF, THE ORDER OF THE TRIBUNAL CANCELING PENALTY LEVIED U/S. 271D OF THE ACT WAS CONFIRMED. 6.3. WE ALSO OBSERVE THAT IN THE CASE OF CIT VS. P ARMANAND (SUPRA), THE HONBLE DELHI HIGH COURT OBSERVED THE FINDING OF THE TRIBUN AL TO BE CORRECT THAT THERE WAS A REASONABLE CAUSE, BECAUSE THE ASSESSEE WAS GOING TO BE DIRECTLY BENEFITED TO GET DISCOUNT @ 2% FOR CASH PAYMENT AGAINST THE BILLS AS THE ASSE SSEE RECEIVED ADVANCES WHICH WERE 4 ON THE DAYS NEARING THE DAY OF ISSUE OF CHEQUES. TH E ASSESSEE TOOK LOAN TO CLEAR THE CHEQUES ISSUED BY IT AS THERE WAS NO SUFFICIENT BAN K BALANCE WITH THE ASSESSEE. IT WAS ALSO OBSERVED THAT THE AMOUNTS WERE PREPAID BY THE ASSESSEE THROUGH ACCOUNT PAYEE CHEQUES. 6.4. IN VIEW OF THE FACTS OF THE CASE OF THE ASSES SEE AND THE FACTS OF THE CASES CITED BY LD. A/R, WE HOLD THAT THERE IS NO REASONABLE CAUSE FOR CONTRAVENING THE PROVISIONS OF SEC. 269SS OF THE ACT. HENCE THE CASES CITED BY LD. A/R (SUPRA) ARE NOT APPLICABLE TO THE FACTS OF THE CASE OF THE ASSESSEE. WE, THEREFORE, UPHOLD THE ORDER OF LD. C.I.T.(A) BY REJECTING THE GROUNDS OF APPEAL TAKEN BY THE ASSESS EE. IN THE RESULT APPEAL OF THE ASSESSEE IS DISMISSED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 12.08.2011 . SD/- SD/- . . . . . .. . !' !' !' !' ) # ( . . . . . .. . ) ( S.V.MEHROTRA) , ACCOUNTANT MEMBER (B.R.MITTAL) , JUDICIAL MEMBER ( (( (4# 4# 4# 4#) )) ) DATE: 12 -08-2011 3 1 /5 6 5'7- COPY OF THE ORDER FORWARDED TO : 1. +, / THE APPELLANT : AMIT SENGUPTA, 60/82, HARIPADA DUTTA ROAD, KOLKATA 7 00 033. 2 /0+, / THE RESPONDENT : ADDL.C.I.T., RANGE-55, KOLKATA. 3. 3% () : THE CIT(A)-XXXVI, KOLKATA. 4. 3%/ THE CIT, KOL- 5 ;< /% / DR, ITAT, KOLKATA BENCHES, KOLKATA 6 GUARD FILE . 05 // TRUE COPY, 3%=/ BY ORDER, (DKP) > ? / DY/ASST. REGISTRAR .