ADDL CIT 19(1), MUMBAI V. SURENDRA SINGH A, MUMBAI

ITA 1992/MUM/2010

• Counselvise Citation: 199219914 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-07-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Assessment Year: 2005-2006
• Appeal Filed On: 11-03-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C G K NAIR
• Assessee Lawyers: MRS KRUPA R GANDHI
• Keywords: Reasonable cause

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH: MUMBAI BEFORE SHRI R.S. PADVEKAR, JUDICIAL MEMBER AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER ITA NO.1992/MUM /2010 (ASSESSMENT YEAR: 2005-06) ITO 19(1)(2), 313, 3RD FLOOR, PIRAMAL CHAMBER, PAREL, MUMBAI -400 012 ....... APPELLANT VS SHRI SURENDRA SINGH A. THAKUR, SHOP NO.1, THAKUR JUICE CENTRE, 12TH ROAD, FORT, MUMBAI -400 001 ..... RESPONDENT PAN: ABXPT 0941 P APPELLANT BY: SHRI C.G.K. NAIR RESPONDENT BY: MRS. KRUPA R. GANDHI O R D E R PER R.S. PADVEKAR, JM THIS APPEAL IS FILED BY THE REVENUE CHALLENGING THE IMPUGNED ORDER OF THE LD. CIT (A)-30, MUMBAI DATED 30.12.200 9 FOR THE A.Y. 2005-06. THE REVENUE HAS TAKEN THE FOLLOWING EFFEC TIVE GROUND:- 2. WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LEARNED CIT (A) HAS ERRED IN DELETI NG THE PENALTY OF ` 6,13,000/- UNDER SECTION 271D OF THE I.T. ACT IGNORING THE FACT THAT THE ASSESSEE HAD VIOLATED TH E PROVISIONS OF SECTION 269SS BY ACCEPTING CASH DEPOS ITS FROM THE EMPLOYEES WITHOUT ANY REASONABLE CAUSE. 2. THE SHORT CONTROVERSY IS IN RESPECT OF THE PENAL TY LEVIED BY THE A.O. / ADDL CIT MUMBAI OF ` 6,13,000/- U/S.271D OF THE ACT, WHICH WAS DELETED BY THE LD. CIT (A). ITA 1992/MUM/2010 SHRI SURENDRA SINGH A. THAKUR 2 3. BRIEFLY STATED, THE FACTS WHICH REVEALED FROM TH E RECORDS ARE AS UNDER. THE ASSESSEE IS RUNNING A BUSINESS OF SECUR ITY AGENCY UNDER THE NAME AND STYLE OF M/S. SPECIAL GUARD FORCE. IT WAS NOTICED BY THE A.O. THAT THE ASSESSEE HAS ACCEPTED AMOUNT OF CASH DEPOSIT DURING THE FINANCIAL YEAR 2004-05 FROM THE FOLLOWING PERSO NS:- SR. NO. NAME OF DEPOSITOR DEPOSIT AMOUNT ( ` `` ` ) 1 SANJAY KUMAR SINGH 1,50,000 2 RAJA BABU 80,000 3 RAHUL KUMAR 80,000 4 SANKATHA SINGH 1,60,000 5 TRIBHUVAN SHARMA 40,000 6 PAPPU SINGH 1,03,000 TOTAL 6,13,000 4. THE A.O. INFORMED THE ADDL. CIT MUMBAI THAT THER E IS A CONTRAVENTION OF THE PROVISIONS OF SECTION 269SS OF THE I.T. ACT BY THE ASSESSEE AND HENCE THE PENALTY PROCEEDINGS SHOULD B E INITIATED U/S.271D. THE ASSESSEE FILED THE EXPLANATION TO TH E ADDL. CIT STATING THAT ALL THE ABOVE PERSONS ARE WORKING AS A SECURIT Y GUARDS WITH THE ASSESSEE. THEY DO NOT HAVE ANY BANK ACCOUNT. THE AMOUNT OF SALARY RECEIVED BY THEM IS KEPT WITH THE ASSESSEE AS SAFE CUSTODY. THOSE EMPLOYEES HAS NOT PERMANENT ADDRESS AND BANK ACCOUN T AND WHEN THEY COME TO MUMBAI FOR EARNING THEIR BREAD FROM FA R OF PLACES / VILLAGES OF UP AND BIHAR. THE ASSESSEE PLEADED THA T THE AMOUNT KEPT BY THOSE EMPLOYEES WITH HIM ARE DEPOSITED IN SEPARA TE BANK ACCOUNT AND THE SAID MONEY IS NOT USED BY THE ASSESSEE FOR HIS BUSINESS PURPOSE. THE ASSESSEE FURTHER CONTENDED THAT THOSE EMPLOYEES HAD NO PERMANENT ADDRESS OR PROOF OF ANY PERMANENT ADDR ESS, IT IS VERY DIFFICULT FOR THEM TO OPEN A BANK ACCOUNT, WHICH AS PER THE BANK NORMS REQUIRE PROOF OF PERMANENT ADDRESS. HE FURTH ER CONTENDED THAT FOR THE SAKE OF CONVENIENCE AND FROM SAFETY POINT O F VIEW THOSE EMPLOYEES KEPT THEIR EARNING WITH THE ASSESSEE WHO STANDS FIDUCIARY CARE-TAKER AND TAKE IT BACK FROM HIM AS AND WHEN TH EY REQUIRE. THE ITA 1992/MUM/2010 SHRI SURENDRA SINGH A. THAKUR 3 ASSESSEE ALSO GAVE THE CONFIRMATION FORM THOSE EMPL OYEES IN WRITING THAT THEY HAD KEPT THE MONEYS WITH THE ASSESSEE, AS STATED BY HIM. HE, THEREFORE, PLEADED THAT HE HAS NOT CONTRAVENE T HE PROVISIONS OF SECTION 269SS, AS THE MONEY KEPT BY THESE EMPLOYEES CANNOT BE TREATED AS A DEPOSIT NOR THERE ANY EVASION OF THE T AX. THE ADDL. CIT WAS NOT SATISFIED WITH THE EXPLANATION OF THE ASSES SEE, IN HIS OPINION, THE ASSESSEE HAS TO SHOW THE REASONABLE CAUSE FOR A CCEPTING THE CASH DEPOSIT AND THE EXPLANATION GIVEN BY THE ASSESSEE C ANNOT BE TREATED AS A REASONABLE CAUSE. THE ASSESSEE RELIED ON THE DECISIONS TO SUPPORT HIS CASE THAT NO PENALTY IS JUSTIFIED U/S.2 71D, BUT ALL THE DECISIONS AND CASE-LAWS WERE DISTINGUISHED BY THE A DDL. CIT AND LEVIED THE PENALTY OF ` 6,13,000/- U/S.271D OF THE ACT FOR THE ALLEGED CONTRAVENTION OF SECTION 269SS. THE ASSESSEE CHALL ENGED THE ORDER BEFORE THE LD. CIT (A) AND LD. CIT (A) DELETED THE PENALTY BY GIVING THE FOLLOWING REASONS:- 5.2 I HAVE CONSIDERED THE CASE LAWS CITED BY THE A PPELLANT. I HAVE ALSO NOTED THAT NEITHER IN THE ASSESSMENT ORDE R NOR IN THE IMPUGNED PENALTY ORDER IT HAS BEEN DEMONSTRATED THAT THE APPELLANT HAD ACCEPTED THE CASE DEPOSITS WITH A MALAFIDE INTENTION TO CONCEAL ANY UNDISCLOSED INCOM E. IN THE ASSESSMENT ORDER THE A.O. HAS ACCEPTED THE CASH DEPOSITS AS EXPLAINED EXCEPT ` 2,35,000/- MEANING THEREBY THAT FOR THE REST OF THE AMOUNT HE HAS ACCEPTED THE CONTENTIONS OF THE APPELLANT WITH REGARD TO THE CAS H DEPOSITS. THEREFORE, I FIND CONSIDERABLE FORCE IN THE ARGUMENT OF THE A.R. OF THE APPELLANT THAT THE MONI ES DEPOSITED BY THE SIX PERSONS IN QUESTION IN THE SAV INGS ACCOUNT OF THE APPELLANT IS NEITHER LOAN NOR DEPOSI T AS THE SAME WAS NOT USED BY THE APPELLANT FOR HIS BUSINESS PURPOSES, BUT WAS ACCEPTED BY HIM AS A CUSTODIAN ON THEIR BEHALF AND HENCE, THE PROVISIONS OF SEC.269SS OF TH E ACT ARE NOT ATTRACTED IN THE CASE OF THE APPELLANT. FU RTHER, THE PERSONS IN QUESTION HAVE OWNED THE MONIES WHICH HAS NOT ITA 1992/MUM/2010 SHRI SURENDRA SINGH A. THAKUR 4 BEEN DENIED BY THE A.O. THE ADDL. CIT HAS LEVIED T HE PENALTY ONLY ON ACCOUNT OF BREACH OF THE CONDITIONS PROVIDED U/S.269SS OF THE I.T. ACT. FURTHERMORE, I N MY CONSIDERED VIEW, THERE WAS ALSO A REASONABLE CAUSE FOR KEEPING THE AFORESAID SUM OF ` 6,13,000/- IN CASH FROM SIX PERSONS IN QUESTION IN THE SAVINGS ACCOUNT OF THE A PPELLANT AS A CUSTODIAN AS IN THE LINE OF THE BUSINESS OF TH E APPELLANT, HE HAS TO TAKE CARE OF THE SAFETY OF PEC UNIARY NEEDS OF HIS EMPLOYEES. IT IS THE REQUIREMENT OF H IS BUSINESS THAT HE HAS TO ACT AS A CUSTODIAN FOR KEEP ING THE MONIES OF HIS EMPLOYEES WITH HIMSELF SO THAT THEY F EEL SECURE AND CONTINUE TO WORK FOR HIM. IN AN INSECUR E ATMOSPHERE, THE EMPLOYEES MAY QUIT FROM HIS SERVICE AND MAY JOIN OTHER SECURITY AGENCIES. UNDER THE CIRCUM STANCES AND IN VIEW OF THE AFORESAID DISCUSSION, I FIND THA T THE ADDL. CIT IS NOT JUSTIFIED IN LEVYING PENALTY U/S.2 71D OF THE I.T. ACT OF ` 6,13,000/- AND THEREFORE, THE SAME IS DIRECTED TO BE DELETED. THE GROUNDS OF APPEAL ARE ALLOWED. 5. NOW, THE REVENUE IS IN APPEAL BEFORE US. 6. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE RECORDS AS WELL AS THE REASONS GIVEN BY BOTH TH E AUTHORITIES FOR LEVYING THE PENALTY AND FOR DELETING THE PENALTY. WE FIND THAT THERE IS NO DISPUTE ABOUT THE VERY IMPORTANT FACT THAT THOSE PERSONS ARE THE EMPLOYEES OF THE ASSESSEE. WE FURTHER FIND THAT NO WHERE IT IS BROUGHT ON RECORD THAT THOSE PERSONS ARE HAVING BANK ACCOUN TS WHEN THE SAME WAS SPECIFICALLY DENIED BY SIX EMPLOYEES THEMS ELVES. WE FURTHER FIND THAT ALL THOSE EMPLOYEES SUPPORTED THE CONTENT ION OF THE ASSESSEE BY FILING THE STATEMENTS BEFORE THE LD. ADDL. CIT, BUT, SAID EVIDENCE WAS TOTALLY BRUSHED ASIDE AND LD. ADDL. CIT LEVIED THE PENALTY. AS PER THE EXPLANATION OF THE ASSESSEE THOSE EMPLOYEES ARE NOT HAVING ANY BANK ACCOUNT DUE TO THE LACK OF THE PROOF OF THE PE RMANENT ADDRESS ITA 1992/MUM/2010 SHRI SURENDRA SINGH A. THAKUR 5 AND THEY KEPT THEIR MONEY WITH THE ASSESSEE AS A CA RE-TAKER AND WHENEVER THEY NEED THE MONEY THEY USED TO TAKE IT B ACK. THOSE IMPORTANT FACTS ALSO HAS NOT BEEN CONTROVERTED ANYW HERE BY THE LD. ADDL. CIT. NOW, THE LAW IS WELL SETTLED IN RESPECT OF THE INTENTION / INTRODUCTION OF SECTION 269SS TO CURB THE BLACK MON EY AND TO PENALISE THE TAX EVADER. WE FIND THAT FROM THE ORDER OF THE LD. ADDL CIT, NOWHERE IT IS SUGGESTED THAT THE SAID MONEY WAS IN THE NATURE OF BACK DOOR MONEY INCOME TO AVOID THE TAX. MOREOVER, IN O UR OPINION, THE EXPLANATION GIVEN BY THE ASSESSEE APPEARS TO BE FAC TUAL AND TRUE AS THE RELATIONSHIP OF THE ALLEGED DEPOSIT AND THE ASS ESSEE AS EMPLOYEES AND EMPLOYER. IT IS COMMON IN MUMBAI THAT MANY PER SONS THEY COME FOR EARNING THEIR BREAD AND BUTTER FROM FAR OF PLAC ES AND THEY DO NOT HAVE ANY RESIDENTIAL PROOF, AS PER THE BANKING NORM S, PERMANENT RESIDENTIAL ADDRESS IS A MUST FOR OPENING THE BANK ACCOUNT. NOWHERE THIS IMPORTANT ASPECT HAS BEEN DENIED BY THE LD. AD DL. CIT. 7. AFTER CONSIDERING TOTALITY OF THE FACTS, IN OUR OPINION, THE LD. CIT (A) HAS RIGHTLY DELETED THE PENALTY. WE DO NOT CON SIDER IT PROPER TO INTERFERE WITH THE REASONING AND FINDING OF THE LD. CIT (A), ACCORDINGLY THE SAME IS CONFIRMED. 8. IN THE RESULT, REVENUES APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS DAY OF 1 5TH JULY 2011. SD/- SD/- ( B. RAMAKOTAIAH ) ACCOUNTANT MEMBER ( R.S. PADVEKAR ) JUDICIAL MEMBER MUMBAI, DATE: 15TH JULY 2011 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A)30, MUMBAI. ITA 1992/MUM/2010 SHRI SURENDRA SINGH A. THAKUR 6 4) THE CIT-CITY-19, MUMBAI. 5) THE D.R. D BENCH, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR I.T.A.T., MUMBAI *CHAVAN ITA 1992/MUM/2010 SHRI SURENDRA SINGH A. THAKUR 7 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 29.06.2011 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 29.06.2011 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 FILE SENT TO THE BENCH CLERK SR.PS/PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER