Dhake Group of Hotels Pvt. Ltd., V. Joint Commissioner of Income-tax,

ITA 1994/PUN/2013

• Counselvise Citation: 199424514 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-05-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 07-05-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 12-11-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: MAZAR AKRAM
• Keywords: Reasonable cause
• Section: 273B; 6

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.1994/PN/2013 ASSESSMENT YEAR: 2009-10 DHAKE GROUP OF HOTELS PVT. LTD., 19 DHAKE WADI, JALGAON 425001 DIST. JALGAON . APPELLANT PAN: AABCD3364L VS. THE JOINT COMMISSIONER OF INCOME TAX, RANGE 2, JALGAON . RESPONDENT APPELLANT BY : SMT. DEEPA KHARE RESPONDENT BY : SHRI MAZAR AKRAM DATE OF HEARING : 12-05-2015 DATE OF PRONOUNCEMENT : 20-05-2015 ORDER PER SUSHMA CHOWLA, JM: THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER OF CIT(A)-2, NASHIK DATED 25.09.2013 RELATING TO ASSESSMENT YEAR 2009-1 0 AGAINST LEVYING PENALTY UNDER SECTION 271E OF THE INCOME-TAX ACT, 1961. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND IN THE PREVAILING CIRCUMSTANCE S OF THE CASE AND IN LAW , THE LEARNED C.I.T.[A] HAS ERRED IN CONFIRMING THE P ENALTY OF RS.5,20,000/- IMPOSED BY THE LEARNED JOINT COMMISSIONER OF INCOME TAX, RANGE-2, JALGAON, U/S 271E OF ' THE I.T.ACT 1961, WITHOUT APPRECIATING THE CORRECT FACT OF THE CASE. IN THE CIRCUMSTANCES THE IMPUGNED PENALTY MAY PLEASE BE DELETED. 2. THE LEARNED C.I.T. [A] HAS ERRED IN CONFIRMING T HE PENALTY OF RS.5,20,000/- IMPOSED BY THE LEARNED JOINT COMMISSIONER OF INCOME TAX, RANGE-2, JALGAON, U/S 271E OF THE I.T.ACT 1961 , ONLY ON DOUBT OF CORRECTNESS OF THE APPELLANT'S ACCOUNTS, EVEN THOUG H APPELLANT HAS ACCEPTED SAID LOANS BY ACCOUNT PAYEE CHEQUES AND RE -PAID IT IN CASH IN THE SAID PREVAILING CIRCUMSTANCES, AS DESIRE THO SE PERSONS. IN THE CIRCUMSTANCES IT MAY PLEASE BE HELD THAT APPELLANT WAS PREVENTED BY REASONABLE AND SUFFICIENT CAUSE FOR NOT COMPLYING T HE PROVISION OF SECTION 269T OF THE I.T. ACT. TRANSACTION BEING GEN UINE, JCIT IS NOT JUSTIFIED IN IMPOSING THE PENALTY AND HENCE, PENALT Y MAY PLEASE BE DELETED. ITA NO.1994/PN/2013 2 3. THE APPELLANT CRAVES THE PERMISSION TO ADD, AMEN D, MODIFY, ALTER, REVISE, SUBSTITUTE, DELETE ANY OR ALL GROUNDS OF APPEAL, IF DEEMED NECESSARY AT THE TIME OF HEARING OF THE APPEAL. 3. THE ONLY ISSUE RAISED IN THE PRESENT APPEAL IS A GAINST LEVY OF PENALTY UNDER SECTION 271E OF THE ACT AMOUNTING TO RS.5,20, 000/-. 4. BRIEFLY, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE WAS ENGAGED IN THE BUSINESS OF PROVIDING COMMERCIAL OFFICES TO VARIOUS CORPORATES ON RENTAL BASIS AND ALSO PROVIDING ALLIED SERVICES. DURING THE COU RSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE A SSESSEE HAD CONTRAVENED THE PROVISIONS OF SECTION 269T OF THE ACT BY REPAYING T HE LOANS IN CASH TOTALING RS.5,20,000/-. THE ASSESSING OFFICER REFERRED THE MATTER TO THE JT. COMMISSIONER OF INCOME TAX, RANGE-2, JALGAON (JCIT) WHO, IN TURN , ISSUED SHOW-CAUSE NOTICE TO THE ASSESSEE AS TO WHY THE PENALTY UNDER SECTION 271E OF THE ACT SHOULD NOT BE LEVIED. IN REPLY, THE ASSESSEE CLAIMED THAT DUR ING THE FINANCIAL YEARS 2006-07 AND 2007-08, THE SAID COMPANY HAD INCURRED LOSSES. DURING THE SAID PERIOD, THE COMPANY HAD ALSO TAKEN BANK LOAN OF RS.3.30 CRORES. THE BANK LIMIT WAS FULLY EXHAUSTED AND THERE WAS CONTINUOUSLY OVERDRAWN FACI LITIES TAKEN ON THE SAID LOAN ACCOUNT. DUE TO THE LOSSES, THE CREDITWORTHINESS O F THE SAID COMPANY AND ITS CREDIBILITY WAS NOT FAVOURABLE AND THE CREDITORS WE RE INSISTING UPON PAYMENT BEING MADE IN CASH ONLY. THE ASSESSEE CLAIMED THAT IN VIEW THEREOF SUM OF RS.20,000/- WAS REPAID IN CASH ON A SINGLE DAY REGU LARLY ON DIFFERENT DATES. IN VIEW OF THE ABOVE-SAID CIRCUMSTANCES, THE PLEA OF T HE ASSESSEE BEFORE THE JCIT WAS THAT IT WAS PREVENTED BY A REASONABLE CAUSE IN NOT COMPLYING WITH THE PROVISIONS OF SECTION 269T OF THE ACT AND NO PENALT Y UNDER SECTION 271E OF THE ACT WAS IMPOSABLE. THE ASSESSING OFFICER NOTED THA T IT WAS AN ADMITTED FACT THAT AMOUNTS WERE TAKEN VIDE CHEQUES BY THE ASSESSEE AND THE REPAYMENT OF SUCH LOANS WERE MADE IN CASH. THE ASSESSEE HAD CONTRAVE NED THE PROVISIONS OF SECTION 269T OF THE ACT AND THE ISSUE WAS WHETHER S UCH CONTRAVENTION WAS ITA NO.1994/PN/2013 3 BECAUSE OF REASONABLE CAUSE OR NOT. IN THE ABSENCE OF ANY EVIDENCE HAVING BEEN SUBMITTED BY THE ASSESSEE IN ORDER TO PROVE TH AT THE CREDITORS WERE IN URGENT NEED OF MONEY AND SINCE THE LOANS OUTSTANDIN G WERE OLD, THE PAYMENT OF LOANS IN CASH WERE HELD TO BE IN CONTRAVENTION TO T HE PROVISIONS OF SECTION 269T OF THE ACT. THE ASSESSEE HAD BIFURCATED THE REPAYM ENT AMOUNTS LESS THAN RS.20,000/- ON EACH DATE OF PAYMENT AS TABULATED UN DER PARA 10 AT PAGES 7 8 OF THE ORDER LEVYING PENALTY UNDER SECTION 271E OF THE ACT. IN THE ABSENCE OF ANY CONFIRMATION FROM THE CREDITORS THAT THEY INSISTED ON REPAYMENT IN CASH INSTEAD OF CHEQUE/DRAFT, WHERE THE PERSONS THEMSELVES HAD GIVE N THE LOAN BY CHEQUE, THE EXPLANATION OF THE ASSESSEE THAT IT WAS PREVENTED B Y SUFFICIENT REASONABLE CAUSE WAS HELD TO BE INCORRECT, BASELESS AND NOT ACCEPTAB LE. ACCORDINGLY, PENALTY UNDER SECTION 271E OF THE ACT WAS LEVIED AT RS.5,20 ,000/-. 5. THE CIT(A) NOTED THAT THE LOANS WERE TAKEN FROM RELATED PARTIES BY THE ASSESSEE WAY BACK IN 2002 AND THE AMOUNTS WERE REPA ID IN CASH ON REGULAR BASIS NOT EXCEEDING RS.20,000/- ON A SINGLE DAY. T HE CIT(A) WAS OF THE VIEW THAT THE ASSESSEE WAS AWARE OF THE PROVISIONS OF SE CTION 269T AND SECTION 271E OF THE ACT AND SUCH REPAYMENT OF LOANS IN CASH WAS IN DELIBERATE DEFIANCE OF LAW. THE CIT(A) UPHELD THE LEVY OF PENALTY UNDER SECTION 271E OF THE ACT. 6. THE ASSESSEE IS IN APPEAL AGAINST THE SAID LEVY OF PENALTY UNDER SECTION 271E OF THE ACT. 7. THE PLEA OF THE LD. AUTHORIZED REPRESENTATIVE FO R THE ASSESSEE BEFORE US WAS THAT THE CONFIRMATIONS FROM THREE LOAN CREDITOR S WERE FILED BEFORE THE AUTHORITIES BELOW VIDE THE SAID CONFIRMATION, THE R ESPECTIVE PARTIES HAD REQUESTED THE REPAYMENT IN CASH AS THEIR BANK ACCOUNTS HAD BE COME NPA BECAUSE OF LOSSES IN THE BUSINESS. OUR ATTENTION WAS DRAWN TO THE CONFIRMATION FURNISHED AT PAGES 32, 55 AND 79 OF THE PAPER BOOK. THE LD. AUT HORIZED REPRESENTATIVE FOR ITA NO.1994/PN/2013 4 THE ASSESSEE FURTHER POINTED OUT THAT THE AMOUNTS W ERE PAID ON DIFFERENT DATES IN CASH AND THE SAME WAS AVAILABLE WITH THE ASSESSEE. IN VIEW THEREOF, THE PLEA OF THE LD. AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE BEFORE US WAS THAT THERE WAS A REASONABLE CAUSE FOR NOT REPAYING THE AMOUNT BY C HEQUE AND CONSEQUENTIALLY THERE WAS NO MERIT IN THE LEVY OF PENALTY UNDER SEC TION 271E OF THE ACT. 8. THE LD. DEPARTMENTAL REPRESENTATIVE FOR THE REVE NUE PLACED RELIANCE ON THE ORDERS OF THE AUTHORITIES BELOW AND POINTED OUT THAT THE LOAN CREDITORS WERE INDIVIDUALS AND ONE LOAN CREDITOR WAS A BUSINESS FI RM. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE ARISING IN THE PRESENT APPEAL IS AGAINST THE LEVY O F PENALTY UNDER SECTION 271E OF THE ACT. UNDER THE PROVISIONS OF SECTION 269T OF T HE ACT, IT IS PROVIDED THAT NO BRANCH OF A BANKING COMPANY OR CO-OPERATIVE BANK AN D NO OTHER COMPANY OR CO- OPERATIVE SOCIETY AND NO FIRM OR OTHER PERSON SHALL REPAY ANY LOAN OR DEPOSIT MADE WITH IT OTHERWISE THAN BY AN ACCOUNT PAYEE CHE QUE OR ACCOUNT PAYEE BANK DRAFT, DRAWN IN THE NAME OF PERSON, WHO HAS MADE TH E LOAN OR DEPOSIT, WHERE AN AMOUNT OF LOAN OR DEPOSIT TOGETHER WITH THE INTERES T, IF ANY, IS TWENTY THOUSAND RUPEES OR MORE, OR WHERE THE AGGREGATE AMOUNT OF TH E LOAN OR DEPOSIT HELD BY SUCH PERSON, HOWEVER, IN HIS OWN NAME OR JOINTLY WI TH ANY OTHER PERSON ON THE DATE OF SUCH REPAYMENT TOGETHER WITH THE INTEREST, IF ANY, PAYABLE ON SUCH LOAN OR DEPOSIT IS TWENTY THOUSAND RUPEES OR MORE. FURTHER , THE PROVISO PROVIDES CERTAIN EXCEPTIONS WHICH ARE NOT RELEVANT FOR DECIDING THE ISSUE BEFORE US. IN CASE OF VIOLATION OF THE PROVISIONS OF SECTION 269T OF THE ACT, PENALTY UNDER SECTION 271E OF THE ACT IS PROVIDED EQUIVALENT TO THE AMOUNT OF LOAN OR DEPOSIT SO REPAID IN CASH. ANOTHER CONDITION FOR LEVYING PENALTY UNDER SECTION 271E OF THE ACT IS THAT THE SAME SHALL BE IMPOSED BY THE JT. COMMISSIONER O F INCOME TAX. ITA NO.1994/PN/2013 5 10. THE ASSESSEE BEFORE US IS A COMPANY AND WHO, IN TURN, HAD RECEIVED THE UNDER-MENTIONED LOANS FROM THE UNDER-MENTIONED PART IES BY CHEQUES IN THE EARLIER YEARS :- 1. SHRI ABHIJEET SALECHA. RS.1,00,000/- I.E. 2.5.02 THROUGH CHEQUE 30,000/- 7.5.02 THROUGH CHEQUE 70,000/- 2. SALECHA INDUSTRIES. RS.1,20,000/- I.E. 1.4.02 OPENING BALANCE 50,000/- 19.10.02 THROUGH CHEQUE 70,000/- 3. SHRI A. V. SALECHA. RS.3,00,000/- I.E. 1.4.02 OPENING BALANCE 3,00,000/- 11. THE ASSESSEE HAD TAKEN THE LOANS FROM ABOVE-SAI D PARTIES THROUGH CHEQUES AND THE SAID LOANS WERE INTEREST-FREE LOANS . DURING THE FINANCIAL YEAR 2008-09, THE ASSESSEE REPAID THE SAID LOANS IN CASH BY SPLITTING THE PAYMENT IN AMOUNT OF RS.20,000/- OR LESS THAN RS.20,000/- REPA ID ON A SINGLE DAY. THE BIFURCATION OF THE REPAYMENT IN CASH IS TABULATED B Y THE ASSESSING OFFICER IN THE ORDER OF LEVYING PENALTY UNDER SECTION 271E OF THE ACT AT PAGES 7 8. IN VIEW OF THE FACT THAT THE LOAN OUTSTANDING WAS MORE THAN RS .20,000/- IN EACH OF THE CASE, THE REPAYMENT IN CASH OF SUCH LOAN VIOLATED THE PRO VISIONS OF SECTION 269T OF THE ACT, MAKING THE ASSESSEE EXIGIBLE TO LEVY OF PENALT Y UNDER SECTION 271E OF THE ACT. HOWEVER, THE CASE OF THE ASSESSEE BEFORE THE AUTHORITIES BELOW AND BEFORE US WAS THAT NO PENALTY UNDER SECTION 271E OF THE AC T WAS LEVIABLE, AS THE ASSESSEE HAD REASONABLE CAUSE FOR REPAYING THE AMOU NTS IN CASH AND THE PROVISIONS OF SECTION 273B OF THE ACT WERE APPLICAB LE. UNDER SECTION 273B OF THE ACT, IT IS PROVIDED THAT WHERE THE PERSON THOUGH HA S DEFAULTED UNDER VARIOUS PROVISIONS OF THE ACT AS ENLISTED IN SECTION 273B O F THE ACT, NO PENALTY SHALL BE IMPOSABLE FOR ANY FAILURE REFERRED TO IN THE SAID P ROVISIONS, IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR THE SAID FAILURE. SECTION 271E OF THE ACT IS COVERED UNDER THE PROVISIONS OF SECTION 273B OF THE ACT. I N OTHER WORDS, IF THE ASSESSEE ESTABLISHES THAT THERE WAS A REASONABLE CAUSE IN NO T COMPLYING WITH THE ITA NO.1994/PN/2013 6 PROVISIONS OF SECTION 269T OF THE ACT, THEN BECAUSE OF THE REASONABLE CAUSE ESTABLISHED BY SUCH PERSON OR ASSESSEE, NO PENALTY IS LEVIABLE FOR THE SAID FAILURE IN VIEW OF SECTION 273B OF THE ACT. 12. THE CASE OF REASONABLE CAUSE PUT UP BY THE ASSE SSEE BEFORE US WAS THAT THE SAID LOANS WERE TAKEN FROM PARTIES WHOSE BANK A CCOUNTS HAD BECOME NPA AND HENCE THERE WAS A REQUEST FROM THE SAID PARTIES TO REPAY THE AMOUNT IN CASH. THE COMMUNICATION FROM SHRI A.V. SALECHA IS PLACED AT PAGE 32 OF THE PAPER BOOK IN WHICH SUCH A REQUEST WAS MADE. THE PLEA OF THE ASSESSEE BEFORE US WAS THAT IN VIEW THEREOF THE AMOUNTS WERE REPAID IN CASH ON DIFFERENT DATES AT RS.20,000/- AND LESS THAN 20,000/-. THE PHOTOCOPIE S OF THE SAID CASH RECEIPTS ARE PLACED AT PAGES 33 TO 49 OF THE PAPER BOOK. SI MILARLY, THE CASH LOAN OF RS.1,00,000 RECEIVED FROM SHRI ABHIJEET SALECHA WAS REPAID IN CASH AS PER HIS REQUEST, COPY OF WHICH IS PLACED AT PAGE 55 OF THE PAPER BOOK ALONG WITH CASH RECEIPTS AT PAGES 56 TO 61 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO PLACED ON RECORD THE COPIES OF THE BANK ACCOUNT OF SHRI ABHIJ EET SALECHA AT PAGE 62 OF THE PAPER BOOK UNDER WHICH IT IS REFLECTED THAT THE ASS ESSEE HAS MINIMAL BALANCE AND THE SAID BANK ACCOUNT IS NOT IN OPERATION. FUR THER, OUR ATTENTION WAS DRAWN TO THE BANK STATEMENT OF M/S SALECHA INDUSTRIES PLA CED AT PAGES 51 TO 54 AND 65 TO 78 OF THE PAPER BOOK. THE ASSESSEE HAS ALSO PLA CED ON RECORD THE EVIDENCE OF WRITE-OFF OF LOAN OF M/S SALECHA INDUSTRIES AT P AGE 87 OF THE PAPER BOOK. THE PERUSAL OF THE ABOVE-SAID STATEMENTS REFLECT THAT T HERE WAS NEGATIVE BALANCE IN THE BANK ACCOUNT OF M/S SALECHA INDUSTRIES FROM DAY TO DAY WHICH, IN TURN, WAS SETTLED BY WAY OF WRITE-OFF OF LOAN. IN VIEW THERE OF, WE FIND MERIT IN THE PLEA OF THE ASSESSEE WITH REGARD TO THE ACCOUNT OF M/S SALECHA INDUSTRIES HAVING BEEN TURNED NPA. ACCORDINGLY, THE ASSESSEE HAVING REPAI D THE LOAN DUE TO M/S SALECHA INDUSTRIES AT RS.1,20,000/- IN CASH, DOES N OT ATTRACT LEVY OF PENALTY UNDER SECTION 271E OF THE ACT, AS THE ASSESSEE HAD REASONABLE CAUSE FOR NOT PAYING THE SAID AMOUNT BY WAY OF CHEQUE. ITA NO.1994/PN/2013 7 13. IN RESPECT OF THE REPAYMENT OF LOANS OF SHRI AB HIJEET SALECHA OF RS.1,00,000/- AND SHRI A.V. SALECHA OF RS.3,00,000/ -, ESPECIALLY IN THE CIRCUMSTANCES WHERE THE SAID LOAN CREDITORS WERE MA INTAINING SAVINGS BANK ACCOUNTS, COPY OF WHICH IS PLACED AT PAGES 62 63 OF THE PAPER BOOK, WE FIND THAT THE ASSESSEE HAS FAILED TO ESTABLISH REASONABL E CAUSE FOR NOT REPAYING LOAN BY WAY OF CHEQUE. IN THE ABSENCE OF THE SAME, WE F IND NO MERIT IN THE PLEA OF THE ASSESSEE AND ACCORDINGLY WE UPHOLD THE LEVY OF PENA LTY UNDER SECTION 271E OF THE ACT TO THE EXTENT OF RS.4,00,000/-. THE GROUND S OF APPEAL RAISED BY THE ASSESSEE ARE THUS, PARTLY ALLOWED. 14. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED ON THIS 20 TH DAY OF MAY, 2015. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 20 TH MAY, 2015 SUJEET COPY OF THE ORDER IS FORWARDED TO: - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-2, NASHIK; 4) THE CIT-2, NASHIK; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE