Sukanta Bardhan, Kolkata V. JCIT, Range-2, Hooghly, Hooghly

ITA 200/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1570 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 25-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALYAN NATH
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENCH KOLKATA BEFORE SHRI N. V. VASUDEVAN, JM & DR. A.L.SAINI, AM ./ ITA NO.200/KOL/2015 ( / ASSESSMENT YEAR: 2009-10 SUKANTA BARDHAN C/O S.N. GHOSH & ASSOCIATES, ADVOCATES, SEVEN BROTHERS LODGE, P.O. BUROSHIBTALA. P.S. CHINSURAH, DIST. HOOGHLY. PIN- 712105. VS. J.C.I.T, RANGE 2, HOOGHLY ./ ./PAN/GIR NO. : ADLPB 3978 J (APPELLANT) .. (RESPONDENT) APPELLANT BY :SHRI SOMNATH GHOSH, ADVOCATE RESPONDENT BY :SHRI KALYANNATH, ADDL. CIT, SR. DR / DATE OF HEARING : 13/07/2017 /DATE OF PRONOUNCEMENT : 30/08/2017 / O R D E R PER DR. ARJUN LAL SAINI, AM: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERTAINING TO ASSESSMENT YEAR 2009-10, IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS) 6, KOLKATA, IN APPEAL NO.10/CIT(A)-6/KOL/12-13, DATED 29.01.2015, WHICH IN TURN ARISES OUT OF AN ORDER PASSED BY THE AO U/S.271D OF THE INCOME TAX ACT 1961, (HEREINAFTER REFERRED TO AS THE ACT) DATED 29.03.2012. 2. THE BRIEF FACTS QUA THE ASSESSEE ARE THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE A.Y 2009-10 ON 27.09.2009. THE ASSESSEES RETURN WAS PROCESSED U/S.143(1), DATED 30.07.2010. SUBSEQUENTLY, THE SUKANTA BARDHAN I.T.A NO.200/KOL/2015 A.Y. 2009-10 PAGE | 2 ASSESSEES CASE WAS SELECTED FOR SCRUTINY U/S. 143(2) OF THE ACT AND THE AO HAD COMPLETED THE ASSESSMENT BY MAKING VARIOUS ADDITIONS BASED ON ESTIMATE. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE HAS ACCEPTED TEMPORARY FINANCIAL ACCOMMODATION LOAN OF RS.6,00,000/- FROM DIFFERENT PERSONS. THE ASSESSING OFFICER INITIATED PENALTY PROCEEDINGS U/S.271D BECAUSE THE LOAN HAS BEEN ACCEPTED AND PAID IN CASH. DURING THE PENALTY PROCEEDINGS, THE ASSESSEE SUBMITTED THAT TRANSFER OF FUNDS BETWEEN FATHER AND SON CANNOT BE CATEGORIZED AS A LOAN AND DO NOT VIOLATE THE PROVISIONS OF SECTION 269SS OF THE INCOME TAX ACT, 1961 AND THE PENALTY U/S 271D READ WITH SECTION 273B OF THE ACT IS NOT TENABLE. THE SON AND FATHER DO NOT FALL IN THE DEFINITION OF ANY OTHER PERSONS. THEREFORE, PENALTY SHOULD NOT BE LEVIED. HOWEVER, THE ASSESSING OFFICER IGNORING THE SUBMISSIONS OF THE ASSESSEE IMPOSED PENALTY U/S 271D OF THE ACT AT RS.3,30,000/- BEING EQUAL TO THE AMOUNT OF THE CASH LOAN TAKEN BY THE ASSESSEE. 3. AGGRIEVED FROM THE PENALTY ORDER U/S.271D OF THE I.T ACT, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A) WHO HAS CONFIRMED THE PENALTY U/S 271D IMPOSED BY THE ASSESSING OFFICER. THE LD. CIT(A) OBSERVED THAT AS PER SECTION 269SS NO PERSON SHALL TAKE OR ACCEPT ANY LOAN OR DEPOSIT OTHERWISE THEN BY ACCOUNT PAYEE CHEQUE/DRAFT. IN SUKANTA BARDHAN I.T.A NO.200/KOL/2015 A.Y. 2009-10 PAGE | 3 CASE ANY DEPOSIT IS TAKEN CONTRARY TO PROVISIONS OF SECTION 269SS, THE PENALTY U/S271D WILL BE IMPOSED. THE ONLY MITIGATING CONDITION HAS BEEN LAID DOWN IN SECTION 273B AS PER WHICH, IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAILURE. THE LD. CIT(A) ALSO OBSERVED THAT IN THIS CASE, THERE WAS NO BUSINESS EXIGENCY FOR ACCEPTING SUCH DEPOSIT IN CASH AS THERE WAS ABSOLUTELY NO URGENCY FOR GIVING OR RECEIVING THE AMOUNT IN CASH. THEREFORE, ASSESSEE HAS TO PROVE THAT THE PENALTY SHOULD NOT BE LEVIED. HENCE, THE LD. CIT(A) CONFIRMED THE PENALTY IMPOSED BY THE ASSESSING OFFICER. 4. NOT BEING SATISFIED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US, AND HAS TAKEN THE FOLLOWING GROUNDS OF APPEALS: 1. FOR THAT THE LD. CIT(A)-6, KOLKATA FAILED TO APPRECIATE THAT NONE OF THE CONDITIONS PRECEDENT REQUIRED TO BE SATISFIED FOR THE ASSUMPTION OF JURISDICTION U/S.271D READ WITH SECTION.269SS OF THE I.T ACT, 1961 EXISTED AND/OR HAVE BEEN COMPLIED WITH AND /OR FULFILLED IN THE INSTANT CASE BY THE LD. JCIT, RANGE 2, HOOGHLY AND HIS SPECIOUS ACTION IN UPHOLDING THE IMPUGNED ORDER IMPOSING PENALTY TO THE EXTENT OF RS.3,30,000/- IN THAT LEGAL PERSPECTIVE IS THEREFORE AB INITIO VOID, ULTRA VIRES AND EX FACIE NULL IN LAW. 2.FOR THAT ON A TRUE AND PROPER INTERPRETATION OF THE SCOPE AND AMBIT OF THE PROVISIONS OF S.271D OF THE I.T ACT, 1961, THE LD. CIT(A)-6, KOLKATA MISCONCEIVED HIS JURISDICTION IN UPHOLDING THE ACTION OF THE LD. JCIT, RANGE 2, HOOGHLY OF PASSING THE SPECIOUS ORDER IMPOSING PENALTY TO THE EXTENT OF RS.3,30,000/- MISCONSTRUING THE EXPRESSION ANY OTHER PERSON APPEARING IN THE PROVISIONS OF S. 269SS OF THE ACT AND HIS PURPORTED FINDING SUKANTA BARDHAN I.T.A NO.200/KOL/2015 A.Y. 2009-10 PAGE | 4 REACHED ON SUCH TENUOUS PREMISE IS COMPLETELY UNFOUNDED, UNJUSTIFIED AND UNTENABLE IN LAW. 3. FOR THAT THE LD. CIT(A)-6, KOLKATA ACTED UNLAWFULLY IN UPHOLDING THE ORDER IMPOSING PENALTY U/S.271D OF THE I.T ACT, 1961 AMOUNTING TO RS.3,30,000/- PASSED BY THE LD. JCIT, RANGE 2, HOOGHLY AND WAS REMISS IN NOT TAKING INTO CONSIDERATION THE REASONABLE CAUSE AS ENVISAGED WITHIN THE SCOPE AND AMBIT OF THE PROVISIONS OF S.273B OF THE I.T. ACT, 1961 ON THE FACTS AND CIRCUMSTANCES OF THE INSTANT CASE AND THE ADVERSE CONCLUSION REACHED ON THAT BEHALF IS TOTALLY ILLEGAL, ILLEGITIMATE AND INFIRM IN LAW. 5. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE TRANSACTION WAS HAPPENED ONLY BETWEEN FATHER AND SON. FATHER AND SON DOES NOT FALL IN THE DEFINITION OF ANY OTHER PERSON AS EXPLAINED IN SECTION 269SS OF THE I.T ACT, WHICH READS AS UNDER: 269SS. MODE OF TAKING AND ACCEPTION CERTAIN LOANS, DEPOSITS AND SPECIFIED SUM: NO PERSON SHALL TAKE OR ACCEPT FROM ANY OTHER PERSON (HEREIN REFERRED TO AS DEPOSITOR), MODE OF TAKING ANY LOAN OR DEPOSIT.. THEREFORE, LOOKING TO THE PROVISIONS OF SECTION 269SS AS EXPLAINED ABOVE, THE TRANSACTIONS BETWEEN FATHER AND SON DOES NOT FALL IN THE DEFINITION OF ANY OTHER PERSON. THE ASSESSEE HAS TAKEN LOAN AND PAID LOAN ON ACCOUNT OF TEMPORARY FINANCIAL ACCOMMODATION AND IT IS BETWEEN FATHER AND SON ONLY. THEREFORE, TRANSFER OF FUNDS BETWEEN FATHER AND SON CANNOT BE CATEGORIZED AS A LOAN AND PENALTY U/S271D SUKANTA BARDHAN I.T.A NO.200/KOL/2015 A.Y. 2009-10 PAGE | 5 READ WITH SECTION 273B OF THE ACT IS NOT APPLICABLE. THE LD COUNSEL FOR THE ASSESSEE ALSO RELIED ON THE FOLLOWING JUDGMENTS: I) ITA NO.198/KOL/2015 IN THE CASE OF AVIJIT SAHA VS. JOINT COMMISSIONER OF INCOME TAX, HOOGHLY IN A.Y. 2009-10 WHEREIN IT WAS HELD AS UNDER: 3. AT THE OUTSET ITSELF, THE LD. COUNSEL FOR THE ASSESSEE STATED THAT THE PENALTY U/S.271D READ WITH SECTION 269SS OF THE ACT IS NOT APPLICABLE TO THE FACTS OF THE CASE BECAUSE THE ASSESSEE ACCEPTED AN AMOUNT OF RS.7.80 LACS ON ACCOUNT OF TEMPORARY FINANCIAL ACCOMMODATION FROM HIS MOTHER SMT. ALPANA SAHA. ACCORDING TO HIM, TAKING CASH FROM MOTHER/PARENT OUT OF BUSINESS EXPEDIENCY CANNOT ATTRACT PENALTY U/S271D R.W.S. 269SS OF THE ACT. LD. COUNSEL DREW OUR ATTENTION TO THE COORDINATE BENCH DECISION IN SWAPAN DUTTA VS. JCIT, RANGE-2, HOOGHLY, REPORTED IN 2010 TAX L.R 166, WHEREIN IT WAS HELD AS UNDER: '5. AFTER HEARING BOTH THE PARTIES AND PERUSING THE MATERIAL AVAILABLE ON RECORD AND THE CASE LAW CITED BY THE ASSESSEE, WE FIND THAT IN THIS CASE, ADMITTEDLY, THE MONEY HAS COME FROM THE PARENTS OF THE ASSESSEE. THEREFORE, THE RATIO LAID DOWN IN THE CASE OF G. D. SUBRAYA SHEREGAR V. I. T.O. (2006) 10 378 BY THE BANGALORE BENCH OF THIS TRIBUNAL IS SQUARELY APPLICABLE TO THE FACTS OF THIS CASE, WHEREIN CONTRAVENTION OF PROVISIONS OF S. 269- SS WAS HELD TO BE NOT APPLICABLE IN A TRANSACTION BETWEEN A FATHER AND SON. WE FURTHER FIND THAT THE FACT THAT THE ASSESSEE WAS IN NEED OF FUNDS AND TOOK THIS MONEY FROM HIS PARENTS WHOSE BUSINESS WAS CONDUCTED BY HIM ON THEIR BEHALF HAS NOT BEEN DISPUTED BY THE REVENUE BEFORE US. IN SUCH CIRCUMSTANCES, THERE IS A REASONABLE CAUSE FOR TAKING MONEY IN CASH FROM HIS PARENTS OUT OF BUSINESS EXPEDIENCY. THIS VIEW OF OURS IS SUPPORTED BY THE DECISION OF RAJASTHAN HIGH COURT IN THE CASE OF CIT VS. MANOJ LALWANI (2003) 260 ITR 590; (2003) TAX LR 290) (RAJ), WHEREIN IT WAS HELD THAT WHEN LOAN IN CASH HAS BEEN TAKEN IN VIEW OF URGENT NEED CONNECTED WITH EXPORT, TRIBUNAL WAS JUSTIFIED IN DELETING THE PENALTY U/S. 271D. SUKANTA BARDHAN I.T.A NO.200/KOL/2015 A.Y. 2009-10 PAGE | 6 II) IN THE ITAT, HYDERABAD BENCH A IN THE CASE OF DILLU CINE ENTERPRISES (P.). LTD. VS. ACIT IN [2002] 80 ITD 484 (HYDERABAD) WHEREIN IT WAS HELD AS UNDER: WHETHER TERM ANY OTHER PERSON OCCURRING IN THIS SECTION MEANS PERSONS WHO ARE NOT VERY INTIMATELY CONNECTED TO ASSESSEE AND, THEREFORE, ON FACTS MENTIONED UNDER HEADING PENALTY FOR WORDS AND PHRASES ANY OTHER PERSON AS OCCURRING IN SECTION 269SS OF THE INCOME-TAX ACT, 1961 THEREFORE LD COUNSEL SUBMITTED THAT TAKING CASH FROM PARENT OUT OF BUSINESS EXPEDIENCY CANNOT ATTRACT PENALTY U/S271D R.W.S. 269SS OF THE ACT. THEREFORE, BASED ON THE PRECEDENT CITED ABOVE, IT IS VERY MUCH CLEAR THAT TRANSACTIONS BETWEEN SON AND FATHER DOES NOT ATTRACT THE PROVISIONS OF SECTION 269SS. 6. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE HAS PRIMARILY REITERATED THE STAND TAKEN BY THE AO WHICH WE HAVE ALREADY NOTED IN THE EARLIER PARA AND IS NOT BEING REPEATED FOR THE SAKE OF BREVITY. 7. HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD, WE ARE OF THE VIEW THAT THE ISSUE UNDER CONSIDERATION IS THE TRANSACTION BETWEEN FATHER AND SON, BEING A TEMPORARY FINANCIAL ACCOMMODATION, THEREFORE, TAKING CASH FROM FATHER BY SON AND VIS-A-VIS CANNOT ATTRACT THE PENALTY U/S 271D READ WITH SECTION 273B OF THE I.T.ACT,1961. THEREFORE TAKING CASH FROM SUKANTA BARDHAN I.T.A NO.200/KOL/2015 A.Y. 2009-10 PAGE | 7 FATHER/PARENT OUT OF BUSINESS EXPEDIENCY CANNOT ATTRACT PENALTY U/S271D R.W.S. 269SS OF THE ACT. THEREFORE, CONSIDERING THE FACTUAL POSITION AND PRECEDENT CITED (SUPRA), WE ARE OF THE VIEW THAT THE PENALTY IMPOSED BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT(A) NEEDS TO BE DELETED. ACCORDINGLY, WE DELETE THE ADDITION. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 30/08/2017 . SD/- (N. V. VASUDEVAN) SD/- (DR. A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA ; DATED 30/08/2017 RS , SR.PS. / COPY OF THE ORDER FORWARDED TO : TRUE COPY BY ORDER SENIOR PRIVATE SECRETARY, HEAD OF OFFICE/D.D.O, I.T.A.T, KOLKATA BENCHES, KOLKATA . 1. / THE APPELLANT SUKANTA BARDHAN 2. / THE RESPONDENT- JCIT, RANGE - (2), KOLKATA 3. ( ) / THE CIT(A), :KOLKATA. 4. / CIT 5. , , / DR, ITAT, KOLKATA 6. / GUARD FILE.