The ITO, Ward-1, Mehsana V. Shri Bhupendrasingh Hakamsingh Luhar, Mehsana

ITA 2016/AHD/2012

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 94778 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-11-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 19-11-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 07-09-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NAGENDRA SINGH
• Assessee Lawyers: S N DIVATIA
• Keywords: Business expenditure; Bonafide belief; Reasonable cause; Tax effect

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER AND SHRI S.S. GODARA, JUDICIAL MEMBER ./ ITA NO. 2016/AHD/2012 / ASSESSMENT YEAR: 2008-09 THE I.T.O., WARD-1, MEHSANA VS SHRI LUHAR BHUPENDRASINGH HAKAMSINGH, PROP. BHUPENDRA HOUSE CRANE SERVICES, OPP. ONGC NAGAR, HIGHWAY, MEHSANA PAN : AATPL 0486 F / (APPELLANT) / (RESPONDENT) REVENUE BY : SHRI NAGENDRA SINGH, SR DR ASSESSEE(S) BY : SHRI S.N. DIVATIA, AR / DATE OF HEARING : 19/11/2015 /DATE OF PRONOUNCEMENT: 30/11/2015 / O R D E R PER ANIL CHATURVEDI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS), GANDHINAGAR, AHMEDABAD DATED 01.06.2012 FOR ASSESSMENT YEAR 2008-09. 2. THE BRIEF FACTS OF THE CASE, AS CULLED OUT FROM THE RECORDS, ARE AS UNDER:- 3. THE ASSESSEE IS AN INDIVIDUAL STATED TO BE DERIV ING INCOME FROM CRANE HIRING SERVICES/JCB MACHINES TO VARIOUS PARTIES. DU RING THE COURSE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER NOTIC ED THAT THE ASSESSEE HAD ACCEPTED CASH LOAN ABOVE RS.20,000/- ON VARIOUS DAT ES DURING FINANCIAL YEAR 2007-08, AGGREGATING TO RS.57,50,000/- FROM M/S. NE W BHUPENDRA HOUSE ITA NO. 2016 /AHD/2012 ITO VS. SHRI LUHAR BHUPENDRASINGH HAKAMSINGH FOR AY 2008-09 - 2 - CRANE SERVICE ITS SISTER-CONCERN WHICH WAS IN VIO LATION OF PROVISIONS OF SECTION 269SS OF THE ACT. THE DCIT ACCORDINGLY MAD E A REFERENCE TO THE ADDL. CIT FOR LEVY OF PENALTY U/S 271D OF THE ACT I N VIEW OF THE VIOLATION OF PROVISIONS TO SECTION 269SS OF THE ACT.. ACCORDING LY, ADDL. CIT VIDE ORDER DATED 15.04.2011 PASSED U/S. 271D OF THE ACT HELD T HAT THE ASSESSEE HAD COMMITTED DEFAULT WITHOUT ANY REASONABLE CAUSE U/S 269SS OF THE ACT AND HAD ACCEPTED LOAN OF RS.55,75,000/-. HE ACCORDINGL Y LEVIED PENALTY OF RS.55,75,000/- U/S 271D OF THE ACT. AGGRIEVED BY T HE ORDER OF THE ADDL. CIT, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFO RE THE LD. CIT(A) WHO VIDE ORDER DATED 01.06.2012 DELETED THE PENALTY BY HOLDING AS UNDER:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE, THE P ENALTY ORDER, THE SUBMISSIONS MADE BY THE APPELLANT BEFORE THE ADDL. CIT AND ARGU MENTS AGAINST IMPOSITION OF PENALTY FILED AS GROUNDS OF APPEAL RE PRODUCED IN PARA. 4, EARLIER IN THIS ORDER. I HAD ALSO CALLED FOR THE CASH BOOK OF THE ASSESSEE ALONGWLTH OTHER BOOKS OF ACCOUNTS DURING THE COURSE OF APPELL ATE PROCEEDINGS. THE ASSESSEE HAS ACCEPTED LOAN OF RS. 55.75 LAKH FR OM NEW BHUPENDRA HOUSE CRANE SERVICE IN CASH AND THE SAME IS ALSO RE FLECTED IN THE BOOKS OF ACCOUNT OF THE ASSESSEE. NEW BHUPENDRA HOUSE CRANE SERVICE IS SISTER CONCERN & PROPRIETARY CONCERN OF UPKERSINGH B. LUNA R (SON OF BHUPENDRASLNGH H. LUNAR). THE APPELLANT HAS PLEADED THAT HE IS TAKING SERVICE FROM HIS SON OF HIRING OF CRANES & TRAILERS FOR HIS BUSINESS. WHEN MONEY WAS NEEDED IN EMERGENCY FOR THE BUSINESS NEED ; THEY HAD TAKEN MONEY IN CASH FROM THE SISTER CONCERN AND HAD PAID BACK IN SHORT TIME WITHOUT ANY INTEREST HAVING BONAFIDE BELIEF THAT TH IS IS NOT A TRANSACTION OF LOANS OR DEPOSIT BUT IT IS IN NATURE OF CURRENT A/C CUM CREDITORS A/C. THE APPELLANT HAS FURTHER PLEADED THAT HE WAS HAVIN G BELIEF THAT SUCH ACCOUNT IS NOT A LOAN OR DEPOSIT ACCOUNT AND RELIED UPON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF IDHYAM PUB LICATIONS LIMITED (2006) 285 ITR 221(MAD). I HAVE FOUND FROM THE CASH BOOK THAT WHENEVER THE C ASH AMOUNTS WERE TAKEN FROM HIS SON'S CONCERN, THESE WERE MANY A TIMES ON THE SAME DAY OR THE VERY NEXT DAY UTILIZED FOR MAKING BUSINESS PAYMENTS. THE INSTANCES WHERE THE CASH HAS BEEN UTILIZED FOR BUSINESS ON THE VERY DAY INCLUDE TAKING OF CREDIT AND UTILIZATION OF CASH ON 9/5/2007, 11/5/2007, 16/ 5/2007, 18/5/2007, 28/5/2007, 31/5/2007, 4/6/2007, 9/6/2007, 11/6/2007 ETC. THESE INSTANCES SUPPORT THE ASSESSEE'S STAND THAT THE CASH WAS TAKE N IN CASE OF EMERGENCY OF ITA NO. 2016 /AHD/2012 ITO VS. SHRI LUHAR BHUPENDRASINGH HAKAMSINGH FOR AY 2008-09 - 3 - BUSINESS PURPOSE. I AGREE WITH THE APPELLANT THAT T HE INSTANCES WHERE THE CASH HAS NOT BEEN UTILIZED ON THE SAME DAY DOES NOT PROVE THE CONTRARY BECAUSE THE CASH MAY HAVE BEEN TAKEN EXPECTING PAYM ENTS ON SOME DAYS WHICH MAY NOT HAVE ACTUALLY MATERIALIZED. IN GENERA L, IT CAN BE SAID THAT THE APPELLANT HAS BEEN ABLE TO PROVE THAT THE CASH WAS TAKEN FOR MEETING EMERGENT BUSINESS EXPENSES LIKE SALARY & WAGES, REP AIRS AND MAINTENANCE ETC. I AGREE WITH THE APPELLANT THAT ITS CASE IS SQUAREL Y COVERED BY THE DECISION OF HON'BLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V/S. SUNILKUMAR GOEL (2009) 315 I.T.R. 163. THE GIST OF THE DECISIO N IS AS UNDER: 'A FAMILY TRANSACTION BETWEEN TWO INDEPENDENT ASSES SEES BASED ON AN ACT OF CASUALNESS, ESPECIALLY IN A CASE WHERE DISCL OSURE THEREOF IS CONTAINED IN COMPILATION OF ACCOUNTS AND WHICH HAS NO TAX EFFECT, ESTABLISHES 'REASONABLE CAUSE' UNDER SECTION 273B- ASSESSING OFFICER IMPOSED PENALTY UNDER SECTIONS 271D AND 271E UPON A SSESSEE FOR ACCEPTING OR RETURNING CASH LOANS IN VIOLATION OF P ROVISIONS OF SECTIONS 269SS AND 269T - ON APPEAL, TRIBUNAL, TAKI NG NOTE OF FACTS THAT CASH TRANSACTIONS OF ASSESSEE WERE WITH SISTER CONCERN AND DUE TO BUSINESS EXIGENCY; THAT ASSESSEE HAD PRODUCED HIS C ASH BOOKS DEPLETING LOANS TAKEN BY HIM UNILATERALLY BEFORE RE VENUE; AND THAT NO PREJUDICE WAS CAUSED TO REVENUE INASMUCH AS ASSESSE E DID NOT ATTEMPT BY IMPUGNED ACT TO AVOID ANY TAX LIABILITY, HELD TH AT ASSESSEE HAD SHOWN REASONABLE CAUSE FOR NOT ABIDING BY PROVISION S OF SECTIONS 269SS AND 269T - IT, THEREFORE, DELETED PENALTY IMP OSED UPON ASSESSEE - WHETHER ON FACTS, TRIBUNAL HAD TAKEN CORRECT DECI SION - HELD, YES' IN THIS CASE ALSO, THE TRANSACTIONS ARE BETWEEN TWO INDEPENDENT RELATED ASSESSEES, IN FACT FATHER AND SON. NOT ONLY ARE TH E TRANSACTIONS DEPICTED IN THE ACCOUNT BOOKS, IN FACT, THE REPAYMENT OF AMOUNT S IS THROUGH CHEQUES WHICH FURTHER PROVES THE BONAFIDES OF THE A SSESSEE. THE AMOUNT WAS TAKEN DUE TO BUSINESS EXIGENCY; THE ASSESSES HAS PR ODUCED HIS CASH BOOKS DEPICTING BANS TAKEN BY HIM UNILATERALLY BEFORE REV ENUE; AND THAT NO PREJUDICE WAS CAUSED TO REVENUE INASMUCH AS ASSESSE E DID NOT ATTEMPT BY IMPUGNED ACT TO AVOID ANY TAX LIABILITY. THEREFORE, FOLLOWING THE ABOVE REFERRED JUDGMENT OF THE HON'BLE PUNJAB & HARYANA H IGH COURT, IT IS HELD THAT THERE WAS A REASONABLE CAUSE WITH THE ASSESSEE FOR NOT ABIDING BY PROVISIONS OF SECTION 269SS. RELIANCE IS ALSO PLAC ED ON THE DECISION OF HON'BLE ITAT, AHMEDABAD IN THE CASE OF SHREENATH BU ILDERS 66 TTJ H3, WHEREIN THE PENALTY WAS HELD TO BE NOT IMPOSABLE ON SIMILAR FACTS WHERE AMOUNTS IN CASH WERE TAKEN DURING REGULAR COURSE OF BUSINESS AND THE TRANSACTIONS WERE HELD BONAFIDE AND GENUINE. THE HO N'BLE JURISDICTIONAL ITAT HAD CANCELLED THE PENALTY SAYING THAT A TECHNI CAL BREACH WHERE THE ITA NO. 2016 /AHD/2012 ITO VS. SHRI LUHAR BHUPENDRASINGH HAKAMSINGH FOR AY 2008-09 - 4 - BREACH FOLLOWS A BONAFIDE BELIEF DOES NOT LEAD TO I MPOSITION OF PENALTY. IN THE PRESENT CASE ALSO THERE IS NO ALLEGATION EVEN OF TH E TRANSACTIONS BEING NOT GENUINE. THEREFORE, THE PENALTY IMPOSED IS DIRECTED TO BE CANCELLED ON THE GROUNDS OF EXISTENCE OF REASONABLE CAUSE AND BONAFI DE BELIEF. 4. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE RE VENUE IS NOW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS:- 1. THE LEARNED CIT (APPEALS) HAS ERRED IN LAW AND ON FACTS DELETING THE PENALTY IMPOSED U/S 271D AMOUNTING TO RS.55,75,000/ - MADE BY THE AO. 2. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) OUGHT TO HAVE UPHELD THE ORDER OF THE ASSESSING OFFICER. 5. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE T OOK US THROUGH THE PENALTY ORDER OF THE ADDL. CIT & SUPPORTED HIS ORDE R. ON THE OTHER HAND, LD. AUTHORIZED REPRESENTATIVE REITERATED THE SUBMIS SIONS MADE BEFORE THE ADDL. CIT AND CIT(A); AND FURTHER PLACED RELIANCE O N THE DECISION RENDERED BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CI T VS. MAA KHODIYAR CONSTRUCTION, REPORTED IN (2014) 365 ITR 474 (GUJ.) AND IN THE CASE OF CIT VS. SHREE AMBICA FLOUR MILLS CORPORATION, REPORTED IN (2008) 6 DTR 169. HE ALSO PLACED ON RECORD THE COPIES OF ABOVE STATED DECISIONS. HE, THUS, SUPPORTED THE ORDER OF LD. CIT(A). 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. THE ISSUE IN THE PRESENT CASE IS WITH REGARD TO LEVY OF PENALTY U/S 271D OF THE ACT. IT IS AN UNDISPUTED F ACT THAT DURING THE YEAR THE ASSESSEE HAD TAKEN MONEY AGGREGATING TO RS. 55. 75 LACS IN CASH FROM THE PROPRIETARY CONCERN OF HIS SON. IT IS ALSO A FACT T HAT THE AMOUNTS WERE REPAID BY CHEQUES AND WERE REFLECTED IN THE BOOKS OF ASSES SEE. WE FIND THAT LD. CIT(A), WHILE DELETING THE PENALTY, HAS GIVEN A FIN DING THAT THE ASSESSEE HAS BEEN ABLE TO PROVE THAT THE CASH WAS TAKEN FOR MEET ING BUSINESS EXIGENCY, THE TRANSACTIONS WERE BETWEEN TWO INDEPENDENT RELAT ED ASSESSEES, THE ITA NO. 2016 /AHD/2012 ITO VS. SHRI LUHAR BHUPENDRASINGH HAKAMSINGH FOR AY 2008-09 - 5 - REPAYMENT OF AMOUNTS WERE MADE THROUGH CHEQUES WHIC H ALSO PROVED THE BONA FIDES OF THE ASSESSEE; AND THAT THERE WERE NO ALLEGATION S ABOUT THE TRANSACTIONS BEING NOT GENUINE WHICH LEADS TO THE C ONCLUSION OF EXISTENCE OF REASONABLE CAUSE AND BONA FIDE BELIEF ON THE PART OF THE ASSESSEE. WE FURTHER FIND THAT THE HONBLE GUJARAT HIGH COURT IN THE CAS E OF CIT VS. MAA KHODIYAR CONSTRUCTION (SUPRA) HAS CONCLUDED THAT TH E PENALTY WILL NOT ORDINARILY BE IMPOSED UNLESS THE PARTY OBLIGED, EIT HER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIO US OR DISHONEST, OR ACT IN CONSCIOUS DISREGARD TO ITS OBLIGATION. BEFORE U S, THE REVENUE HAS NOT POINTED OUT ANY FALLACY IN THE FINDING OF THE LD. C IT(A) NOR HAS PLACED ON RECORD ANY CONTRARY BINDING DECISION IN ITS SUPPORT . IN VIEW OF THE AFORESAID FACTS, WE FIND NO REASON TO INTERFERE WIT H THE ORDER OF THE CIT(A) AND THEREFORE THE GROUND OF THE REVENUE IS DISMISSE D. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 30 TH NOVEMBER, 2015 AT AHMEDABAD. SD/- SD/- (S.S. GODARA) JUDICIAL MEMBER (ANIL CHATURVEDI) ACCOUNTANT MEMBER AHMEDABAD; DATED 30/11/2015 *BIJU T, PS !'#'$ / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. !' # / CONCERNED CIT 4. # ( ) / THE CIT(A) 5. &'( ' , ' , ! / DR, ITAT, AHMEDABAD 6. (-. / GUARD FILE. / BY ORDER, //TRUE COPY// / (DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD