SHRI SUNIL KUAMR, JAIPUR V. ADDITIONAL COMMISSIONER OF INCOME TAX, JHUNJHUNU

ITA 203/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 7510 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 09-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH JCIT DHK
• Keywords: Bonafide belief; Reasonable cause
• Section: 44AD; 273B; 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S B, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 203 & 204/JP/2018 FU/KZKJ.K O'KZ@ ASSESSMENT YEAR : 2011-12 SUNIL KUMAR, S/O- SHRI HOSHIYAR SINGH, V.P. MOHAN PURA, TEHSIL- CHIRAWA, JHUNJHUNU. CUKE VS. ADDL. COMMISSIONER OF INCOME TAX, JHUNJHUNU. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AUHPK 7246 F VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ANIL SHARMA (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 04/12/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 09/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, J.M. THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST THE TWO SEPARATE ORDERS DATED 13/12/2017 OF LD. CIT(A)-3, J AIPUR ARISING FROM THE PENALTY ORDERS PASSED U/S 271D AND 271E OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) FOR THE A.Y. 2011-12. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS IN THESE APPEALS: GROUNDS OF ITA 203/JP/2018 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS. 3,36,000 /- LEVIED U/S ITA 203 & 204/JP/2018_ SUNIL KR. VS. ADDL.CIT 2 271D OF THE IT ACT, 1961 FOR ACCEPTING ALLEGED CASH DEPOSIT OF EQUIVALENT AMOUNT IN CONTRAVENTION OF SECTION 269SS OF THE ACT. 2. THEREFORE, IT IS PRAYED TO CANCEL THE PENALTY OR DER AND DELETE THE RELEVANT DEMAND. GROUNDS OF ITA 204/JP/2018 1. UNDER THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD CIT(A) IS NOT JUSTIFIED IN CONFIRMING THE PENALTY OF RS. 3,36,000 /- LEVIED U/S 271E OF THE IT ACT, 1961 FOR MAKING ALLEGED CASH PA YMENT OF DEPOSIT OF EQUIVALENT AMOUNT IN CONTRAVENTION OF SE CTION 269T OF THE ACT. 2. THEREFORE, IT IS PRAYED TO CANCEL THE PENALTY OR DER AND DELETE THE RELEVANT DEMAND. 2. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF SUPPLY OF BUILDING MATERIAL AND FILED HIS RETURN OF INCOME DECLARING I NCOME U/S 44AD OF THE ACT OF RS. 3,08,167/-. DURING THE COURSE OF ASSESSM ENT PROCEEDINGS, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAS MADE CASH DEPOSIT OF RS. 23,36,000/- IN HIS PERSONAL SAVINGS BANK ACCOUNT. TH E ASSESSEE HAS EXPLAINED THE SOURCE OF CASH DEPOSITS WHICH INCLUDES A SUM OF RS. 2,36,000/- BELONGING TO THE FRIEND OF THE ASSESSEE SHRI SHREERAM, S/O- SHRI RICHPAL SINGH DEPOSITED FOR MAKING A DEMAND DR AFT (D.D.) FOR PARTICIPATING IN THE TENDERS OF LIQUOR SHOPS TO BE AUCTIONED BY THE EXCISE DEPARTMENT. THE ASSESSING OFFICER HAD ACCEPTED THE EXPLANATION OF SOURCE OF DEPOSIT AND CONSEQUENTLY NO ADDITION WAS M ADE IN THE INCOME OF THE ASSESSEE. HOWEVER, THE ASSESSING OFFICER REFE RRED THE MATTER FOR ITA 203 & 204/JP/2018_ SUNIL KR. VS. ADDL.CIT 3 INITIATION OF THE PENALTY PROCEEDINGS U/S 271D AND 271E OF THE ACT AS THE ASSESSEE RECEIVED THE LOAN/DEPOSIT OF RS. 3,36, 000/- AS WELL AS REPAYMENT OF THE SAME IN CASH IN VIOLATION OF PROVI SIONS OF SECTION 269SS AND 269T OF THE ACT RESPECTIVELY. THE ADDITIONA L CIT VIDE ORDERS DATED 23/11/2015 LEVIED THE PENALTY U/S 271D AS WELL AS 271E OF THE ACT OF RS. 3,36,000/- EACH. THE ASSESSEE CHALLENGED THE ACTION OF LEVY OF PENALTY BEFORE THE LD. CIT(A) AND CONTENDED THAT IT WAS NEITHER A LOAN TAKEN BY THE ASSESSEE NOR THE DEPOSITS BUT THE AMOU NT OF RS. 3,36,000/- BELONG TO THE FRIEND OF THE ASSESSEE WHO DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE FOR MAKING THE D.D. IN FAVOUR OF TH E EXCISE DEPARTMENT FOR PARTICIPATING IN THE TENDERS OF THE LIQUOR SHOP . WHEN HE DID NOT SUCCEED IN THE TENDER, THE D.D. WERE GOT CANCELLED A ND THE AMOUNT WAS REFUNDED TO THE FRIEND. THE LD. CIT(A) DID NOT ACCEPT THIS CONTENTION OF THE ASSESSEE FOR WANT OF ANY DOCUMENTARY EVIDENCE AN D ACCORDINGLY, CONFIRMED THE LEVY OF PENALTY U/S 271D AND 271E OF THE ACT. 3. BEFORE US, THE LD AR OF THE ASSESSEE HAS SUBMITT ED THAT THE ASSESSEE VIDE ITS LETTER FILED BEFORE THE ASSESSING OFFICER EXPLAINED THE SOURCE OF CASH DEPOSIT AND ALSO FILED THE AFFIDAVIT OF SHRI SHREERAM, S/O- SHRI RICHPAL SINGH, WHO HAS ACCEPTED THAT THE AMOUN T WAS DEPOSITED BY HIM IN THE BANK ACCOUNT OF THE ASSESSEE FOR MAKING D.D. IN FAVOUR OF ITA 203 & 204/JP/2018_ SUNIL KR. VS. ADDL.CIT 4 THE EXCISE DEPARTMENT FOR PARTICIPATING IN THE TEND ER OF LIQUOR SHOP, SUBSEQUENTLY, THE D.D. WERE CANCELLED AND THE AMOUNT WAS REFUNDED TO HIM, THEREFORE, THE ASSESSING OFFICER WHILE COMPLET ING THE ASSESSMENT U/S 143(3) OF THE ACT, ACCEPTED THE EXPLANATION OF THE ASSESSEE REGARDING THE SOURCE OF DEPOSIT OF RS. 3,36,000/- F ROM SHRI SHREERAM, S/O- SHRI RICHPAL SINGH. ONCE THE ASSESSEE HAS EXPL AINED THE SOURCE AS THE AMOUNT BELONGS TO SHRI SHREERAM, WHO GOT THE D.D . FROM THE BANK ACCOUNT OF THE ASSESSEE FOR PARTICIPATING IN THE TE NDER OF THE LIQUOR SHOP THEN IT WILL NOT FALL IN THE AMBIT OF THE TERM LOAN OR DEPOSIT DECEIVED BY THE ASSESSEE SO AS TO ATTRACT THE PROVISIONS OF SEC TION 269SS AND 269T OF THE ACT AND CONSEQUENTLY THE PENALTY LEVIED U/S 271D AND 271E OF THE ACT ARE NOT JUSTIFIED. THE LD AR HAS FURTHER SUB MITTED THAT THE DEPOSITOR SHRI SHREERAM, WAS NOT HAVING ANY BANK AC COUNT, THEREFORE, THE SAME WAS TAKEN BY WAY OF CASH TO MEET THE URGENT BUSINESS REQUIREMENT OF PARTICIPATING IN THE TENDER OF LIQUO R SHOPS. FURTHER THE ASSESSEE BEING THE SMALL BUSINESS MAN ENGAGED IN TH E SUPPLY OF BUILDING MATERIAL AND HAVING RURAL BACKGROUND, WAS N OT AWARE ABOUT THE TECHNICAL PROVISIONS OF SECTION 269SS OR 269T OF THE ACT. THEREFORE, THE ASSESSEE WAS UNDER BONAFIDE BELIEF THAT THE RELEVANT TRANSACTION WITH SHRI SHREERAM ARE NOT IN VIOLATION OF ANY LAW. THE LD AR HAS THUS ITA 203 & 204/JP/2018_ SUNIL KR. VS. ADDL.CIT 5 SUBMITTED THAT THE SAID EXPLANATION OF THE ASSESSEE IS A REASONABLE CAUSE FOR FAILURE TO COMPLY WITH THE PROVISIONS OF S ECTION 269SS AD 269T OF THE ACT AS PROVIDED U/S 273B OF THE ACT. HENCE, HE HAS SUBMITTED THAT THE PENALTY LEVIED U/S 271D AND 271E OF THE AC T BE DELETED. IN SUPPORT OF HIS CONTENTION HE HAS RELIED UPON THE DE CISION OF HONBLE JHARKHAND HIGH COURT IN THE CASE OF OMEC ENGINEERS VS CIT 169 TAXMAN 158 (JHARKHAND) AS WELL AS THE DECISION OF HON BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS BHAGWATI PRASAD BAJORIA ( HUF) 133 TAXMAN 426 (GAU). THE LD AR HAS ALSO RELIED UPON THE DECISI ON OF MUMBAI BENCHES OF THE TRIBUNAL DATED 18/02/2015 IN THE CAS E OF CHEMFERT TRADERS (BOMBAY) PVT. LTD. VS ACIT 1(1) IN ITA NOS. 720 & 721/MUM/2011. HENCE, THE LD AR HAS PLEADED THAT THE PENALTY LEVIED U/S 271D AND 271E OF THE ACT MAY BE DELETED. 4. ON THE OTHER HAND, THE LD DR HAS SUBMITTED THAT THERE IS NO DISPUTE THAT THE AMOUNT OF RS. 3,36,000/- WAS DEPOSI TED IN CASH BY THE ASSESSEE AS TAKEN FROM ONE SHRI SHREERAM, S/O- SHRI RICHPAL SINGH, THEREFORE, THE SAME IS IN CONTRAVENTION OF PROVISIO NS OF SECTION 269SS OF THE ACT. FURTHER THE SAID AMOUNT WAS ALSO REPAID BY THE ASSESSEE TO SHRI SHREERAM IN CASH AND AGAIN IT IS IN CONTRAVENTION O F THE PROVISIONS OF SECTION 269T OF THE ACT. HE HAS FURTHER CONTENDED TH AT THE ASSESSEE HAS ITA 203 & 204/JP/2018_ SUNIL KR. VS. ADDL.CIT 6 ONLY MADE SUBMISSIONS AND NOT FILED ANY DOCUMENTARY EVIDENCE TO ESTABLISH THAT THE DEPOSITOR USED THE AMOUNT FOR HI S OWN PURPOSE OF OBTAINING THE LICENSE IN HIS OWN NAME. NO CORRESPOND ENCE FROM THE EXCISE DEPARTMENT TO THE EFFECT WAS PRODUCED BY THE ASSESSEE IN SUPPORT OF THE CLAIM. FURTHER THE ASSESSEE ALSO COU LD NOT ESTABLISH THAT THE BIDDING WAS IN THE NAME OF DEPOSITOR AND NOT IN THE NAME OF THE ASSESSEE. EVEN OTHERWISE MAKING THE D.D. DOES NOT RE QUIRE NECESSARY A BANK ACCOUNT AND THEREFORE, THE EXPLANATION OF THE ASSESSEE REMAINED UNSUBSTANTIATED. HE HAS RELIED UPON THE ORDERS OF T HE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ASKED THE ASSESSEE TO EXPLAIN THE SOURCE OF CASH DEPOSITED IN THE BANK ACCOUNT OF THE ASSESSEE. IN R ESPONSE, THE ASSESSEE EXPLAINED THAT THE AMOUNT OF RS. 15.00 LAC S WERE WITHDRAWN FROM THE BUSINESS CONCERNED AND FURTHER AN AMOUNT O F RS. 5.00 LACS WAS OUT OF PAST SAVINGS OF THE FATHER OF THE ASSESSEE A ND THE REMAINING AMOUNT WAS EXPLAINED TO THE EXTENT OF RS. 3,36,000/- AS THE CASH DEPOSITED BY ONE SHRI SHREERAM, S/O- SHRI RICHPAL S INGH FOR MAKING THE D.D. IN FAVOUR OF THE EXCISE DEPARTMENT FOR PARTICI PATING IN TENDER OF LIQUOR SHOP. THE ASSESSING OFFICER ACCEPTED THE EXP LANATION OF THE ITA 203 & 204/JP/2018_ SUNIL KR. VS. ADDL.CIT 7 ASSESSEE AND DID NOT MAKE ANY ADDITION ON ACCOUNT O F UNEXPLAINED CASH DEPOSIT IN THE BANK ACCOUNT OF THE ASSESSEE. THE ORD ER OF THE ASSESSING OFFICER PASSED U/S 143(3) OF THE ACT IS COMPLETELY SILENT ABOUT THE SATISFACTION OF THE ASSESSING OFFICER REGARDING THE SOURCE OF CASH DEPOSITS EXPLAINED BY THE ASSESSEE. THUS, ONCE THE A SSESSING OFFICER HAS NOT DISPUTED THE EXPLANATION OF THE ASSESSEE WHI LE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT AND EXPLANATION FU RNISHED BY THE ASSESSEE REGARDING THE DEPOSIT OF RS. 3,36,000/- MA KES IT CLEAR THAT THIS AMOUNT WAS DEPOSITED FOR MAKING A D.D. IN FAVOUR OF THE EXCISE DEPARTMENT FOR PARTICIPATING IN THE TENDER OF THE L IQUOR SHOPS BY ONE SHRI SHREERAM, S/O- SHRI RICHPAL SINGH. THE ASSESSE E ALSO SUBMITTED AN AFFIDAVIT OF SHRI SHREERAM IN THIS REGARD. THE ASSES SING OFFICER WAS SATISFIED WITH THIS EXPLANATION OF THE ASSESSEE AND DID NOT RAISE ANY OBJECTION ABOUT THE PURPOSE AND SOURCE OF DEPOSIT. ONCE THE ASSESSING OFFICER HAS ACCEPTED THE EXPLANATION AS FURNISHED B Y THE ASSESSEE DURING THE ASSESSMENT PROCEEDINGS AND HAS NOT GIVEN ANY FINDING ABOUT THE NATURE OF THE DEPOSIT IN THE BANK ACCOUNT THEN THE SAID EXPLANATION CANNOT BE OUT RIGHTLY REJECTED IN THE PENALTY PROCE EDINGS U/S 271D AND 271E OF THE ACT. EVEN OTHERWISE THE INITIATION OF PE NALTY PROCEEDINGS U/S 271D AND 271E OF THE ACT IS BASED ON THE PREMISES T HAT THE ASSESSEE ITA 203 & 204/JP/2018_ SUNIL KR. VS. ADDL.CIT 8 HAS TAKEN THIS AMOUNT OF RS. 3,36,000/- FROM ONE SH RI SHREERAM AND IT WAS ALSO REPAID BY THE ASSESSEE TO THE SAID PERSON B UT SINCE THE RECEIPT AND PAYMENT WAS IN CASH, THEREFORE, IT WAS HELD TO BE IN VIOLATION OF PROVISIONS OF SECTION 269SS AND 269T OF THE ACT. IT IS PERTINENT TO NOTE THAT WHEN THE EXPLANATION OF THE ASSESSEE THAT THE SAID AMOUNT WAS DEPOSITED BY THE SAID PERSON IN THE BANK ACCOUNT OF THE ASSESSEE FOR THE PURPOSE OF TAKING A D.D. IN FAVOUR OF THE EXCISE DE PARTMENT FOR PARTICIPATING IN THE TENDER OF LIQUOR SHOPS THEN IT WOULD NOT FALL IN THE AMBIT OF LOAN OR DEPOSITS AS CONTEMPLATED IN THE PR OVISIONS OF SECTION 269SS AND 269T OF THE ACT. THEREFORE, ONCE IT IS NOT A LOAN TAKEN BY THE ASSESSEE FOR HIS REQUIREMENT BUT THE EXPLANATION WAS ACCEPTED BY THE ASSESSING OFFICER THAT THIS AMOUNT WAS DEPOSITED BY SHRI SHREERAM FOR HIS REQUIREMENT OF PARTICIPATING IN THE TENDER OF T HE LIQUOR SHOPS THEN IN ABSENCE OF ANY FRESH MATERIAL OR CONTRARY RECORD TO SHOW THAT THE AMOUNT WAS TAKEN AS A LOAN BY THE ASSESSEE FOR ASSES SEES REQUIREMENT, THE PENALTY LEVIED U/S 271D AND 271E ARE NOT JUSTIF IED. ACCORDINGLY, IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE WHEN THE ASSESSING OFFICER WAS FULLY SATISFIED WITH THE EXPLANATION THAT THE AMOUNT WAS DEPOSITED BY SHRI SHREERAM FOR THE PURPOSE OF MAKIN G D.D. FOR PARTICIPATING IN THE TENDER OF THE LIQUOR SHOP THEN THE SAID EXPLANATION OF ITA 203 & 204/JP/2018_ SUNIL KR. VS. ADDL.CIT 9 THE ASSESSEE ITSELF IS REASONABLE EXPLANATION TO SH OW THAT THE CASE OF THE ASSESSEE DOES NOT FALL IN THE PROVISIONS OF SEC TION 269SS OR 269T OF THE ACT. ACCORDINGLY, WE DELETE THE PENALTY LEVIED I N BOTH THESE APPEALS U/S 271D AND 271E OF THE ACT. 6. IN THE RESULT, BOTH THESE APPEALS OF THE ASSESSE E ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 09 TH JANUARY, 2019. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 09 TH JANUARY, 2019 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI SUNIL KUMAR, JHUNJHUNU. 2. IZR;FKHZ @ THE RESPONDENT- THE ADDL.CIT, JHUNJHUNU. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 203 & 204/JP/2018) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR