Assistant Commissioner of Income-tax, V. Kailaswasi Sambhajirao Garad Shikshan Prasarak Mandal,

ITA 2070/PUN/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 93846 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 6 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-06-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-05-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 29-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Recovery proceedings; Principle of natural justice; Reasonable cause; Ignorance of law
• Section: 273B; 27

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE: SHRI R.K. PANDA, ACCOUNTANT MEMBER AND SHRI VIKAS AWASTHY, JUDICIAL MEMBER ITA NO S . 2069 & 2070 /PN/201 3 ASSESSMENT YEAR : 200 7 - 08 THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 2, SOLAPUR VS. KAILASWASI SAMBHAJIRAO GARAD SHIKSHAN PRASARAK MANDAL, A/P. MOHOL, DISTT.-SOLAPUR (APPELLANT) (RESPONDENT) PAN NO. AAATK6940M ASSESSEE BY: SHRI PRAMOD SHINGTE REVENUE BY: SHRI ACHAL SHARMA DATE OF HEARING : 12-05-2015 DATE OF PRONOUNCEMENT : 26-06-2015 ORDER PER VIKAS AWASTHY, JM:- THESE TWO APPEALS OF THE REVENUE ARE DIRECTED AGAINST THE COMM ON ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-III, PUNE DA TED 12-09-2013 FOR THE ASSESSMENT YEAR 2007-08 DELETING P ENALTY LEVIED U/S. 271D AND 271E OF THE INCOME TAX ACT, 1961 (HEREINAFTER R EFERRED TO AS THE ACT). 2. THE BRIEF FACTS OF THE CASE AS EMANATING FROM RECORD S ARE: THE ASSESSEE IS AN EDUCATIONAL TRUST. THE ASSESSEE IS FULLY AIDED BY THE GOVERNMENT AND THUS, ITS INCOME IS EXEMPT U/S. 10(23C)(IIIAB) OF THE ACT. THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE ASSE SSMENT YEAR 2007-08 DECLARING NIL INCOME. DURING THE COURSE OF SCRU TINY ASSESSMENT, THE ASSESSING OFFICER FOUND CASH DEPOSITS OF R S.7,73,000/- 2 ITA NOS. 2069 & 2070/PN/2013, A.Y. 2007-08 FROM THREE DIFFERENT PERSONS WHO WERE TRUSTEES/MEMBERS OF THE ASSESSEE TRUST. THE SAID AMOUNT WAS REPAID SHORTLY THEREAFTER IN CASH TO THE PERSONS FROM WHOM IT WAS TAKEN. THE ASSESSING OFFICER HELD THAT THE ASSESSEE ACCEPTED THE CASH DEPOSITS AND REPAID THE SA ME IN CASH IN VIOLATION OF THE PROVISIONS OF SECTION 269SS AND 269T. ACCO RDINGLY, PENALTY PROCEEDINGS U/S. 271D AND 271E FOR ACCEPTING CAS H AND REPAYMENT OF AMOUNT IN CASH WERE INITIATED AGAINST THE AS SESSEE. THE ADDITIONAL COMMISSIONER OF INCOME TAX VIDE TWO SEPARATE OR DERS DATED 17-03-2010 LEVIED PENALTY OF RS.7,73,000/- U/S. 271D AND 27 1E FOR THE ASSESSMENT YEAR 2007-08. AGGRIEVED BY THE ORDERS LEVYING PENALTY, THE ASSESSEE PR EFERRED APPEALS BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). T HE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDERS ACCEPTED THE REASONS FURNISHED BY THE ASSESSEE FOR ACCEPTING CAS H LOAN AND REPAYMENT OF LOAN IN CASH. THE COMMISSIONER OF INCOME TA X (APPEALS), ACCORDINGLY DELETED THE PENALTY LEVIED U/S. 271D AS WELL A S 271E OF THE ACT. NOW, THE REVENUE HAS FILED PRESENT APPEALS BEFORE TH E TRIBUNAL ASSAILING THE FINDINGS OF COMMISSIONER OF INCOME TAX (APPEALS). 3. SHRI ACHAL SHARMA REPRESENTING THE DEPARTMENT SUBMIT TED THAT THE ASSESSEE HAD ACCEPTED THE CASH LOAN FROM THREE DIFFE RENT PERSONS DESPITE THE FACT IT WAS HAVING BANK ACCOUNT. THE ASSESS EE HAS NOT BEEN ABLE TO SHOW THAT THE LENDERS WERE NOT HAVING BANK ACC OUNTS. THERE WAS SUFFICIENT TIME FOR THE ASSESSEE TO DEPOSIT THE CHEQUE FOR FURTHER REPAYMENT OF LOAN. THE LD. DR VEHEMENTLY DEFENDING THE OR DERS LEVYING PENALTY SUBMITTED, THAT THE ASSESSEE HAS NOT BEEN ABLE TO SHOW REASONABLE CAUSE FOR ACCEPTING AND REPAYING THE LOAN AMO UNT IN CASH. IN SUPPORT OF HIS SUBMISSIONS HE PLACED RELIANCE ON THE FOLLO WING DECISIONS: 3 ITA NOS. 2069 & 2070/PN/2013, A.Y. 2007-08 I. CIT VS. SUNIL KUMAR GOEL, 274 ITR 53 (P&H). II. KASI CONSULTANT CORPORATION VS. DCIT, 311 ITR 419 (MAD). III. P. BASKAR VS. CIT, 340 ITR 560 (MAD). IV. ITO VS. SUNIL M. KASLIWAL, 94 ITD 281 (PUNE)(TM). V. BALAJI TRADERS VS. DCIT, 78 ITD 368 (PUNE). 4. ON THE OTHER HAND SHRI PRAMOD SHINGTE APPEARING ON BEHALF OF THE ASSESSEE STRONGLY SUPPORTED THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS). THE LD. AR SUBMITTED THAT THE ASSESSEE HAD TAK EN LOAN OF RS.3,00,000/- FROM ONE GEETA NAGARI SAHAKARI PAT PURAVTHA SANSTHA MARYADIT, MOHOL (HEREINAFTER REFERRED TO AS GEETA SANSTHA ) FOR THE PURPOSE OF CONSTRUCTION IN THE YEAR 1994. THE ASSESSEE WAS NOT IN POSITION TO REPAY LOAN TO GEETA SANSTHA ALL THESE YEARS AS IT WAS IN FINANCIAL DISTRESS. WHEN THE LOAN WAS TAKEN THE ASSESSEE WAS NOT RECEIVING ANY AID FROM THE GOVERNMENT. THE ASSESSEE IN IT S BALANCE SHEET AS ON 31-03-2007 HAS SHOWN THE LOAN ALONG WITH A CCUMULATED INTEREST RS.9,26,865/- UNDER THE HEAD LOANS (SECURED OR UNSEC URED). IN THE MEANTIME, GEETA SANSTHA LODGE A CASE AGAINST TH E ASSESSEE FOR RECOVERY OF THE SAID LOAN IN CO-OPERATIVE COURT, SOLAPU R. ON 28-04-2006, GEETA SANSTHA MADE AN OFFER TO THE ASSESSE E TO SETTLE THE LOAN BY LUMP SUM PAYMENT OF RS.6,11,000/-. THE AMOUNT W AS TO BE PAID ON 12-06-2006 BEFORE THE CO-OPERATIVE COURT. SOME OF THE TRUSTEES AND MEMBERS AGREED TO BAIL OUT THE ASSESSEE FROM DEBT UNDER THIS ONE TIME SETTLEMENT SCHEME. ACCORDINGLY, THEY DECIDED TO CON TRIBUTE THE AMOUNT TO AVAIL THIS OPPORTUNITY. THREE PERSONS CONTRIBU TED THE AMOUNT AS UNDER: 4 ITA NOS. 2069 & 2070/PN/2013, A.Y. 2007-08 NAME OF THE PERSON DATE OF BORROWING AMOUNT SAMADHAN A. BHOSALE, JT. SECRETARY 06 - 05 - 2006 09-06-2006 RS.2,26,000/ - RS.1,33,000/- MUKUND A. BHOSALE, MEMBER 03 - 05 - 2006 05-05-2006 RS.2,34,000/ - RS.30,000/- SUNIL S. BHOSALE, MEMBER 08 - 06 - 2006 RS.1,50,000/ - TOTAL RS.7,73,000/ - THE AMOUNT RECEIVED FROM THE ABOVE THREE PERSONS WAS DEPOSITED IN ASSESSEES ACCOUNT WITH STATE BANK OF INDIA, MOHOL BRA NCH ON THE FOLLOWING DATES: DATE AMOUNT 03 - 05 - 2006 RS.1,34,000/ - 23 - 05 - 20 06 RS.1,00,000/ - 24 - 05 - 2006 RS.25,000/ - 25 - 05 - 2006 RS.2,26,000/ - 29 - 05 - 2006 RS.1,33,000/ - 08 - 06 - 2006 RS.1,50,000/ - TOTAL RS.7,68,000/ - ON 12-06-2006 THE AMOUNT OF RS.6,11,000/- WAS WITHDRA WN AND WAS TAKEN TO THE CO-OPERATIVE COURT, SOLAPUR. IN COURT THE REPRESENTATIVES OF THE SOLAPUR DISTRICT CENTRAL CO-OPERAT IVE BANK CLAIMED THAT THEY ARE ENTITLED TO RECEIVE THE AMOUNT ON BEHALF OF GEETA SANSTHA. THE OFFICIALS OF THE SOLAPUR DISTRICT CENTRAL CO-OP ERATIVE BANK CLAIMED THAT THE BANK HAD LENDED MONEY TO GEETA SANSTH A AND RECOVERY PROCEEDINGS AGAINST GEETA SANSTHA ARE PENDING BEFORE TH E SAME COURT. THEREFORE, THEY HAVE THE LIEN ON THE SAID AMOUNT. SINCE, THE ASSESSEE HAD NO INSTRUCTIONS FROM GEETA SANSTHA TO REPAY THE AM OUNT TO SOLAPUR DISTRICT CENTRAL CO-OPERATIVE BANK, THE ASSESSEE WAS ADV ISED BY COUNSEL NOT TO MAKE THE PAYMENT AT THAT POINT OF TIME IN THE C OURT. AS A 5 ITA NOS. 2069 & 2070/PN/2013, A.Y. 2007-08 CONSEQUENCE OF EVENTS THAT OCCURRED IN COURT, THE LEN DERS INSISTED THE ASSESSEE TO REPAY THE MONEY ON THE SAME DAY ITSELF. AC CORDINGLY, THE AMOUNT WITHDRAWN FROM THE BANK WAS REPAID TO THE LENDER S ON THE SAME DATE. 5. THE LD. COUNSEL SUBMITTED THAT THE LENDERS HAD FILED AN AFFIDAVIT BEFORE THE AUTHORITIES BELOW ADMITTING THE PAYMENT OF AMOU NT IN CASH. THE MANAGER OF GEETA SANSTHA FILED AN AFFIDAVIT ON 26-04-20 10 CORROBORATING THE ENTIRE HAPPENINGS THAT HAD OCCURRED IN COURT ON 26-06-2006. THUS, THE ASSESSEE WAS ABLE TO SHOW THAT IT WAS ON ACCOUNT OF EXIGENCY THAT THE AMOUNT WAS TAKEN IN CASH AND REPA ID IN CASH. IN SUPPORT OF HIS SUBMISSIONS THE LD. AR PLACED RELIANCE ON T HE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF CIT VS. LAXMI TR UST CO. REPORTED AS 303 ITR 99 (MAD) AND THE DECISION OF AGRA BE NCH OF THE TRIBUNAL IN THE CASE OF SHARDA EDUCATIONAL TRUST VS. ACIT REPORTED AS 99 TTJ (AGRA) 212. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENT ATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUT HORITIES BELOW. WE HAVE ALSO EXAMINED THE DECISIONS ON WHICH BOTH THE SIDES HAVE PLACED RELIANCE. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE ACCE PTED CASH LOAN OF RS.7,73,000/- AND HAS REPAID THE SAME IN CASH TO THE LEND ERS. THUS, THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269SS AND 269T OF THE ACT. FOR THE VIOLATIONS OF AFORESAID SECTIONS THE ASSE SSEE HAD MADE ITSELF LIABLE FOR PENALTY U/S. 271D AND 271E, RESPECTIVELY. H OWEVER, THE PROVISIONS OF SECTION 273B PROVIDES AN EXCEPTION, THAT NO PENALTY SHALL BE IMPOSED U/S. 271D AND 271E IF THE ASSESSEE PROVES T HAT THERE WAS REASONABLE CAUSE FOR NOT COMPLYING WITH PROVISIONS OF THE ACT. THE 6 ITA NOS. 2069 & 2070/PN/2013, A.Y. 2007-08 ASSESSEE HAS GIVEN DETAILED REASONS FOR ACCEPTING THE LOA N AMOUNT IN CASH FROM ITS MEMBERS/OFFICE BEARER AND REPAYMENT OF THE SAME IN CAS H. FURTHER, IN SUPPORT OF ITS SUBMISSIONS, THE ASSESSEE HAS P LACED ON RECORD LETTER DATED 28-04-2006 FROM GEETA SANSTHA MAK ING AN OFFER TO SETTLE THE LOAN ACCOUNT BY PAYING AN AMOUNT OF RS.6,11,000 /- ON 12-06-2012 BEFORE THE CO-OPERATIVE COURT. THE ASSESSE E HAS ALSO PLACED ON RECORD THE TRANSLATED COPIES OF THE RESOLUTION DATED 31-03-2006 AND 15-08-2005 TO SUBSTANTIATE THAT THE ASSESSEE HAD TO REPAY LOAN TO GEETA SANSTHA. THE ASSESSEE HAS FILED AFFIDAVITS OF THE LENDERS WH O ARE AGRICULTURIST TO SUBSTANTIATE THAT THEY HAVE ADVANCED C ASH LOAN FOR THE PURPOSE OF REPAYMENT OF ARREARS OF LOAN TO GEETA SANSTH A ON 12-06-2012. THE ASSESSEE HAS ALSO PLACED ON RECORD AFFID AVIT OF SHRI RAMCHANDRA SHIVAJI JADHAV, MANAGER, GEETA SANSTHA GIVING THE DETAILED SEQUENCE OF EVENTS THAT TRANSPIRED ON 12-06-2006 IN TH E CO-OPERATIVE COURT. 7. THE REVENUE HAS NOT DISPUTED THE OUTSTANDING AMOUN T PAYABLE BY ASSESSEE TO GEETA SANSTHA WHICH IS DULY REFLECTED IN AUD ITED BALANCE SHEET OF THE ASSESSEE AS ON 31-03-2007 UNDER THE HEA D LOANS. THE ASSESSING OFFICER HAD SUMMONED THE LENDERS OF THE CASH A MOUNT AND RECORDED THEIR STATEMENTS ON 14-10-2009. ALL THE THREE LENDERS SUPPORTED THE CAUSE OF THE ASSESSEE. THE GENUINENESS OF THE TRANSACTIONS HAVE BEEN VERIFIED. THE PERSONS WHO HAVE A DVANCED CASH LOANS HAVE BEEN IDENTIFIED. THEY HAD FILED AFFIDAVITS AND THEIR STATEMEN TS WERE RECORDED BY THE ASSESSING OFFICER. THE REVENUE HAS NOT BEEN ABLE TO CONTROVERT THE CONTENTS OF THE STATEMENTS OR THE AFFIDAVITS. THE CIRCUMSTANCES UNDER WHICH CASH LOAN WAS ACCEPTED AND R EPAID HAVE BEEN EXPLAINED. WE ARE OF THE CONSIDERED VIEW THAT THE CASH TRANSACTIONS WERE GENUINE AND BONAFIDE. 7 ITA NOS. 2069 & 2070/PN/2013, A.Y. 2007-08 8. THE LD. DR IN SUPPORT OF HIS SUBMISSIONS HAS PLACED RELIAN CE ON CERTAIN DECISIONS. AFTER EXAMINING THE SAME, WE ARE OF THE CONSIDERED VIEW THAT THE DECISIONS CITED BY THE LD. DR DO NOT SUPP ORT THE CASE OF REVENUE. IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (SUPRA) THE HON' BLE HIGH COURT DID NOT CONSIDER THE QUESTION FRAMED BY THE APPELLA NT (DEPARTMENT) WITH RESPECT TO DELETING OF PENALTY IMPOSED U /S. 271D AND 271E OF THE ACT. THE HON'BLE HIGH COURT SET ASIDE THE O RDER OF TRIBUNAL ON THE GROUND OF VIOLATION OF RULES OF NATURAL JUSTICE. THE HON'BLE HIGH COURT HELD THAT THE TRIBUNAL HAS FAILED TO RECORD TANGIBLE AND COGENT REASONS FOR UPSETTING WELL REASONED ORDERS PASSED BY TH E ASSESSING OFFICER AND THE COMMISSIONER OF INCOME TAX (APPEALS). IN THE CASE OF KASI CONSULTANT CORPORATION VS. DCIT (SUP RA) THE HON'BLE MADRAS HIGH COURT CONFIRMED THE LEVY OF PENALTY U/ S. 271D AS THE ASSESSEE WAS NOT ABLE TO EXPLAIN THE REASONABLE CAU SE FOR ACCEPTING THE CASH. THE TRIBUNAL AFTER APPRECIATING THE FACTS HAD C OME TO THE CONCLUSION THAT THE ASSESSEE HAS NOT PRODUCED ANY MAT ERIAL TO SUBSTANTIATE THE PLEA OF REASONABLE CAUSE. THE HON'BLE H IGH COURT UPHELD THE ORDER OF TRIBUNAL. IN THE CASE OF P. BASKAR VS. CIT (SUPRA) THE HON'BLE HIGH COURT UPHELD THE FINDINGS OF TRIBUNAL IN CONFIRMING PENALTY U/S. 271 D. THE HON'BLE HIGH COURT HELD THAT EXCEPT FOR THE MERE STATEM ENT OF THE ASSESSEE THERE WAS NO MATERIAL ON RECORD TO SHOW THAT IN FACT THERE WAS REAL EXIGENCY THAT COMPELLED THE ASSESSEE TO PAY CASH LOAN. IN THE INSTANT CASE THE ASSESSEE HAS BEEN ABLE TO SUBSTANTIAT E THE REASONS FOR ACCEPTING CASH LOAN AND REPAYMENT OF THE SAME IN CASH. 8 ITA NOS. 2069 & 2070/PN/2013, A.Y. 2007-08 IN THE CASE OF ITO VS. SUNIL M. KASLIWAL (SUPRA) THE TRIBUN AL CONFIRMED THE LEVY OF PENALTY U/S. 271D AS THE ASSESSEE WAS NOT ABLE TO EXPLAIN REASONABLE CAUSE FOR ACCEPTING CASH LOAN. IN THE CASE OF BALAJI TRADERS VS. DCIT (SUPRA) THE CO-OR DINATE BENCH OF THE TRIBUNAL DELETED THE PENALTY LEVIED U/S. 271D BY ACCEPTING THE REASONS PUT FORTH BY THE ASSESSEE. THE LD. DR RELIE D ON THIS CASE TO SAY THAT IGNORANCE OF LAW IS NO EXCUSE. THERE IS NO QUA LM ABOUT THIS WELL ACCEPTED PRINCIPLE. THE LD. AR HAS NOT RAISED THE GROU ND OF IGNORANCE OF LAW BEFORE US. THEREFORE, THIS DECISION HAS NO RELEVANCE IN THE PRESENT CASE. 9. THE LD. AR IN SUPPORT OF HIS SUBMISSIONS HAS PLACED RELIAN CE ON THE DECISION OF HON'BLE MADRAS HIGH COURT IN THE CASE OF C IT VS. LAXMI TRUST CO. (SUPRA). IN THE FACTS OF THE CASE, THE HON'BLE HIGH COURT AFFIRMED THE ORDER OF THE TRIBUNAL IN DELETING THE PENALTY LEV IED U/S. 271D AND 271E OF THE ACT. THE HON'BLE HIGH COURT HELD THAT THE COMMISSIONER OF INCOME TAX (APPEALS) AND TRIBUNAL HAVE FOUND THAT TRANSACTION OF CASH LOAN AND ITS REPAYMENT WERE GENUINE AND THERE WAS NO INTENTION TO EVADE TAX. NO INTERFERE WAS CALLED FOR IN THE ORDER DELETING PENALTY U/S. 271D AND 271E OF THE ACT. IN THE CASE OF SHARDA EDUCATIONAL TRUST VS. ACIT (SUPRA ) THE CO-ORDINATE AGRA BENCH OF THE TRIBUNAL DELETED THE PENA LTY U/S. 271D ON THE GROUND THAT THE REVENUE AUTHORITIES HAVE ACCEP TED THE TRANSACTION AS GENUINE. THE TRIBUNAL FURTHER HELD THAT T HE TRANSACTION IN QUESTION WAS NEITHER LOAN NOR DEPOSIT BECAUSE THE AMO UNT WAS RECEIVED BY THE TRUST FROM THE TRUSTEES. THE PHRASE USED IN SECTION 269SS IS ..TAKE OR ACCEPT FROM ANY OTHER PERSON... TH E AMOUNT ADVANCED BY TRUSTEE TO TRUST OR VICE VERSA RESULTS IN A DVANCING TO ONESELF. 9 ITA NOS. 2069 & 2070/PN/2013, A.Y. 2007-08 IN SUCH CASES THERE IS REASON TO LEVY PENALTY U/S. 271D . THE DEFAULT, IF ANY IS OF TECHNICAL AND VENIAL NATURE. 10. IN VIEW OF THE FACTS OF THE CASE, WE ARE OF THE CONSIDE RED OPINION THAT NO PENALTY U/S. 271D AND 271E OF THE ACT IS LEVIABLE. WE FIND NO REASON TO INTERFERE WITH THE IMPUGNED ORDER. THE APPEA LS OF THE REVENUE ARE DISMISSED BEING DEVOID OF MERIT. ORDER PRONOUNCED ON FRIDAY, THE 26 TH DAY OF JUNE, 2015 AT PUNE SD/- SD/- (R.K. PANDA) (VIKAS AWASTHY) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 26 TH JUNE, 2015 RK/PS COPY TO 1 ASSESSEE 2 DEPARTMENT 3 4 THE CIT (A) - III, PUN E THE CIT-IV, PUNE 5 6 THE DR, ITAT, B BENCH, PUNE. GUARD FILE. //TRUE COPY// BY ORDER PRIVATE SECRETARY, INCOME TAX APPELLATE TRIBUNAL, PUNE