DCIT, Trichy V. Shri N.Vaithyalingam, Pudukkottai

ITA 2100/CHNY/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51797 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-08-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 11-08-2011
• Assessment Year: 2004-2005
• Appeal Filed On: 10-12-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR I VIJAYAKUMAR
• Section: 271D

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, CHENNAI BEFORE SHRI N.S. SAINI, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER I.T.A. NO. 2100/MDS/2010 (ASSESSMENT YEAR : 2004-05) THE DEPUTY COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE I TIRUCHIRAPALLI. (APPELLANT) V. SHRI N. VAITHYALINGAM NO 5400, 2ND STREET MARTHANDAPURAM PUDUKOTTAI PAN : ABJPN 7647 N (RESPONDENT) APPELLANT BY : DR. I. VIJAYAKUMAR, CIT-D R RESPONDENT BY : NONE DATE OF HEARING : 11.08.2011 DATE OF PRONOUNCEMENT : O R D E R PER N.S. SAINI, ACCOUNTANT MEMBER : THIS APPEAL IS FILED BY REVENUE FOR THE ASSESSMENT YEAR 2004- 2005 AGAINST AN ORDER DATED 16.09.2010 OF COMMISSIO NER OF INCOME TAX (APPEALS), TIRUCHIRAPALLI. I.T.A. NO. 911/MDS/11 2 2. THE SOLE GROUND OF APPEAL TAKEN BY THE REVENUE I N THIS APPEAL IS THAT THE LD. CIT(A) ERRED IN DELETING THE PENALT Y OF RS. 12 LAKHS U/S 271D OF THE INCOME-TAX ACT, 1961 [IN SHORT, THE ACT]. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSING O FFICER OBSERVED THAT THE ASSESSEE HAD ACCEPTED THE FOLLOWING LOANS DURING THE YEAR UNDER CONSIDERATION IN CASH: S.P. NATARAJAN FATHER RS. 4,50 ,000/- N. RAJAMBHAL ACHI MOTHER RS. 4,00,000 /- V. DEIVASENA WIFE RS. 3, 50,000/- TOTAL RS . 12,00,000/- AS THE SAID LOAN WAS TAKEN IN VIOLATION OF SECTION 269SS OF THE ACT, THE ASSESSING OFFICER LEVIED PENALTY OF RS. 12 LAK HS U/S 271D OF THE ACT. I.T.A. NO. 911/MDS/11 3 4. ON APPEAL, THE LD. CIT(A) DELETED THE PENALTY BY OBSERVING AS UNDER: 5. I HAVE CAREFULLY CONSIDERED THE ORDER LEVYING TH E PENALTY PASSED BY THE ASSESSING OFFICER AND ALSO TH E ARGUMENTS MADE BY THE AUTHORIZED REPRESENTATIVE OF TH E APPELLANT. I HAVE ALSO GONE THROUGH THE ORDER OF M Y PREDECESSOR IN THE CASE OF THE APPELLANTS COUSIN BR OTHER AND THE ORDER OF THE ITAT IN HIS CASE. IT IS NOT D ISPUTED BY THE APPELLANT THAT THE REPAYMENTS WERE MADE BY CASH , EVEN THOUGH THE REPAYMENT IS TO HIS FATHER / MOTHER / WIFE. THE SUBMISSION OF THE APPELLANT THAT THE AMOUN TS REFERRED TO IN THE ORDER HAVE BEEN DULY REFLECTED IN THE RETURN OF INCOME OF THE CONCERNED PERSONS APPEARS TO BE CORRECT. IN THE CASE OF MUTHOOT M GEORGE BANKERS V ACIT 46 ITD 10 (COCHIN) IT WAS HELD THAT ALLEGED TRANSA CTIONS OF TRANSFER OF FUNDS AMONG SISTER CONCERNS ONLY REPRESE NT DIVERSION OF FUNDS FROM ONE CONCERN TO ANOTHER DEPEN DING UPON THE EXIGENCIES OF BUSINESS. TO MAKE A DEPOSIT OR A LOAN, THERE MUST BE AT TWO DIFFERENT PARTIES THE G IVER AND THE RECEIVER BOTH IN PHYSICAL EXISTENCE / LEGAL EXISTENCE. 6. FROM THE MATERIAL PRODUCED BEFORE ME, I FIND THAT IN DECISION IN THE CASE OF THE APPELLANTS COUSIN, THE PENALTY I.T.A. NO. 911/MDS/11 4 IN RESPECT OF CASH TRANSACTION WITH A CLOSE RELATIV E, IN THAT CASE, THE WIFE, THE PENALTY HAS BEEN DELETED BY MY PREDECESSOR AND THE SAID DECISION HAS ALSO BEEN UPH ELD BY THE ITAT. THE SAME VIEW HAS ALSO BEEN EXPRESSED BY THE IN THE CASE OF CIT V BHAGWATI PRASAD BAJORIA (HUF) 263 ITR 487 AND THE JURISDICTIONAL TRIBUNAL IN THE CASE OF M/S V IGNESH FLAT HOUSING PROMOTERS IN I.T (SS) A. NO. 54/MDS/03 DT. 25.04.2006. ON THE STRENGTH OF ALL THE ABOVE, I HO LD THAT THE PENALTY LEVIED U/S 271 D ON THE CASE OF THE APP ELLANT FOR THE ABOVE YEAR HAS TO BE DELETED. I THEREFORE HOLD THAT THE PENALTY LEVIED IS CANCELLED. 5. NONE APPEARED ON BEHALF OF THE RESPONDENT-ASSESS EE WHEN THE CASE WAS CALLED FOR HEARING AND NEITHER ANY ADJOURN MENT APPLICATION WAS FILED. SINCE THE BENCH WAS OF THE VIEW THAT THE ISSUE AT HAND CAN BE DECIDED IN THE ABSENCE OF THE RESPONDENT- ASSESSEE, APPEAL OF WAS HEARD EXPARTE QUA THE RESPO NDENT-ASSESSEE. 6. THE LD. D.R. SUPPORTED THE ORDER OF THE ASSESSIN G OFFICER. I.T.A. NO. 911/MDS/11 5 7. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND PERU SING THE ORDERS OF THE LOWER AUTHORITIES, WE FIND THAT THE UNDISPUT ED FACTS OF THE CASE ARE THAT THE ASSESSEE TOOK LOAN OF RS. 12 LAK HS IN CASH FROM HIS FATHER, MOTHER AND WIFE WHICH WAS DULY REFLECTED IN THEIR RETURNS OF INCOME. THE SAID LOAN WAS TAKEN DUE TO URGENT F INANCIAL NEEDS OF THE ASSESSEE. THE ASSESSING OFFICER WAS OF THE VIE W THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 269 SS OF THE ACT BY TAKING CASH LOAN AND THEREFORE, LEVIED PENALTY OF R S. 12 LAKHS U/S 271D OF THE ACT. 8. ON APPEAL, THE LD. CIT(A) DELETED THE PENALTY ON THE GROUND THAT THE AMOUNT RECEIVED AS LOAN IN CASH OF RS. 12 LAKHS FROM HIS FATHER, MOTHER AND WIFE WHICH WAS DULY REF LECTED IN THEIR RETURNS OF INCOME AND THAT THE JURISDICTIONAL TRIBU NAL IN THE CASE OF VIGNESH FLAT HOUSING PROMOTERS IN ITSSA NO. 54/MDS/ 2003 ORDER DATED 25.4.2006 AND THE HON'BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS. BHAGWATI PRASAD BAJORIA [HUF] 263 ITR 487 H AS HELD THAT IN A CASE OF CASH TRANSACTIONS WITH CLOSE RELATIVES, IN THAT CASE THE WIFE, NO PENALTY WAS EXIGIBLE. I.T.A. NO. 911/MDS/11 6 9. WE FIND THAT THE GENUINENESS OF THE TRANSACTION IS NOT IN DOUBT AND IT IS NOT A CASE WHERE THE ASSESSEE TRIED TO EX PLAIN SOME UNDISCLOSED ASSETS FOUND TO PROHIBIT WHICH OBJECT W AS INSERTION OF PROVISION OF SECTION 269SS IN THE ACT. MOREOVER, W E FIND THAT IN SIMILAR CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IN THE CASE OF DR. B.G. PANDEY VS. DCIT [2010] 111 TAXMANN 86 [MAG] HA S HELD THAT NO PENALTY WAS LEVIABLE FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT IN A CASE WHERE THE ASSESSEE OBTAINED CERTA IN LOAN FROM HIS WIFE FOR CONSTRUCTION OF A HOUSE AS THE TRANSACTION DID NOT INVOLVE ANY INTEREST ELEMENT AND THERE WAS NO PROMISE TO RE TURN THE AMOUNT WITH OR WITHOUT INTEREST. IN THE PRESENT CA SE ALSO, THE ASSESSEE RECEIVED LOAN OF RS. 12 LAKHS IN CASH FRO M HIS FATHER, MOTHER AND WIFE WHICH WAS DULY REFLECTED IN THEIR R ETURNS OF INCOME. THE FACTS OF THE PRESENT CASE BEING IDENTI CAL TO THE FACTS IN THE CASE OF DR. B.G. PANDEY [SUPRA], WE CONFIRM THE ORDER OF THE LD. CIT(A) AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. I.T.A. NO. 911/MDS/11 7 10. IN THE RESULT APPEAL OF THE REVENUE IS DISMISSE D. THE ORDER WAS PRONOUNCED IN THE COURT ON 12 TH AUGUST, 2011. SD/- SD/- (GEORGE MATHAN) (N.S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER CHENNAI, DATED THE 12 TH AUGUST, 2011. VL COPY TO: (1) APPELLANT (2) RESPONDENT (3) CIT(A)-III, CHENNAI (4) CIT-I, CHENNAI (5) D.R. (6) GUARD FILE