Sri M. Sougoumarin, CHENNAI V. The Joint CIT, Pondicherry

ITA 2162/CHNY/2013

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96047 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-09-2015
• Appeal Filed By: Assessee
• Bench Allotted: C
• Next Hearing Date: 09-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 13-12-2013
• Court: TRIBUNAL
• Department Lawyers: A V SREEKANTH
• Assessee Lawyers: A V SRIRAMAN
• Keywords: Reasonable cause
• Section: 273B; 133A

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL C BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER ./ I.T.A.NO. 2 162 /MDS/2013 / ASSESSMENT YEAR :200 9 - 1 0 SRI M. SOUGOUMARIN, 115, MUTHIAH MUDALI STREET, MUTHIALPET, PONDICHERRY 605 003. [PAN: A A IPS8447D ] VS. THE JOINT COMMISSIONER OF INCOME TAX , PONDICHERRY RA NGE, PONDICHERRY. ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A.V. SRIRAMAN, ADVOCATE / RESPONDENT BY : SHRI A.V. SREEKANTH, J CIT / DATE OF HEARING : 0 9 . 0 9 .201 5 / DATE OF P RONOUNCEMENT : 16 . 0 9 .201 5 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : TH IS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) V I , CHENNAI , DATED 3 0 . 0 9 .20 1 3 RELEVANT TO THE ASSESSMENT YEAR 200 9 - 1 0 . 2. BRIEF FACTS OF THE CASE ARE THAT BASED ON THE SURVEY UNDER SECTION 133A OF THE INCOME TAX ACT, 1961 ( ACT IN SHORT), A REFERENCE WAS RECEIVED FROM THE INCOME TAX OFFICER WARD I(1), PONDICHERRY DATED 12 .01.2012 THAT THE ASSESSEE SHRI M. SUGUMARAN ALIAS M. SOUGOUMARIN HA S RECEIVED LOAN OF I.T.A. NO . 2 162 /M/ 13 2 .20,00,000/ - FROM SHRI A. KANNAN IN CASH . THE ASSESSEE WAS SERVED A NOTICE UNDER SECTION 271D R.W.S. 269SS OF THE ACT AND CALLED FOR EXPLANATION AS TO WHY PENALTY SHOULD NOT BE LEVIED UNDER SECTION 271D OF THE ACT. T HE ASSESSEE VIDE HIS LETTER DATED 24.07 .2012 HAS SUBMITTED A DETAILED REPLY / COUNTER LETTER BEFORE THE ASSESSING OFFICER. T HE ASSESSING OFFICER HAS OBSERVED THAT THOUGH THE ASSESSEE HAS NOT DENIED HAVING TAKEN AND REPAID LOAN IN CASH, THE ASSESSEE S CONTENTION WAS THAT THE PENAL SECTIONS DO NOT APPLY IN GENUINE CASES. SINCE THE ASSESSEE HAS NOT SUBMITTED BOOKS OF ACCOUNT AND OTHER DOCUMENTS TO VERIFY THE POSITION OF CASH AVAILABILITY, THE URGENCY, THE UTILITY OR EVEN THE ADMISSION OF THE RECEIPTS AND REPAYMENT IN THE BOOKS OF ACCOUNT, THE ASSESS ING OFFICER HAS OBSERVED THAT THE ASSESSEE HAS FAILED TO ESTABLISH REASONABLE CAUSE AS CONTEMPLATED UNDER SECTION 273B OF THE ACT. ACCORDINGLY, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271D OF THE ACT. 3. ON APPEAL BEFORE THE LD. CIT(A), THE A SSESSEE HAS FILED WRITTEN SUBMISSIONS ON THE ISSUE OF REASONABLE CAUSE FOR ACCEPTANCE OF THE LOAN IN CASH. AFTER CONSIDERING THE DETAILED WRITTEN SUBMISSIONS OF THE ASSESSEE AND ALSO CONSIDERING THE LEGAL POSITION, THE LD. CIT(A) HAS OBSERVED THAT THERE EX ISTED REASONABLE CAUSE FOR ACCEPTANCE OF THE LOAN IN CASH BY THE ASSESSEE FOR URGENT BUSINESS NECESSITY TO THE EXTENT OF .14,00,000/ - AND DIRECTED THE ASSESSING OFFICER TO DELETE THE PENALTY OF .14,00,000/ - OUT OF I.T.A. NO . 2 162 /M/ 13 3 .20,00,000/ - . HOWEVER, FOR THE REMAININ G BALANCE AMOUNT OF .6,00,000/ - , THE LD. CIT(A) HAS OBSERVED THAT THE SAID AMOUNT WAS UTILIZED TO CARRY OUT REPAIRS TO THE PROPERTY AND HELD THAT THE BORROWAL OF THE FUNDS IN CASH FOR CARRYING OUT REPAIRS TO THE PROPERTY CANNOT BE CONSIDERED TO BE REASONA BLE CAUSE FOR NOT LEVYING PENALTY UNDER SECTION 271D R.W.S. 269SS OF THE ACT. ACCORDINGLY, THE LD. CIT(A) SUSTAINED THE PENALTY LEVIED TO THE EXTENT OF .6,00,000/ - ONLY. 4. ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 5. THE LD . COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN I.T.A NOS.1905 TO 1908/MDS/2013 IN ASSESSEE S OWN CASE PASSED UNDER SECTION 271E OF THE ACT. 6. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS NOT THE SUBJECT MATTER BEFORE THE TRIBUNAL SINCE THE LD. CIT(A) HAS DIRECTED THE ASSESSING OFFICER TO DELETE THE PENALTY ONLY TO THE EXTENT OF .14,00,000/ - OUT OF .20,00,000/ - . WHILE STRONGLY RELYING ON THE ORDER OF THE LD. CIT(A), THE LD. DR HAS FURTHER SUBMITTED THAT THE AMOUNT UTILISED FOR REPAIR OF THE PROPERTY IS NOT AN URGENT BUSINESS NECESSITY IN TERMS OF SECTION 273B OF THE ACT. I.T.A. NO . 2 162 /M/ 13 4 7. WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. IT IS AN ADMITTED FACT THAT THE ASSESSEE HAS RECEIVED LOAN IN CASH AND REPAID THE LOAN IN CASH. IN THE PENALTY PROCEEDINGS, THE ASSESSING OFFICER HAS HELD THAT THE ASSESSEE HAS NOT FURNISHED FULL FACTS ON THE URGENCY TO TAKE LOAN IN CASH AND SAME WAS INTENTIONAL TO EVADE TAX. HOWEVER, THE LD. CIT(A), BY CONSIDERING THE DETAILED SUBMISSIONS OF THE ASSESSEE AND ALSO BY CONSIDERING VARIOUS CASE LAW, OB SERVED THAT THERE IS REASONABLE CASE FOR ACCEPTING LOAN IN CASH BY THE ASSESSEE FOR URGENT BUSINESS NECESSITY. AFTER VERIFYING THE DETAILS FILED BY THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED THAT OUT OF .20 LAKHS BORROWED, THE LOAN AMOUNT OF .19 LAKHS (NE T OF INTEREST) WAS DEPOSITED INTO SAVING BANK ACCOUNT OUT OF WHICH .7 LAKHS WAS TRANSFERRED TO M/S. CLASSIQUE WATER PRODUCTS PVT. LTD. ON DIFFERENT DATES AND .6 LAKHS WAS USED FOR REPAYMENT OF LOAN TO SRI A. KANNAN ON DIFFERENT DATES. THEREFORE, THE LD. CIT(A) HAS HELD THAT THERE IS REASONABLE CAUSE FOR ACCEPTING LOAN IN CASH FOR THE BUSINESS EXIGENCY AND DIRECTED THE ASSESSING OFFICER TO DELETE THE PENALTY OF .14,00,000/ - OUT OF .20,00,000/ - LEVIED UNDER SECTION 271D R.W.S. 269SS OF THE ACT. HOWEVER, W ITH REGARD TO THE BALANCE AMOUNT OF .6,00,000/ - , THE ASSESSEE HAS CONTENDED THAT THE AMOUNT HAS BEEN UTILISED TO CARRY OUT REPAIRS TO THE PROPERTY AT 90 & 92, AMBALATHADAYAR MADAM ST., PONDICHERRY, BUT, THE SAME WAS NOT ACCEPTED BY THE LD. CIT(A) ON THE G ROUND THAT THE REPAIRS TO THE PROPERTY IS NOT A BUSINESS EXPEDIENCY IN TERMS OF SECTION 273B I.T.A. NO . 2 162 /M/ 13 5 OF THE ACT AND ACCORDINGLY CONFIRMED THE PENALTY TO THE EXTENT OF . 6,00,000/ - . NOW, THE QUESTION BEFORE US IS WHETHER THE AMOUNT UTILIZED TO CARRY OUT REPAIRS OF THE PROPERTY WOULD BE CONSIDERED AS URGENT BUSINESS NECESSITY AS CONTEMPLATED UNDER SECTION 273B OF THE ACT OR NOT? IN THIS CONNECTION, THE ASSESSEE HAS NOT FILED ANY MATERIAL EVIDENCE TO ESTABLISH SUCH URGENCY TO CARRY OUT THE REPAIRS O F THE PROPERTY EIT HER BEFORE THE ASSESSING OFFICER OR BEFORE THE LD. CIT(A) OR EVEN BEFORE THE TRIBUNAL EXCEPT RELYING ON THE DECISION OF THE TRIBUNAL IN ASSESSEE S OWN CASE IN I.T.A NOS.1905 TO 1908/MDS/2013 DATED 31.10.2013 PASSED UNDER SECTION 271E OF THE ACT . WE ARE OF THE FIRM VIEW THAT THE PROCEEDINGS UNDER SECTION 271E AND 271D OF THE ACT ARE DIFFERENT PROCEEDINGS. APART FROM THIS, THE LD. CIT(A) HAS DELETED THE AMOUNT OF .14,00,000/ - UNDER SECTION 271D BY GIVING VALID REASONS. THE COORDINATE BENCH OF THE TRIBUNAL AL SO ACCEPTED THE FINDINGS OF THE LD. CIT(A) IN I.T.A NOS.1905 TO 1908/MDS/2013 DATED 31.10.2013 , WHEREIN THE TRIBUNAL HAS HELD AS UNDER: . THEREFORE, WE FIND THAT THE COMMISSIONER OF INCOME TAX (APPEALS) OUGHT TO HAVE DELETED THE PENALTIES LEVIED UND ER SECTION 271E, WHEN IN FACT, FOR GOOD REASONS, HE WAS DELETING THE PENALTIES LEVIED UNDER SECTION 271D. 8. UNDER THE ABOVE FACTS AND CIRCUMSTANCES, THE PENALTY CONFIRMED BY THE LD. CIT(A) TO THE EXTENT OF .6,00,000/ - IS SUSTAINED AND ACCORDINGLY, T HE APPEAL FILED BY THE ASSESSEE STANDS DISMISSED. I.T.A. NO . 2 162 /M/ 13 6 9 . IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THE 16 TH SEPTEMBER , 2015 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBE R CHENNAI, DATED, THE 16 . 0 9 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.