Mr. T.D. Muthukumar, CHENNAI V. ACIT, CHENNAI

ITA 2197/CHNY/2013

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 7192 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 03-12-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 17-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN IRS
• Assessee Lawyers: J PRABHAKAR
• Keywords: Source of fund

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . , ! , ' # BEFORE SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI VIKAS AWASTHY JUDICIAL MEMBER. ./ I.T.A. NO.2197/MDS/2013 ( / ASSESSMENT YEAR : 2007 -2008) SHRI. T.D. MUTHUKUMAR, NO.12, COASTAL ROAD, KALAKSHETRA COLONY, BESANT NAGAR, CHENNAI 600 090. [PAN :ADGPT 0440E] ( !$ /APPELLANT) VS THE ASSISTANT COMMISSIONER OF INCOME TAX, BUSINESS CIRCLE IV, CHENNAI 600 034. ( %&!$ /RESPONDENT) / APPELLANT BY : SHRI. J. PRABHAKAR, CA. / RESPONDENT BY : SHRI. P. RADHAKRISHNAN, IRS, JCIT. /DATE OF HEARING : 03.12.2014 !' /DATE OF PRONOUNCEMENT : 19.12.2014 ' / O R D E R PER VIKAS AWASTHY, JUDICIAL MEMBER THE APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST T HE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) V, CHENNAI DA TED 29.10.2013 FOR THE ASSESSMENT YEAR 2007-08, WHEREBY THE PENALT Y LEVIED U/S. I.T.A.NO.2197 /MDS/2013 . :- 2 -: 271D OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REF ERRED TO AS THE ACT) HAS BEEN CONFIRMED. 2. THE ADDITIONAL COMMISSIONER OF INCOME TAX VIDE ORDE R DATED 29 TH DECEMBER, 2010 HAS LEVIED PENALTY OF F15,50,000/- U/S. 271D FOR VIOLATING THE PROVISION OF SECTION 269SS OF THE ACT . THE ASSESSEE HAS ALLEGED TO HAVE TAKEN CASH LOAN OF F15,50,000/- FRO M T.D. MUTHUKUMAR (HUF) WITHOUT SUFFICIENT REASON. AGGRIEVED BY THE PENALTY ORDER, THE ASSESSEE PREFER RED AN APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEA LS). THE COMMISSIONER OF INCOME TAX (APPEALS) VIDE IMPUGNED ORDER CONFIRMED THE PENALTY. AGAINST THE ORDER CONFIRMIN G PENALTY U/S. 271D THE ASSESSEE HAS COME IN SECOND APPEAL BEFORE THE T RIBUNAL. 3. SHRI J. PRABHAKAR, C.A APPEARING ON BEH ALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE (INDIVIDUAL) HAS TAKEN CASH LOAN FROM T.D.MUTHUKUMAR (HUF). THE REVENUE HAS NOT DISPUTED THE LOAN TRANSACTION. THE HUF HAS BEEN ABLE TO EXPLAIN THE SOURCE OF FUNDS. IN RETURN OF INCOME OF HUF, THE SAID AMOUNT HAS BEEN R EFLECTED. IN THE BOOKS OF ASSESSEE, T.D. MUTHUKUMAR (HUF) HAS BEEN S HOWN AS A CREDITOR AND A CORRESPONDING ENTRY IS ALSO AVAILABL E IN THE ACCOUNTS OF HUF. THE PENALTY HAS BEEN LEVIED FOR THE REASON T HAT THE ASSESSEE I.T.A.NO.2197 /MDS/2013 . :- 3 -: HAS NOT BEEN ABLE TO CONVINCINGLY HIGHLIGHT MITIGAT ING CIRCUMSTANCES FOR TAKING CASH LOAN. THE LEARNED AUTHORISED REPRES ENTATIVE OF THE ASSESSEE REITERATED THE REASONS STATED BEFORE THE A UTHORITIES BELOW FOR TAKING CASH LOAN. 4. ON THE OTHER HAND, SHRI.P. RADHAKRISHNAN, REPRE SENTING THE DEPARTMENT VEHEMENTLY SUPPORTED THE IMPUGNED ORDER. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE ASSE SSEE HAS NOT BEEN ABLE TO SHOW COMPELLING CIRCUMSTANCES UNDER WH ICH HE WAS FORCED TO TAKE CASH LOAN FROM HUF. THE LEARNED DEP ARTMENTAL REPRESENTATIVE PRAYED FOR DISMISSING THE APPEAL OF THE ASSESSEE. 5. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRES ENTATIVES OF BOTH SIDES AND HAVE PERUSED THE ORDERS OF AUTHORITI ES BELOW. IN GROUNDS OF APPEAL, THE ASSESSEE HAS TAKEN AS MANY A S TWELVE GROUNDS. HOWEVER CRUX OF GROUNDS TAKEN IN APPEAL IS CHALLENG ING THE ORDER CONFIRMING PENALTY U/S. 271D FOR VIOLATION OF PROVI SION UNDER SECTION 269SS OF THE ACT. THE ASSESSEE HAS ALSO FILED ADDI TIONAL GROUNDS OF APPEAL CHALLENGING VIRES OF PENALTY PROCEEDINGS. A PAPER BOOK CONTAINING COPY OF NOTICES AND REPLY THEREOF ALONG WITH SUBMISSIONS CHALLENGING VARIOUS NOTICES ISSUED UNDER SECTION 271D HAS BEEN FILED. I.T.A.NO.2197 /MDS/2013 . :- 4 -: HOWEVER, DURING THE COURSE OF SUBMISSIONS, THE LEAR NED AUTHORISED REPRESENTATIVE OF THE ASSESSEE CONFINED HIS SUBMISS IONS ONLY ON MERITS. THUS, WE ARE NOT CONSIDERING THE APPEAL OF THE ASSESSEE ON VALIDITY OF PENALTY PROCEEDINGS. 6. ADMITTEDLY, THE ASSESSEE HAS TAKEN CASH LOAN OF F15,50,000/- FROM HUF. THE HUF ADVANCED CASH LOAN FROM ITS AGRI CULTURAL INCOME. IT HAS NOT BEEN DISPUTED BY THE REVENUE. THE FACTS ARE THAT BOTH ASSESSEE AND THE HUF HAVE ACCOUNTED LOAN TRANSACTIO N IN THEIR RESPECTIVE BOOKS OF ACCOUNTS. ONCE THE SOURCE OF IN COME IS ESTABLISHED, THE CREDITWORTHINESS OF THE CREDITOR I S PROVED AND THE TRANSACTION HAS BEEN PROPERLY ACCOUNTED IN THE BOOK S, WE DO NOT FIND ANY REASON FOR LEVY OF PENALTY U/S. 271D. THE PENA L PROVISIONS OF THE ACT ARE TARGETED TO CURB THE FLOW OF UNACCOUNTED MO NEY. 7. THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS ARGU ED THAT THE ASSESSEE INDIVIDUAL AND THE HUF ARE ONE AND THE SAM E PERSON, THEREFORE, CONFIRMATION GIVEN BY THE HUF CANNOT BE RELIED UPON. THE HONBLE HIGH COURT IN THE CASE OF CIT VS. M. YESODHA REPORTED AS 351 ITR 265 HAS HELD THAT WHERE LENDER AND BORROWER ARE CLOSEL Y RELATED, THE GENUINENESS OF THE TRANSACTIONS CANNOT BE DOUBT ED AND THEREFORE, I.T.A.NO.2197 /MDS/2013 . :- 5 -: PENALTY PROVISIONS U/S.271D WILL NOT BE APPLICABLE. IN THE PRESENT CASE, SHRI. T.D.MUTHUKUMAR (INDIVIDUAL) AND T.D.MUT HUKUMAR (HUF) ARE TWO SEPARATE ASSESSEES. BOTH THE ASSESSEES ARE MAINTAINING SEPARATE BOOKS OF ACCOUNT AND FILED SEPARATE RETURN S OF INCOME. LOAN TRANSACTION BETWEEN THE AFORESAID TWO ASSESSEES IS BEYOND ANY SHADOW OF DOUBT AND THE MONEY FLOW HAS BEEN EXPLAIN ED. MOREOVER, THE ASSESSEE HAS BEEN SUFFICIENTLY ABLE TO EXPLAIN THE REASON FOR DEPOSITING CASH RECEIVED BY HUF FROM SALE OF TREES INTO HIS BANK ACCOUNT. IN THE FACTS AND CIRCUMSTANCES OF THE CAS E, WE DO NOT SEE ANY REASON TO CONFIRM LEVY OF PENALTY U/S.271D. 8. ACCORDINGLY, WE SET ASIDE THE IMPUGNED ORDER AND ALLOW THE APPEAL OF THE ASSESSEE. ORDER PRONOUNCED ON FRIDAY, THE 19TH OF DECEM BER, 2014, AT CHENNAI. SD/- SD/- ( . ) (A.MOHAN ALANKAMONY) / ACCOUNTANT MEMBER ( ! ) (VIKAS AWASTHY) ' / JUDICIAL MEMBER #$ /DATED:19.12.2014. K.V $% &' (' /COPY TO: 1. ) APPELLANT 2. / RESPONDENT 3. * ( )/CIT(A) 4. * /CIT 5. '+, - /DR 6. ,. / /GF.