S. Harsha, CHENNAI V. JCIT, Pondicherry

ITA 2258/CHNY/2013

• Counselvise Citation: 225821714 RSA 2013
• Duration Of Justice: 1 year(s) 4 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-04-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 26-12-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P RADHAKRISHNAN
• Assessee Lawyers: S SRIDHAR
• Keywords: Reasonable cause
• Section: 273B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . . . , . , % BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER ./ I.T.A.NO. 2258/MDS/2013 ( / ASSESSMENT YEAR: 2009-10) MR. S.HARSHA, S/O. N.SUBRAMANIAN, NO.7, FIRST CROSS, VIVEKANANDA NAGAR, PONDICHERRY-605 005 . VS THE JOINT COMMISSIONER OF INCOME TAX, PONDICHERRY RANGE, PONDICHERRY. PAN: ACKPH5130J ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. S.SRIDHAR, ADVOCATE /RESPONDENT BY : MR. P.RADHAKRISHNAN, JCIT /DATE OF HEARING : 16 TH APRIL, 2015 /DATE OF PRONOUNCEMENT : 1 ST MAY, 2015 / O R D E R PER N.R.S. GANESAN, JM: THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) VI, CHENNAI DATED 28.11.2013 AND PERTAINS TO ASSESSM ENT YEAR 2009-10. 2. SHRI S.SRIDHAR, LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE BORROWED LOAN OF ` 15,00,000/- FROM HIS FATHER SHRI N. SUBRAMANIAN ON 27.01.2009. SINCE THE LOAN WAS BORROWED IN CASH, THE ASSESSING OFFICE R LEVIED PENALTY UNDER SECTION 271D OF THE ACT. ON APPEAL B Y THE ASSESSEE, LEARNED COMMISSIONER OF INCOME TAX (APPEA LS) 2 ITA NO.2258/MDS/2013 CONFIRMED THE PENALTY LEVIED BY THE ASSESSING OFFIC ER. ACCORDING TO THE LEARNED COUNSEL, THE TRANSACTION OF LOAN IS BETWEEN THE ASSESSEE AND HIS FATHER AND THE TRANSAC TION WAS GENUINE AND THEREFORE NO PENALTY COULD BE LEVIED UN DER SECTION 271D OF THE ACT, IN VIEW OF THE JUDGEMENT O F MADRAS HIGH COURT IN THE CASE OF CIT VS. SMT. M.YESODHA ( 2010) 351 ITR 265. 3. ON THE CONTRARY, SHRI P.RADHAKRISHNAN, LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT ASSESSEE RECEIVED LOAN IN CASH EXCEEDING ` 20,000/-. THERE WAS NO REASONABLE CAUSE FOR RECEIVING THE MONEY IN CASH, T HOUGH THE ASSESSEE CLAIMS THAT HE GAVE A CHEQUE OF ` 25,00,000/- TO ONE OF HIS FAMILY FRIEND MR. JOHN CHRISTOPHER AND T O HONOUR THE CHEQUE HE BORROWED MONEY FROM HIS FATHER AND DE POSITED IN THE ACCOUNT. ACCORDING TO THE DEPARTMENTAL REPRESENTATIVE, THE ASSESSEE HAS BORROWED ` 15,00,000/- IN CASH FOR HONOURING THE VERY SAME CHEQUE. THEREFORE, THERE MAY NOT BE IMPEDIMENT FOR RECEIVING LOAN OF ` 15,00,000/- FROM HIS FATHER BY CHEQUE IN THE ABSENCE OF ANY REA SONABLE CAUSE. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE COMMISSIONER OF INCOME TAX (APP EALS) HAS RIGHTLY LEVIED PENALTY. 3 ITA NO.2258/MDS/2013 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL ON RECORD. A DMITTEDLY THE ASSESSEE HAS RECEIVED A SUM OF ` 15,00,000/- IN CASH FROM HIS FATHER MR. N.SUBRAMANIAN. THE RECEIPT OF ` 15,00,000/- RECEIVED BY THE ASSESSEE FROM HIS FATH ER IS NOT DISPUTED BY THE REVENUE. THE CLAIM OF THE ASSESSEE APPEARS TO BE THAT TRANSACTION WAS GENUINE AND THE TRANSACT ION WAS BETWEEN THE CLOSE RELATIVES AND THEREFORE PROVISION S OF SECTION 271D OF THE ACT IS NOT APPLICABLE. WE HAVE CAREFULLY GONE THROUGH THE JUDGEMENT OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. SMT. M.YESODHA (SUPRA). IN THE CASE BEFORE THE MADRAS HIGH COURT, THE ASSESSEE RECEIVED MONEY FROM HER FATHER-IN-LAW IN CASH EXCEEDING ` 20,000/-. IN FACT, THE ASSESSEE RECEIVED A LOAN OF ` 20,99,393/- FROM HER FATHER-IN- LAW. THE HIGH COURT AFTER CONSIDERING THE PROVISION S OF SECTION 273B OF THE ACT FOUND THAT WHEN THE TRANSA CTION WAS BETWEEN DAUGHTER-IN-LAW AND FATHER-IN-LAW AND THE TRANSACTION WAS BONAFIDE, PENALTY CANNOT BE IMPOSED . 5. WE HAVE ALSO CAREFULLY GONE THROUGH THE PROVISIO NS OF SECTION 269SS AND 271D OF THE ACT. THE ASSESSING OF FICER IS EMPOWERED TO LEVY PENALTY WHEREVER ASSESSEE RECEIVE S LOAN 4 ITA NO.2258/MDS/2013 EXCEEDING ` 20,000/- IN CASH. HOWEVER, IF THERE IS A REASONABLE CAUSE FOR RECEIVING THE MONEY IN CASH, P ENALTY CANNOT BE LEVIED UNDER SECTION 273B OF THE ACT. THE REFORE, THE VERY GENUINENESS OF THE TRANSACTION ALONE CANNO T BE A REASON FOR NOT LEVYING PENALTY AND THE ASSESSEE IS EXPECTED TO EXPLAIN THE REASONABLE CAUSE FOR RECEIVING MONEY IN CASH. IN FACT, THE APEX COURT IN THE CASE OF ASSISTANT DI RECTOR OF INSPECTION (INVESTIGATION) VS. KUM. A.B.SHANTHI (20 02) 255 ITR 258 FOUND THAT THE PARLIAMENT BY INTRODUCING SE CTION 273B OF THE ACT MITIGATED THE UNDUE HARDSHIP CAUSED TO A PERSON WHO RECEIVED MONEY IN CASH. THE APEX COURT F URTHER OBSERVED THAT IF THERE WAS GENUINE AND BONAFIDE TRA NSACTION AND IF FOR ANY REASON TAX PAYER COULD NOT GET A LOA N OR DEPOSIT BY ACCOUNT PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BO NAFIDE REASONS, THE AUTHORITY VESTED WITH THE POWER TO IMP OSE PENALTY HAS GOT DISCRETIONARY POWER. IN FACT, THE APEX COURT OBSERVED AS FOLLOWS:- IT IS IMPORTANT TO NOTE THAT ANOTHER PROVISION, NAMELY SECTION 273B WAS ALSO INCORPORATED WHICH PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN THE PROVISIONS OF SECTION 271D, NO PENALTY SHALL BE IMPOSABLE ON THE PERSON OR THE ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFERRED TO IN THE SAID PROVISION IF HE PROVES THAT THERE WAS REASONABLE CAUSE FOR SUCH FAILURE AND IF THE ASSESSEE PROVES THAT THERE WAS REASONABLE 5 ITA NO.2258/MDS/2013 CAUSE FOR FAILURE TO TAKE A LOAN OTHERWISE THAN BY ACCOUNT-PAYEE CHEQUE OR ACCOUNT-PAYEE DEMAND DRAFT, THEN THE PENALTY MAY NOT BE LEVIED. THEREFORE, UNDUE HARDSHIP IS VERY MUCH MITIGATED BY THE INCLUSION OF SECTION 273B IN THE ACT. IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND IF FOR ANY REASON THE TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT-PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONA FIDE REASONS, THE AUTHORITY VESTED WITH THE POWER TO IMPOSE PENALTY HAS GOT DISCRETIONARY POWER. 6. THE MADRAS HIGH COURT IN THE CASE OF CIT VS. SMT . M.YESODHA (SUPRA) OBSERVED AS FOLLOWS:- THE CONTENTION OF THE REVENUE IS THAT THE AMOUNT RECEIVED BY THE ASSESSEE FROM HER FATHER-IN-LAW HAS TO BE TREATED ONLY AS A LOAN AND IT IS A LOAN, THEN THE ASSESSEE IS LIABLE TO PAY PENALTY UNDER SECTION 271D OF THE INCOME-TAX ACT. WHETHER IT IS A LOAN OR OTHER TRANSACTION, STI LL THE OTHER PROVISION, NAMELY, SECTION 273B OF THE INCOME-TAX ACT, COMES TO THE RESCUE OF THE ASSESSEE, IF SHE ABLE TO SHOW REASONABLE CAUSE FOR AVOIDING PENALTY UNDER SECTION 271D OF THE INCOME-TAX ACT. THE TRIBUNAL HAS RIGHTLY FOUND THAT THE TRANSACTION BETWEEN THE DAUGHTER-IN-LAW AND THE FATHER-IN-LAW IS A REASONABLE TRANSACTION AND A GENUINE ONE OWING TO THE URGENT NECESSITY OF MONEY TO BE PAID TO THE SELLER. WE FIND THAT THIS WOULD AMOUNT TO REASONABLE CAUSE SHOWN BY THE ASSESSEE TO AVOID PENALTY UNDER SECTION 271D OF THE INCOME-TAX ACT. 7. IN THIS CASE, ADMITTEDLY THE TRANSACTION WAS BET WEEN THE ASSESSEE AND HIS FATHER. THE ASSESSEE CLAIMS TH AT HE NEEDS MONEY FOR HONOURING CHEQUE ISSUED TO MR. JOHN CHRISTOPHER. IN VIEW OF THE ABOVE FACTUAL SITUATION , THIS 6 ITA NO.2258/MDS/2013 TRIBUNAL IS OF THE CONSIDERED OPINION THAT JUDGEMEN T OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. SMT. M.YES ODHA (SUPRA) AND THE JUDGEMENT OF APEX COURT IN THE CAS E OF ASSISTANT DIRECTOR OF INSPECTION (INVESTIGATION) VS . KUM. A.B.SHANTHI (SUPRA) ARE SQUARELY APPLICABLE IN THE FACTS AND CIRCUMSTANCES OF THIS CASE. THEREFORE, LEVY OF PEN ALTY UNDER SECTION 271D IS NOT JUSTIFIED. ACCORDINGLY, ORDERS OF LOWER AUTHORITIES ARE SET ASIDE AND PENALTY LEVIED BY THE ASSESSING OFFICER AND AS CONFIRMED BY THE COMMISSIONER OF INC OME TAX (APPEALS) UNDER SECTION 271D OF THE ACT IS DELETED. 8. IN THE RESULT, APPEAL OF THE ASSESSEE STANDS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 1 ST DAY OF MAY, 2015. SD/- SD/- (A.MOHAN ALANKAMONY) (N.R.S.GANESAN) (. ) ( . . . ) +/ ACCOUNTANT MEMBER - + /JUDICIAL MEMBER - /CHENNAI, / /DATED 1 ST MAY, 2015 SOMU 01 21 / COPY TO: 1. APPELLANT 2. RESPONDENT 3. 3 () /CIT(A) 4. 3 /CIT 5. 1 5 /DR 6. /GF .