Shri Mangilal S/o. Bhanwarlal Choudhary, Ujjain V. The Joint Commissioner of Income-tax, Ujjain

ITA 227/IND/2010

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 2835 (ITAT-INDORE)
• Duration Of Justice: 1 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-06-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2004-2005
• Appeal Filed On: 21-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APARNA KARAN
• Keywords: Reasonable cause
• Section: 2

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, SMC-I BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER ITA NO.227/IND/10 A.YS. 2004-05 MANGILAL S/O BHANWARLAL CHOUDHARY RAJGARH APPELLANT VS JOINT COMMISSIONER OF INCOME TAX RANGE-2 UJJAIN RESPONDENT APPELLANT BY : SHRI HP VERMA ALONG WITH SHRI ASHISH GOYAL RESPONDENT BY : SMT. APARNA KARAN, SR. DR O R D E R PER JOGINDER SINGH, JM THIS APPEAL IS BY THE ASSESSEES AGAINST THE ORDER O F THE LEARNED CIT(A) DATED 23.2.2010 WHEREIN THE ONLY GROUND RAIS ED IS THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LEA RNED COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFIRMING THE PENALT Y IMPOSED U/S 271D AMOUNTING TO RS.92,660/-. 2. DURING HEARING OF THIS APPEAL THE CONTENTION RAI SED ON BEHALF OF THE ASSESSEE IS THAT PENALTY WAS IMPOSED FOR ALL EGED VIOLATION OF 2 SECTION 269SS OF THE ACT BY CONTENDING THAT PAYMENT WAS TO BE MADE TO BANK AGAINST OVERDRAFT ACCOUNT OF RS.1,13,400/- WHI CH WAS MADE ON THE NEXT DAY. IT WAS POINTED OUT THAT THE DETAILS SHOW THAT THE MONEY WAS REQUIRED TO MAKE IMMEDIATE PAYMENTS TO AVOID INTERE ST LIABILITY AND NO INTEREST WAS PAID TO THE DAUGHTER. THE DEPOSIT WAS TAKEN FROM THE DAUGHTER OF THE ASSESSEE AND WAS DULY SHOWN IN THE BOOKS. THE CRUX OF ARGUMENTS ON BEHALF OF THE ASSESSEE IS THAT THERE W AS NO INTENTION TO AVOID TAX LIABILITY. IN ITS SUPPORT THE ASSESSEE RE LIED ON THE DECISION IN CIT V. SUNIL KUMAR GOYAL; 315 ITR 163 (P&H), RAMESH CHAND MANGAL V. ITO; 5 ITJ 468 (INDORE BENCH), JAGDISH PRASAD GOYAL V. ACIT; 2ITJ 115 (INDORE BENCH), MRS. RUPALI R. DESAI; 273 ITR 109 ( MUM) AND WHEN THE DEPOSITS ARE GENUINE, RELIANCE WAS PLACED ON OMEC E NGG. V. CIT; 294 ITR 599 (JHAR) AND CIT V. SAINI MEDICAL STORES; 276 ITR 79 (P&H). ON THE OTHER HAND, THE SENIOR DEPARTMENTAL REPRESENTAT IVE STRONGLY PLEADED THAT THE CASES RELIED ON BY THE ASSESSEE HA VE ALREADY BEEN CONSIDERED BY THE ASSESSING OFFICER AND THERE WAS N O NEED TO TAKE THE CASH FROM THE DAUGHTER SINCE THERE WERE NO EXCEPTIO NAL CIRCUMSTANCES. THE CRUX OF ARGUMENTS WAS THAT THERE WAS URGENT BUS INESS NEED, THEREFORE, THE IMPOSITION OF PENALTY WAS DEFENDED. 3. I HAVE CONSIDERED THE RIVAL SUBMISSIONS OF LD. R EPRESENTATIVES OF BOTH SIDES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BRIEF FACTS ARE THAT THE ASSESSEE IS A PROPRIETOR OF M/S CHOUDH ARY SHOPPING CENTRE, 3 RAJGARH. THE SCRUTINY ASSESSMENT U/S 147/143(3) OF THE ACT WAS COMPLETED ON 18.12.2006 WHEREIN IT WAS FOUND BY THE ASSESSING OFFICER THAT ON 24.9.2003 THE ASSESSEE CREDITED RS.41,000/- IN CASH BOOK AND IDENTICALLY RS.74,000/- WERE CREDITED IN CASH ON 26 TH MARCH, 2004. BOTH THE CASH DEPOSITS WERE ACCEPTED FROM HER DAUGHTER, KU. BHAVANA CHOUDHARY, AN INCOME TAX ASSESSEE, WHO WAS WORKING ON CONTRACT BASIS WITH PRASAR BHARTI BROADCASTING CORPORATION OF INDI A. IN FINANCIAL YEARS 2002-03 AND 2003-04 SHE RECEIVED REMUNERATION OF R S.41,000/- AND RS. 74,000/-, RESPECTIVELY. THESE AMOUNTS OF REMUNE RATION WERE RECEIVED BY THE ASSESSEE. DURING THE ASSESSMENT PR OCEEDINGS SHE APPEARED BEFORE THE ASSESSING OFFICER AND CATEGORIC ALLY ADMITTED THAT SHE GAVE THE AMOUNTS TO HER FATHER, THEREFORE, THE SOURCE OF DEPOSIT WAS ACCEPTED BY THE ASSESSING OFFICER. THE ASSESSEE DI D NOT PAY ANY INTEREST ON SUCH AMOUNTS TO HER DAUGHTER. HOWEVER, THE ASSESSING OFFICER WAS OF THE VIEW THAT THERE WERE NO EXTRAORD INARY CIRCUMSTANCES COMPELLING THE ASSESSEE TO ACCEPT CASH FROM HER DAU GHTER, THEREFORE, IN VIEW OF SECTION 269SS OF THE ACT, HE LEVIED THE PEN ALTY OF RS.92,660/- U/S 271D OF THE ACT. ON APPEAL, THE STAND OF THE A SSESSING OFFICER WAS CONFIRMED WHICH IS UNDER CHALLENGE BEFORE THE TRIBU NAL. 4. UNDER THE AFOREMENTIONED FACTS, I AM OF THE VIEW THAT IF THERE WAS GENUINE AND BONAFIDE TRANSACTION AND THAT TOO T HE MONEY WAS 4 ACCEPTED FROM HER OWN DAUGHTER, WHO HAS EXPLAINED T HE SOURCE OF THE MONEY, THEREFORE, THERE IS NO REASON TO SUSPECT THE TRANSACTION AND TO LEVY THE PENALTY. EVEN OTHERWISE, IF THE ASSESSING OFFICER IS SATISFIED ABOUT THE GENUINENESS OF THE TRANSACTION HE HAS THE DISCRETION TO LEVY THE PENALTY OR NOT. AT THE SAME TIME, SUCH DISCRET ION HAS TO BE USED JUDICIOUSLY. ADMITTEDLY, THE SOURCE OF AMOUNT HAS BEEN SATISFACTORILY EXPLAINED BY THE ASSESSEE. EVEN OTHERWISE, THE TRA NSACTION IS BETWEEN TWO CLOSE RELATIVES WITHIN THE FAMILY AND THE FUNDS WERE USED FOR BUSINESS PURPOSES AND DULY ACCOUNTED FOR IN THE BOO KS OF ACCOUNTS THEREFORE I AM OF THE CONSIDERED OPINION THAT PENAL TY U/S 271D IS NOT LEVIABLE. THE OBJECT OF BRINGING SECTION 269SS ON THE STATUTE IS TO RESTRICT OR PLUG THE MOVEMENT OF UNACCOUNTED MONEY, THEREFORE, THE DECISION FROM HONBLE PUNJAH & HARYANA HIGH COURT I N CIT V. SUNIL KUMAR GOYAL; 315 ITR 163 AND CIT V. LAXMI TRUST CO MPANY (303 ITR 99) (MAD) COMES TO THE RESCUE OF THE ASSESSEE. THE RATIO LAID DOWN BY THE INDORE BENCH IN RAMESH CHAND MANGAL V. ITO (5 I TJ 468) AND JAGDISH PRASAD GOYAL (2 ITJ 115) ALSO SUPPORTS THE CASE OF THE ASSESSEE. WHEN THE AMOUNT WAS ENTERED IN THE BOOKS OF ACCOUNTS, IT WAS HELD BY THE MUMBAI BENCH THAT PENALTY IS NOT LE VIABLE. WHEN THE DEPOSIT HAS BEEN ACCEPTED TO BE GENUINE BY THE ASSE SSING OFFICER, THEREFORE, THERE IS NO REASON TO IMPOSE PENALTY U/S 271D FOR WHICH THE DECISION IN OMEC ENGG. V. CIT; 294 ITR 599 AND SAIN I MEDICAL STORES; 5 276 ITR 79 (P&H) CAN BE RELIED UPON. THE DECISIONS IN CIT V. KUNDRATHUR FINANCE & CHIT COMPANY; 283 ITR 329 (MAD ), CIT V. RATNA AGENCIES; 284 ITR 609 (MAD) AND DI INV. V. KU. A.B. SHANTHI; 255 ITR 258 (SC) ALSO FAVOUR THE CASE OF THE ASSESSEE ESPEC IALLY WHEN THE TRANSACTION IS GENUINE AND THE IDENTITY OF THE LEND ER IS NOT IN DOUBT. EVEN IF THE AMOUNT IS ABOVE THE PRESCRIBED LIMIT AND THE RE IS A REASONABLE CAUSE FOR ACCEPTING THE DEPOSIT IN CASH, I AM OF TH E CONSIDERED OPINION THAT NO PENALTY SHOULD BE IMPOSED. THE RATIO LAID D OWN IN CIT V. BENGAL IRON GALVANISING WORKS; 165 ITR 249 (CAL) (PARA 21) , KERALA STATE INDUSTRIAL DEVELOPMENT CORPORATION V. CIT; 259 ITR 51 (SC) (PARAS 6 AND 16), K.P. VARGHESE V. ITO; 131 ITR 597 (SC) (PA RAS 15 AND 16) ALSO SUPPORT THE CASE OF THE ASSESSEE. THE IMPUGNED AMO UNTS ARE NOT VERY MUCH HIGH, TRANSACTION IS NOT IN DOUBT, THE AMOUNT WAS USED BY THE ASSESSEE, IT IS DULY ENTERED IN THE BOOKS, THEREFOR E, THERE IS NO EVASION OF TAX. IT IS NOT THE CASE THAT SIMPLY TO DEFRAUD T HE INTEREST OF REVENUE THE PAYMENT WAS MADE AND A FORMULA WAS DEVISED BY THE A SSESSEE TO REDUCE THE TAX RATHER THE PAYMENT WAS TO BE MADE TO BANK AGAINST OVER DRAFT ACCOUNT AND THE AMOUNT OF RS.1,13,400/- WAS P AID ON THE NEXT DAY ITSELF AS IS EVIDENT FROM PAGE 13 OF THE PAPER BOOK . CONSEQUENTLY, I AM SATISFIED THAT IT IS A FIT CASE WHERE PENALTY U/S 2 71D IS NOT ATTRACTED. CONSEQUENTLY, THIS APPEAL OF THE ASSESSEE IS ALLOWE D. FINALLY, THE APPEAL OF THE ASSESSEE IS ALLOWED. 6 ORDER PRONOUNCED IN OPEN COURT ON 2 ND JUNE, 2010. SD/- (JOGINDER SINGH) JUDICIAL MEMBER JUNE 2, 2010 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, G UARD FILE *DN/