Shri Niranjanaben V. Parekh, RAJKOT-GUJARAT V. The Additional Commissioner of Income Tax, Range-5, RAJKOT-GUJARAT

ITA 23/RJT/2012

• Counselvise Citation: [2012] 120 COUNSELVISE.COM (IT) 0186 (ITAT-RAJKOT)
• Duration Of Justice: 8 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 04-09-2012
• Assessment Year: 2007-2008
• Appeal Filed On: 16-01-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AVINASH KUMAR
• Assessee Lawyers: DM RINDANI
• Keywords: Bonafide belief; Reasonable cause
• Section: 27

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBULAL; RAJKOT BENCH, RAJKOT. . .. . . .. . , , , , . .. . . .. . , , , , $ $ $ $ BEFORE SHRI T. K. SHARMA, JM AND SHRI D. K. SRIVASTAV A, AM ITA NO.23/RJT/2012. / ASSESSMENT YEAR 2007-08 SMT. NIRANJANBEN V.PAREKH C/O M/S JAY ENTERPRISE, MEENA GALI, MANDVI CHOWK, PAN: ACGPP7700A ( * / APPELLANT) VS. ADDITIONAL COMMISSIONER OF INCOME TAX, RANGE-5, RAJKOT. +,* / RESPONDENT -. / ASSESSEE BY SHRI D.M.RINDANI . / REVENUE BY SHRI. AVINASHKUMAR . / DATE OF HEARING 4.9.2012 . / DATE OF PRONOUNCEMENT 28.9.2012 / / / / ORDER . .. . . . . . , , , , / T. K. SHARMA, J. M. THIS APPEAL BY THE ASSESSEE IS AGAINST THE ORDER DATED 14.12.2011 OF CIT(A) , IV, RAJKOT CONFIRMING THE PENALTY OF RS.37,740/- OUT OF TOTAL P ENALTY OF RS.2,47,240/- LEVIED U/S 271D OF THE INCOME TAX ACT, 1961(THE ACT) F OR THE ASSESSMENT YEAR 2007-08. 2. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS AN INDIV IDUAL DERIVING SHARE INCOME FROM PARTNERSHIP, RENT, INTEREST AND JOB WORK. FOR THE ASSESSMENT YEAR UNDER APPEAL, SHE FILED HER RETURN OF I NCOME DECLARING TOTAL INCOME OF RS.1,93,030/- ON 17.3.2008. IN R ESPECT OF LOAN OBTAINED FROM VARIOUS PERSONS, THE AO LEVIED PENALTY OF RS. 2,47,240/- U/S 271D ITA NO.23/RJT/2012. 2 OF THE ACT. ON APPEAL, IN THE IMPUGNED ORDER, THE LD. CIT(A) CONFIRMED THE PENALTY TO THE EXTENT OF RS.37,740/- IN RESPECT O F TWO LONNEES FOR THE DETAILED REASONS GIVEN IN THE PARAGRAPHS 4.4 TO 4.6 OF THE IMPUGNED ORDER WHICH IS REPRODUCED BELOW : 4.4 AS FAR AS LOAN OF RS.20,000/- TAKEN IN CASH FROM S MT. HASUMATIBEN PATADIA ON 15.7.2006 IS CONCERNED, THE CRED IT BALANCE OF THIS LENDER WAS RS.69,500/- WHICH ALREADY E XCEEDED THE LIMIT OF RS.20,000/-. THEREFORE, ANY AMOUNT WHICH I S TAKEN IN CASH WHEN SUCH CREDIT BALANCE EXISTS WILL BE HIT BY THE PROVISI ONS OF SECTION 269SS. I THEREFORE FIND THAT THE LOAN OF RS.2 0,000/- IN CASH WAS TAKEN BY APPELLANT ON 15.7.2006 IN CONTRAVENTION OF SECTION 269SS. THE PENALTY OF RS.20,000/- U/S 271D IS THEREF ORE CONFIRMED IN RESPECT OF THIS TRANSACTION OF TAKING CASH LOAN OF RS.20 ,000/- FROM SMT. HASUMATIBEN PATADIA ON 15.7.2006. HOWEVE R, THERE ARE NO DETAILS IN RESPECT OF TRANSACTIONS, WHICH RESULTED IN OPENING CREDIT BALANCE OF RS.69,500/- OF SMT. HASUMATIBEN PAT ADIA AS ON 1.4.2006. THE PENALTY U/S 271D IS LEVIED ON TAKING CASH LOAN OR MONEY IN CASH IF THE CREDIT BALANCE BEFORE TAKING SUCH LOA N EXCEEDED RS.20,000/-. THE DEFAULT HAS TO BE IN TERMS OF MONEY TAKEN IN CASH AND NOT IN TERMS OF ANY OPENING BALANCE CREDIT IN THE ACCOUNTS OF THE LENDER IN THE BOOKS OF ACCOUNT. THE ADDL. CIT HAD TO FIND OUT WHETHER THE TRANSACTIONS WHICH CONSTITUTED THE OPENING BALANCE OF RS.69,500/- AS ON 1.4.2006 WERE LOAN TRAN SACTIONS IN CASH OR CHEQUE AND ACCORDINGLY APPLY THE PROVISIONS OF SE CTION 269SS CAN BE PRESUMED. THEREFORE, I REDUCE THE PENA LTY LEVIED BY THE ADDL. CIT(A) U/S 271D BY RS.69,500/- ON THE OPEN ING BALANCE CREDITED IN THE BOOKS OF APPELLANT IN THE ACCOUNT OF SMT. HASUMATIBEN PATADIA. 4.5 AS FAR AS LOAN OF RS.19,240/- TAKEN IN CASH FROM S HRI SANDIPBHAI KHAKHRA ON 21.7.2006 IS CONCERNED, THE CRED IT BALANCE OF THIS LENDER WAS RS.18,500/- BEFORE TAKING THIS LOAN. I HAVE ALREADY DISCUSSED IN PARA 4.4. ABOVE THAT PENALTY U/S 27 1D MAY BE LEVIED ON ACCEPTANCE OF LOAN IN CASH AND NOT ON OPENING BALANCE IN THE ACCOUNT OF ANY LENDER OF THE LOAN. THEREFORE, I REDUCE THE PENALTY LEVIED BY THE ADD.CIT(A) U/S 271D BY RS.18 ,500/- ON THE OPENING BALANCE CREDITED IN THE BOOKS OF APPELLANT IN THE ACCOUNT OF SHRI SANDIPBHAI KHAKHRA. HOWEVER THE AGGREGAT E OF LOAN OF RS.19,240/- TAKEN IN CASH ON 21.7.2006 AND THE EXISTING CREDIT BALANCE ON THAT DAY BEFORE TAKING SUCH LOAN OF RS.18 ,500/- IS RS.37,740/-, WHICH EXCEEDS RS.20,000/-. THEREFORE, THE T RANSACTION OF ACCEPTING LOAN OF RS.19,240/- IN CASH FROM SHRI SA NDIPBHAI KHAKHRA ON 21.7.2006 IS HIT BY THE PROVISIONS OF SECTI ON 269SS. HOWEVER, THE QUANTUM OF DEFAULT HAS TO BE DETERMINE D BY THE AMOUNT BY WHICH THE AGGREGATE OF LOAN IN CASH OF RS.19 ,240/- AND OPENING BALANCE OF RS.18,500/- EXCEEDS RS.20,000/-. HO NBLE RAJASTHAN HIGH COURT HELD IN CASE OF CIT V. AJANTA D YEING AND PRINTING MILLS (2003) 130 TAXMAN 442 (RAJ) THAT THE PERMISSIBLE ITA NO.23/RJT/2012. 3 AMOUNT OF RS.20,000/- HAS TO BE ADJUSTED BEFORE DETE RMINING THE QUANTUM OF DEFAULT U/S 269SS OR PENALTY U/S 271D. THE AMOUNT OF DEFAULT IN THE ABOVE MENTIONED TRANSACTION IN CASE OF APPELLANT IS RS.37,740(-) RS.20,000=RS.17,740/-. I THEREFORE CONFIRM THE PENALTY OF RS.17,740/- LEVIED BY THE ADD.CIT ON THE LOAN T RANSACTION WITH SHRI SANDIPBHAI KHAKHRA AND DELETE THE BALANCE AMO UNT. 4.6 IN NUTSHELL, I REDUCE THE PENALTY OF RS.2,47,240 /- LEVIED BY THE ADDL.CIT U/S 271D OF THE IT ACT TO RS.37,740/- 3. AGGRIEVED WITH THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4. AT THE TIME OF HEARING BEFORE US, SHRI D.M.RIND ANI, THE LD. COUNSEL FOR THE ASSESSEE APPEARED AND CONTENDED THAT THE ASSESSEE I S A LADY. WHEN SHE WAS IN IMMEDIATE NEED OF MONEY AND COULD NOT GET SUCH MONEY THROUGH BANKING CHANNEL, SHE APPROACHED THE PRI VATE MONEY LENDERS, FRIENDS AND RELATIVES WHO COULD LENT MONEY TO HER TO SATISFY IMMEDIATE NEED OF MONEY. HE EXPLAINED THAT SHE HA S NOT ENTERED INTO A CASH TRANSACTION TO AVOID THE PAYMENT OF TAX OR DEFRAUD THE REVENUE. FURTHER THE MAIN PURPOSE OF INTRODUCING SECTION 269SS OF THE ACT WAS TO DAMPER DEVICE TO EXPLAIN UNACCOUNTED CASH OR UNACCOUNTE D INVESTMENT OR UNACCOUNTED DEPOSITS, AND TECHNICAL OR VENIAL DEFAUL T PENALTY U/S 271D OF THE ACT IS NOT LEVIABLE. IN SUPPORT OF THI S HE ALSO INVITED OUR ATTENTION TO THE MEMORANDUM EXPLAINING THE PROVISIO NS OF SECTION 269SS INTRODUCED BY THE FINANCE ACT, 1984. HE ALSO REL IED ON THE DECISION OF THE AHMEDABAD BENCH OF THE TRIBUNAL IN THE CASE OF SHREENATH BUILDERS V/S DCIT (2000) 111 TAXMAN 142 (MAG.). IT WAS ALSO S UBMITTED THAT SINCE THE TRANSACTION WAS GENUINE AND BONAFIDE ONE AND THER E WAS NO MALAFIDE INTENTION OF THE ASSESSEE TO INTRODUCE THE UNACCOUNTE D MONEY IN THE FORM OF A LOAN, THEREFORE, NO PENALTY IS ATTRACTED IN THIS CASE. HE ALSO ITA NO.23/RJT/2012. 4 PLACED RELIANCE ON THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. V/S STATE OF ORISSA (1972) 8 3 ITR 26 (SC) TO EMPHASIZE HIS SUBMISSION THAT IF THE TRANSACTION IS BONAFIDE AND GENUINE ONE FOR THE BUSINESS PURPOSE OF THE ASSESSEE, IT IS NOT NE CESSARY THAT IN EACH AND EVERY CASE, PENALTY SHOULD BE LEVIED. 4.1 THE LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT IN THIS CASE, THERE IS A REASONABLE CAUSE WITHIN THE MEANING O F SECTION 271D OF THE ACT AS THE ASSESSEE WAS IN URGENT NEED OF MONEY, TH EREFORE, THE AO OUGHT TO HAVE TAKEN LENIENT VIEW. RELIANCE WAS ALSO PLACED ON THE DECISION OF THE HONBLE GUWAHATI HIGH COURT IN THE CASE OF CIT V/S BHAGWATI PRASAD BAJORIA (HUF) (2003) 183 CTR (GAU) 484. 5. ON THE OTHER HAND, SHRI AVINASHKUMAR , THE LD. DR APPEARED ON BEHALF OF THE REVENUE AND VEHEMENTLY SUPPORTED TH E ORDER OF THE LD. CIT(A). THE LD. DR POINTED OUT THAT ON 15.7.2006, THE ASSESSEE HAS RECEIVED RS.20,000/- FROM SMT. HASUMATIBEN PATADIA F ULLY KNOWING THAT FROM THIS LONEE THERE IS A OPENING BALANCE OF RS. 69, 500/-, WHICH WAS IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE A CT. SIMILARLY, IN RESPECT OF LOAN TAKEN FROM SHRI SANDIPBHAI KHAKHRA O N 21.7.2006, THE ASSESSEE RECEIVED RS.17,740/- FULLY KNOWING THAT THERE I S A OPENING BALANCE OF RS.18,500/-, SHE HAS VIOLATED THE PROVISION S OF SECTION 269SS OF THE ACT. AS AGAINST THIS, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED THAT SHE WAS UNDER THE BONAFIDE BELIEF THAT THERE IS NO VIOLATION OF PROVISIONS OF INCOME TAX ACT WHEN THE LOAN AMOUNT IS UP TO RS.20,000/- OR LESS. AT THE TIME OF ACCEPTING LOANS FROM THESE TWO L ONEE, THE ASSESSEE BY INADVERTENCE FAILED TO TAKE INTO ACCOUNT OPENING BALANCE AND ITA NO.23/RJT/2012. 5 ACCEPTED FRESH LOAN OF RS.20,000 FROM SMT. HASUMATIBE N PATADIA ON 15.7.2006 AND THE LOAN OF RS. 17,740/- FROM SHRI S ANDIPBHAI KHAKHRA ON 21.7.2006, THEREFORE, LENIENT VIEW MAY KINDLY BE TA KEN AND PENALTY CONFIRMED BY THE LD. CIT(A) BE CANCELLED. 6. HAVING HEARD BOTH THE SIDES, WE HAVE CAREFULLY GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. IT IS PERTINENT TO KNOW THAT IN THE IMPUGNED ORDER THE LD. CIT(A) HAS CONFIRMED THE PENALTY OF RS. 37,740/- IN RESPECT OF TWO LONNEE VIS. SMT. HASUMATIBEN PATADIA, RS.20,000/- AND RS.17,740/-. ADMITTEDLY, DURING THE YEAR THE LOAN AMOUNT RECEIVE D IS LESS THAN RS.20,000/-. KEEPING IN VIEW THIS CONSPICUOUS FACTS, WE ARE OF THE VIEW THAT THE REVENUE SHOULD HAVE TAKEN LENIENT VIEW. BE THAT IT MAY, PRIMA FACIE IT APPEARS THAT THIS CONSTITUTE REASONABLE CAUSE WIT HIN THE MEANING OF SECTION 271B OF THE ACT, THEREFORE, THE PENALTY TO THE EXTENT OF RS. RS.37,740/- CONFIRMED BY THE LD. CIT(A) IS CANCELLED. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS AL LOWED. THIS ORDER IS PRONOUNCED IN THE OPEN COURT ON THE DAT E MENTIONED HEREINABOVE. SD/- SD/- ( .. / D. K. SRIVASTAVA) ( .. / T. K. SHARMA) / ACCOUNTANT MEMBER /JUDICIAL MEMBER 3/ ORDER DATE 28-09-2012. /RAJKOT ITA NO.23/RJT/2012. 6 SRL . .. . +4 +4 +4 [phone] / COPY OF ORDER FORWARDED TO:- 1. * / APPELLANT-. 2. +,* / RESPONDENT- 3. : / CONCERNED CIT. 4. :- / CIT (A). 5. 4 +, , / DR, ITAT, RAJKOT 6. / GUARD FILE. / BY ORDER , TRUE COPY SENIOR PRIVATE SECRETARY , INCOME TAX APPELLATE TRIBUNAL, RAJKOT.