Sri P. Palani, CHENNAI V. The Joint CIT, Pondicherry

ITA 230/CHNY/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 96294 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 9 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-10-2015
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 12-10-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 27-01-2014
• Court: TRIBUNAL
• Department Lawyers: A B KOLI
• Assessee Lawyers: A S SRIRAMAN
• Keywords: Reasonable cause
• Section: 133A

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL A BENCH, CHENNAI , . , BEFORE SHRI CHANDRA POOJARI , ACCOUNTANT MEMBER & SHRI DUVVURU RL REDDY , JUDICIAL MEMBER I.T.A.NO S . 229 AND 230/MDS/2014 ASSESSMENT YEAR S :20 09 - 1 0 AND 2011 - 12 SHRI P. PALANI, 38, SUBRAMANIASAMY KOIL STREET, MUTHIALPET, PONDICHERRY 605 003. [PAN: A NHP P 3585F ] VS. THE JOINT COMMISSION E R OF INCOME TAX , PONDICHERRY RANGE, PO NDICHERRY . ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI A.S. SRIRAMAN , ADVOCATE / RESPONDENT BY : SHRI A.B KOLI , J CIT / DATE OF HEARING : 12 . 1 0 .201 5 / DATE OF P RONOUNCEMENT : 29 . 1 0 .201 5 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THESE TWO APPEALS FILED BY THE SAME ASSESSEE ARE DIRECTED AGAINST DIFFERENT ORDERS OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) VI, CHENNAI BOTH DATED 30.12. 2013 PASSED UNDER SECTION 271D AND 271E OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] FOR THE ASSESSMENT YEARS 2009 - 10 AND 2011 - 12 RESPECTIVELY. 2. BRIEF FACTS OF THE CASE ARE THAT A SURVEY UNDER SECTION 133A WAS CONDUCTED IN THE BUSINESS PREMISES OF SHR I A. KANNAN, PROP. VADAMALAYAN I.T.A. NO S . 229 & 230 /M/ 1 4 2 FINANCE ON 08.09.2011. IT WAS FOUND IN THE COURSE OF SURVEY THAT SHRI A. KANNAN WAS LENDING MONEY ON PRO - NOTES AND THE VADAMALAYAN FINANCE IS NOT LICENSED FOR CARRYING OUT FINANCIAL ACTIVITIES. HE CHOSE TO GIVE LOANS TO ONLY SELECTED GROUP OF PERSONS. HE GAVE MONIES TO PERSONS AFTER DEDUCTING INTEREST FOR TEN MONTHS. THE AMOUNT IS DIVIDED INTO TEN MONTHLY INSTALLMENTS. ONCE THE REPAYMENTS OF TEN INSTALLMENTS ARE OVER, AGAIN THE SAME PERSONS TOOK FURTHER LOAN. HE CHARGED INTERE ST ON THE LOAN AT ONE PERCENT PER MONTH. THE WHOLE TRANSACTION WAS DONE BY CASH ONLY I.E. NO CHEQUES OR DRAFTS CAME INTO PLAY. THE ASSESSING OFFICER HAS FOUND DURING THE SURVEY PROCEEDINGS THAT THE ASSESSEE HAD VIOLATED THE PROVISIONS OF BOTH THE SECTIONS 269SS AND 269T OF THE INCOME TAX ACT AS THE ASSESSEE HAD ACCEPTED THE LOANS IN CASH EXCEEDING .20,000/ - AND REPAID THE LOAN EXCEEDING . 20,000/ - . 3. THE ITO HAS REFERRED THIS CASE TO THE JCIT, P ONDICHERRY AND CONSEQUENT TO THE ABOVE REFERENCE, A SHOW C AUSE NOTICE DATED 21.02.2012 WAS ISSUED TO THE ASSESSEE UNDER SECTION 271D & 271E OF THE ACT AND THE SAME WAS SERVED UPON THE ASSESSEE ON 21.02.2012. THE HEARING OF THE CASE WAS ADJOURNED AS MANY AS SIX OCCASIONS AND FINALLY, THE ASSESSEE HAS FILED A LETTE R DATED 07.08.2012 CONTENDING THAT THE PENALTY PROCEEDINGS INITIATED UNDER SECTION 271D OF THE ACT IS BAD IN LAW . AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED AS UNDER: FROM THE ABOVE DETAILS IT IS OBVIOUS THAT THE INTENTION OF THE PERSON LENDING IS TO CONCEAL INCOME. THE ASSESSEE ALSO HAS NOT COME UP I.T.A. NO S . 229 & 230 /M/ 1 4 3 WITH THE FULL FACTS ON THE URGENCY TO TAKE LOAN IN CASH, THE PURPOSE OF LOAN, ITS ULTIMATE UTILITY, THE INCOME EARNED AND THE SOURCES FOR REPAYMENT. IT IS NOT ONLY THE ACCEPTING OF LOAN WHICH HAS BEEN CARRIED OUT IN CASH, BUT ALSO EVERY REPAYMENT HAS BEEN PERSISTENTLY MADE OUT IN CASH. THUS, THE VIOLATION IS INTENTIONAL AND PURPOSEFUL. THE ASSESSEE WAS OFFERED AMPLE NUMBER CHANCES AND WAS REQUESTED TO PRODUCE DETAILS TO EXAMINE HIS PLEA OF REASONABLE CAUSE. I HAVE NOT BEEN OFFERED THE OPPORTUNITY TO EXAMINE THE 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. UNDER THESE CIRCUMSTANCES, THE ASSESSEE CANNOT CLAIM TO HAVE ESTABLISHED A REASONABLE CAUSE CONTEMPLATED U/S 273B, TO THE SATISFACTION OF THE ASSESSING AUTHORITY. HENCE, I CONSIDER THE CASE FIT FOR LEVY OF PENALTY U/S 271 D OF THE ACT TO THE EXTENT OF THE SUM EQUAL TO THE AMOUNT OF LOAN SO TAKEN OR ACCEPTED, WHICH IS RS.15,00,000/ - (RUPEES FIFTEEN LAKHS ONLY) FOR THE ASSESSMENT YEAR 2009 - 10. 4. THE ASSESSING OFFICER HAS MADE SIMILAR OBSERVATIONS IN THE PENALTY ORDER PASSED UNDER SEC TION 271E OF THE ACT. 5 . THE ASSESSEE CARRIED THE MATTER IN APPEAL FOR BOTH THE ASSESSMENT YEARS. THE LD. CIT(APPEALS) ISSUED NOTICE TO THE ASSESSEE AND DULY SERVED ON THE ASSESSEE ON SEVERAL DATES REPEATEDLY FROM 01.04.2013 TO 03.10.2013 EXCEPT ON 16.0 9.2013. ON 16.09.2013, SHRI JAYACHANDER, C.A. APPEARED BY THE LD. CIT(A) AND SOUGHT FOR ADJOURNMENT OF THE CASE, WHICH WAS FIXED ON 03.10.2013. EVEN ON THIS DATE, NONE APPEARED ON BEHALF OF THE ASSESSEE. THEREFORE, THE LD. CIT(APPEALS) HAS PROCEEDED TO DEC IDE THE APPEAL ON MERITS AND CONFIRMED THE ORDER PASSED BY THE ASSESSING OFFICER BY PASSING A DETAILED SPEAKING ORDER. 6 . ON BEING AGGRIEVED, THE ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. THE LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT WITHOUT HEARI NG TO THE I.T.A. NO S . 229 & 230 /M/ 1 4 4 ASSESSEE, THE LD. CIT(A) HAS PASSED THE EX - PARTE ORDER S FOR THE ASSESSMENT YEARS 2009 - 10 AND 2011 - 12 AND PRAYED THAT ONE MORE OPPORTUNITY MAY KINDLY BE GIVEN SO THAT THE ASSESSEE CAN FILE ALL DETAILS BEFORE THE LD. CIT(A). 7 . ON THE OTHER HAND , THE LD. DR HAS STRONGLY CONTENDED THAT DESPITE NUMBERS OF OPPORTUNITIES WERE GIVEN TO THE ASSESSEE, NONE APPEARED ON BEHALF OF THE ASSESSEE BEFORE THE LD. CIT(A) AND THEREFORE, THE LD. CIT(A) DECIDED THE APPEAL ON MERITS . THUS , THE LD. DR HAS SUBMITTED T HE ORDER S PASSED BY THE LD. CIT(A) MAY BE CONFIRMED. 8 . WE HAVE HEARD BOTH SIDES, PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. FROM THE PENALTY ORDER, THE FACTS ARE VERY CLEAR THAT THE ASSESSEE HAD BORROWED . 15.00 LA KHS IN CASH AND REPAID . 15.00 LAKHS IN CASH. THESE FACTS ARE NOT DISPUTED BY THE ASSESSEE. THE ASSESSEE HAS NOT FILED ANY BOOKS OF ACCOUNTS, AND OTHER DOCUMENTS TO VERIFY THE POSITION OF CASH AVAILABILITY, THE URGENCY, THE UTILITY OR EVEN THE ADMISSION O F THE RECEIPTS AND REPAYMENT IN THE BOOKS OF ACCOUNTS BEFORE THE ASSESSING OFFICER DURING ASSESSMENT PROCEEDINGS AND EVEN DURING THE COURSE OF PENALTY PROCEEDINGS . THE ASSESSEE HAS NOT EXPLAINED THE REASONABLE CAUSE FOR ACCEPTING LOANS IN CASH AND REPAID T HE SAME IN CASH. IT IS VERY CLEAR FROM THE ORDER OF THE ASSESSING OFFICER THAT T HE ASSESSEE W AS GIVEN AS MANY AS NUMBER OF OPPORTUNITIES FOR FURNISHING BOOKS OF ACCOUNTS AND OTHER DOCUMENTS AND ALSO TO EXPLAIN HIS CASE BEFORE HIM. HOWEVER, THE ASSESSEE I.T.A. NO S . 229 & 230 /M/ 1 4 5 HAS NOT UTILIZED THOSE OPPORTUNITIES AND NOT EXPLAINED THE REASON FOR ACCEPTING AND REPAYING MONIES IN CASH, WHICH IS CONTRARY TO THE PROVISIONS OF SECTIONS 269SS AND 269T OF THE ACT. THEREFORE, THE ASSESSING OFFICER LEVIED PENALTY UNDER SECTION 271D/271E OF THE ACT FOR THE ASSESSMENT YEARS 2009 - 10 AND 2011 - 12 RESPECTIVELY . ON APPEAL, THE LD. CIT(A) ALSO GAVE NUMBER OF OPPORTUNITIES FOR FILING THE DETAILS AND TO SUBSTANTIATE THE REASONABLE CA USE FOR TAKING LOAN IN CASH AND REPAYMENT OF LOAN IN CASH. HOWEVER, NEITHER THE ASSESSEE HAS APPEARED BEFORE THE LD. CIT(A) NOR FILED THE DETAILS. THEREFORE, THE LD. CIT(A), BASED ON THE MATERIALS ON RECORD, DECIDED THE APPEAL ON MERITS AND CONFIRMED THE P ENALTY LEVIED BY THE ASSESSING OFFICER. AFTER CAREFULLY GOING THROUGH THE ORDERS OF THE ASSESSING OFFICER AND LD. CIT(APPEALS), WE ARE OF THE OPINION THAT THE ASSESSEE HAS PURPOSEFULLY AVOIDED TO ATTEND BEFORE THE LOWER AUTHORITIES. NOW, THE LD. COUNSEL FO R THE ASSESSEE IS REQUESTING TO REMIT THE MATTER BACK TO THE LD. CIT(APPEALS), WHICH APPEARS TO BE NOT FAIR. HOWEVER, TO MEET THE ENDS OF JUSTICE, WE ARE OF THE CONSIDERED OPINION TO GIVE ONE MORE OPPORTUNITY TO THE ASSESSEE TO FILE ALL DETAILS BEFORE THE LD. CIT(A). THEREFORE, WE SET ASIDE BOTH THE ORDER S PASSED BY THE LD. CIT(A) FOR THE ASSESSMENT YEARS 2009 - 10 AND 2011 - 12 AND REMIT THE MATTER BACK TO THE LD. CIT(A) TO EXAMINE THE DETAILS AS MAY BE FILED BY THE ASSESSEE AND DECIDE THE ISSUE AFRESH IN ACCO RDANCE WITH LAW. THE ASSESSEE SHOULD NOT SEEK ADJOURNMENT FOR JUST CAUSE. I.T.A. NO S . 229 & 230 /M/ 1 4 6 9 . IN THE RESULT, BOTH THE APPEAL S FILED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED ON THE 29 TH OCTOBER, 2015 AT CHENNAI. SD/ - SD/ - ( CHANDRA POOJARI ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 29 .1 0 .201 5 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.