M/s. Shiv Construction Co., Baroda V. The ACIT., Circle-5, Baroda

ITA 2339/AHD/2010

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 67895 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 3 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 22-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 15-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M K PATEL
• Assessee Lawyers: O P BATHEJA
• Keywords: Opportunity of being heard; Additional evidence; Reasonable cause
• Section: 273B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH AHMADABAD BEFORE SHRI MUKUL KR. SHRAWAT , JUDICIAL MEMBER AND SHRI N. S. SAINI , ACCOUNTANT MEMBER ITA NOS. 2338 & 2339/AHD/2010 ASSESSMENT YEAR :2006-07 M/S. SHIV CONSTRUCTION CO. 3, SONALI SOCIETY, WATER TANK ROAD, KARELIBAUG, BARODA - 390018 V/S . ASST. C.I.T., CIR.- 5, BARODA. PAN NO. A AKFS6031P (APPELLANT) .. (RESPONDENT) BY REVENUE SHRI M. K. PATEL, A.R. /BY ASSESSEE SHRI O. P. BATHEJA, SR. D.R. /DATE OF HEARING 22.10.2013 /DATE OF PRONOUNCEMENT 31.10.2013 O R D E R PER : SHRI N. S. SAINI, ACCOUNTANT MEMBER THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-V, BARODA, DATED 25.05.2010. 2. IN ITA NO. 2338/AHD/2010, THE ISSUE INVOLVED IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF RS. 7 LA CS U/S.271D OF THE ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER OBSERVED THAT THE ASSESSEE HAS RECEIVED RS.4 LACS ON 29.04.2005 F ROM M/S. C.C. PATEL AND RS. 3 LACS ON 26.04.2005 FROM PATEL FANCIERS IN CAS H IN VIOLATION OF THE PROVISIONS OF SECTION 269SS OF THE ACT. THEREFORE, HE LEVIED PENALTY U/S. 271D OF RS.7 LACS FOR VIOLATION OF THE PROVISIONS O F SECTION 269SS OF THE ACT. 4. ON APPEAL, THE LD. CIT(A) CONFIRMED THE ACTION O F THE ASSESSING OFFICER ITA NOS. 2338 & 2339/AHD/10 A.Y. 06-07 PAGE 2 ON THE GROUND THAT NO SUBMISSIONS WERE MADE BY THE ASSESSEE BEFORE THE ASSESSING OFFICER SHOWING REASONABLE CAUSE FOR ACCE PTING LOANS OF RS. 7 LACS IN CASH IN VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. 5. THE LD. A.R. OF THE ASSESSEE FILED BEFORE US COP Y OF BANK STATEMENT OF CANARA BANK, ACCOUNT NO. PACA000005814 FOR THE PERI OD 01.04.2005 TO 17.11.2005 AND SUBMITTED THAT THE AMOUNTS BORROWED IN CASH WERE DEPOSITED IN THE BANK ACCOUNT ON 30.04.2005 RS. 2 LACS, ON 03 .05.2005 RS. 2 LACS AND ON 05.05.2005 RS. 2 LACS, ALL AGGREGATING TO RS. 6 LACS WHICH WAS UTILIZED FOR CLEARING OF THE CHEQUE NO. 5310 ON 06.05.2005. HE POINTED OUT THAT THE ASSESSEE HAD ISSUED CHEQUE OF RS.6 LACS AND DID NOT HAVE THE FUNDS IN THE BANK FOR GETTING THE CHEQUE CLEARED AND THEREFORE, THE ASSESSEE HAD TO BORROW THE AMOUNT IN CASH FOR DEPOSITING THE SUM IN THE BANK ACCOUNT TO GET THE CHEQUE CLEARED FROM THE BANK. THUS, THERE WAS A REASONABLE CAUSE FOR THE ASSESSEE HAS TO ACCEPT THE LOAN OF RS. 7 LACS I N CASH U/S. 271D OF THE ACT AND HENCE PRAYED THAT THE PENALTY LEVIED SHOULD BE DELETED. 6. ON THE OTHER HAND, LD. SR. D.R. SUPPORTED THE OR DERS OF THE LOWER AUTHORITIES AND SUBMITTED THAT THE EVIDENCE IN THE FORM OF BANK STATEMENT OF CANARA BANK NOW FILED BEFORE THE TRIBUNAL WAS NEVER FILED BEFORE THE A.O. AND CIT(A). IT AMOUNTS FRESH EVIDENCE AND THE ISSUE SH OULD BE RESTORED TO THE ASSESSING OFFICER FOR VERIFICATION OF THE FRESH EVI DENCE NOW FILED BEFORE THE TRIBUNAL. 7. AFTER CONSIDERING THE SUBMISSION OF BOTH PARTIES , WE ARE OF THE CONSIDERED OPINION THAT THE LEVY OF PENALTY U/S. 27 1D IS NOT WARRANTED IF THE ASSESSEE CAN SHOW REASONABLE COST AS PROVIDED U/S. 273B OF THE ACT FOR ITA NOS. 2338 & 2339/AHD/10 A.Y. 06-07 PAGE 3 ACCEPTING THE LOAN EXCEEDING RS.20,000/- IN CASH. IN THE INSTANT CASE, WE FIND THAT THE EXPLANATION OF THE ASSESSEE IS THAT HE BOR ROWED RS. 7 LACS IN CASH TO DEPOSIT THE SAME IN THE BANK AND GOT THE CHEQUE ISS UED BY IT EARLIER CLEARED THROUGH THE BANK AND THUS, THERE WAS REASONABLE CAU SE FOR ACCEPTING LOAN IN CASH. HE HAS FILED BANK STATEMENT OF CANARA BANK TO SUPPORT HIS CONTENTION. WE ALSO FIND THAT THIS BANK STATEMENT WAS NOT FILED EITHER BEFORE THE A.O. OR BEFORE THE CIT(A) AND THE SUBMISSION MADE BEFORE US , WAS NOT MADE BEFORE EITHER BEFORE THE A.O. OR BEFORE THE CIT(A) AND HEN CE, THEY COULD NOT VERIFY THE SAME BEFORE IMPOSING PENALTY OF RS.7 LACS. IN OUR CONSIDERED VIEW, IT WOULD BE JUST NOT FAIR AND IN THE INTEREST OF JUSTI CE TO RESTORE THE MATTER BACK TO THE FILE OF THE A.O. TO RE-ADJUDICATE THE ISSUE AFR ESH AFTER VERIFICATION OF THE EVIDENCE, NOW FILED BEFORE US AS PER LAW, AFTER ALL OWING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE, WE ORDER ACCORDINGLY. THUS, THE GROUND OF APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSE. 8. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED FOR STATISTICAL PURPOSE. 9. IN ITA NO.2339/AHD/2010, THE GRIEVANCE OF THE ASSESSEE IS THAT THE LD. CIT(A) ERRED IN CONFIRMING THE LEVY OF PENALTY OF R S.1,40,000/- U/S. 271E OF THE ACT. 10. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE DURING THE YEAR UNDER CONSIDERATION MADE PAYMENT OF LOAN IN CASH EXCEEDIN G AMOUNT OF RS.20,000/- THEREBY VIOLATING THE PROVISIONS OF SECTION 269T OF THE ACT. THE SAID REPAYMENT OF LOAN EXCEEDING RS.20,000/- IN CASH WAS RS.11,000/- TO ATULKUMAR PARSHOTTAMDAS & CO., RS.20,000/- TO C.C. PATEL & CO., RS.25,000/- ITA NOS. 2338 & 2339/AHD/10 A.Y. 06-07 PAGE 4 TO KAMLABEN MODI, RS. 35,000/- TO N. I. INVESTMENT & TRADING & RS. 65,000/- TO PATEL FINANCIERS, ALL AGGREGATING TO RS.1,51,000 /-. THEREFORE, THE ASSESSING OFFICER HAS LEVIED PENALTY OF RS. 1,51,00 0/- U/S. 271E OF THE IT ACT. 11. ON APPEAL, THE CIT(A) CONFIRMED THE LEVY OF PEN ALTY ON THE GROUND THAT NO SUBMISSIONS WERE MADE BEFORE THE A.O. BY THE ASS ESSEE TO SHOW THE REASONABLE CAUSE FOR VIOLATION OF PROVISIONS OF SEC TION 269T OF THE ACT. 12. BEFORE US, LD. A.R. CONTENDED THAT THE ASSESSEE WAS UNDER FINANCIAL CONSTRAINT AND THEREFORE, REPAYMENT OF LOAN WAS MAD E IN CASH. HE ALSO SUBMITTED THAT NO PENALTY U/S.271E OF THE IT ACT IS LEVIABLE ON THE GROUND THERE WAS REASONABLE CAUSE FOR SUCH PAYMENT. HE FU RTHER RELIED ON THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF HINDUSTAN STEEL LIMITED VS. STATE OF ORISSA 83 ITR 26 (SC) AND SUBMITTED THAT THE HONBLE SUPREME COURT HAS HELD THAT EVEN IF A MINIMUM PENALTY IS PRESCRIB ED, THE AUTHORITY COMPETENT TO IMPOSE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE THE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVIS IONS OF THE ACT OR WHEN THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFEN DER IS NOT LIABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE . FURTHER, THE HONBLE SUPREME COURT IN CASE OF ASSTT. DIRECTION OF INSPECTION (INVESTIGATION) VS. KUM. A. B. SHANTHI, 255 ITR 258 (SC) HAS HELD THAT THE OBJECT OF INTRODUCING SECTION 269 SS IS TO ENSURE THAT A TAX PAYER IS NOT ALLOWED TO GIVE FALS E EXPLANATION FOR HIS UNACCOUNTED MONEY, OR IF HE MAKES SOME FALSE ENTRIE S, HE SHALL NOT ESCAPE BY GIVING FALSE EXPLANATION FOR THE SAME. THE UNDUE HARDSHIP OF THE PROVISIONS OF SECTION 271D IS SUBSTANTIALLY MITIGATED BY THE I NCLUSION OF SECTION 273B PROVIDING THAT IF THERE WAS A GENUINE AND BONA FIDE TRANSACTION AND THE ITA NOS. 2338 & 2339/AHD/10 A.Y. 06-07 PAGE 5 TAXPAYER COULD NOT GET A LOAN OR DEPOSIT BY ACCOUNT -PAYEE CHEQUE OR DEMAND DRAFT FOR SOME BONA FIDE REASON, THE AUTHORITY VEST ED WITH THE POWER TO IMPOSE PENALTY HAS A DISCRETIONARY POWER NOT TO LEVY THE P ENALTY . 13. AFTER CONSIDERING THE RIVAL SUBMISSIONS AND WE ARE OF THE CONSIDERED VIEW THAT AS WE HAVE RESTORED THE ISSUE ON LEVY OF PENALTY U/S. 271D BACK TO THE FILE OF ASSESSING OFFICER TO EXAMINE THE ISSUE AFRESH IN THE LIGHT OF THE ADDITIONAL EVIDENCES FILED BEFORE US BY THE ASSESSE E AND TO EXAMINE WHETHER THE ASSESSEE HAD REASONABLE CAUSE TO ACCEPT AND REP AY THE LOAN OR DEPOSITS IN CASH, WE RESTORE THIS ISSUE ALSO BACK TO THE FIL E OF THE A.O. TO READJUDICATE THE ISSUE AFRESH IN THE LIGHT OF OBSERVATION MADE H EREINABOVE AND AFTER ALLOWING REASONABLE OPPORTUNITY OF BEING HEARD TO T HE ASSESSEE. THUS, THIS GROUND OF ASSESSEES APPEAL IS ALSO ALLOWED FOR STA TISTICAL PURPOSE. 14. IN THE RESULT, BOTH APPEALS ARE ALLOWED FOR ST ATISTICAL PURPOSE. ORDER PRONOUNCED IN THE COURT ON THURSDAY THE 31 ST OF OCTOBER, 2013, AT AHMADABAD. SD/- SD/- ( MUKUL KR. SHRAWAT ) (N. S. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER TRUE COPY S.K.SINHA / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. / ASSESSEE 3. $%$& ' '( / CONCERNED CIT 4. ' '(- + / CIT (A) 5. -.+' &, ' ++' &, 01 % / DR, ITAT, AHMEDABAD 6. .34 56 / GUARD FILE. BY ORDER/ , 7/0' $+ ' ++' &,