Sohan Lal Saha, Kolkata V. JCIT, Range-44, Kolkata, Kolkata

ITA 2360/KOL/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 1625 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2012-2013
• Appeal Filed On: 15-12-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: C J SINGH
• Assessee Lawyers: MIHIR BANDYOPADHYAY
• Keywords: Reasonable cause
• Section: 132; 273B; 143(3); 271D

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C, BENC H KOLKATA BEFORE SHRI A. T. VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.2360/KOL/2016 ( / ASSESSMENT YEAR:2012-13) SOHANLALSAHA 13A/46A, ARIFF ROAD, KOLKATA- 700067 VS. JCIT, RANGE-44, KOLKATA ./ ./PAN/GIR NO.: AXBPS 6968 F (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI MIHIR BANDYOPADHYAY, A.R. RESPONDENT BY : SHRI C. J. SINGH, ADDL. CIT DR / DATE OF HEARING : 25/06/2019 /DATE OF PRONOUNCEMENT : 06/09/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE ASSESSEE, PERT AINING TO ASSESSMENT YEAR 2012-13, IS DIRECTED AGAINST THE ORDER PASSED BY TH E COMMISSIONER OF INCOME TAX (APPEAL)-13, KOLKATA, WHICH IN TURN ARISES OUT OF A PENALTY ORDER PASSED BY THE ASSESSING OFFICER U/S 271D OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 06.05.2015. 2. HOWEVER, IN THIS APPEAL, THE ASSESSEE HAS RAISE D A MULTIPLE GROUNDS OF APPEAL, BUT AT THE TIME OF HEARING, THE SOLITARY GRIEVANCE OF THE ASSESSEE HAS BEEN CONFINED TO THE ISSUE OF PENALTY IMPOSED U/S 271D OF THE ACT IN RESPECT OF LOAN OBTAINED BY THE ASSESSEE IN CASH. SOHANLAL SAHA ITA NO.2360/KOL/2016 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 2 22 2 3. BRIEF FACTS QUA THE ISSUE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME FOR THE A.Y. 2012-13 ON 30.09.2012 AT A TOTAL INCOME OF RS.10,99,128/-. THE ASSESSMENT WAS COMPLETED U/S 143(3) OF THE ACT ON 30.03.2015 AT A TOTAL INCOME OF RS. 11,17,450/-. DURING THE COURSE OF SCRUTINY A SSESSMENT, IT WAS OBSERVED THAT THE ASSESSEE HAS ACCEPTED LOANS AMOUNTING TO RS. 22 ,20,000/- UNDER THE HEAD LOANS FROM OTHERS AS SHOWN IN THE BALANCE SHEET A S ON 31 ST MARCH, 2012, OTHERWISE THAN ACCOUNT PAYEE CHEQUE /BANK DRAFT. IN THE ASSESSMENT ORDER U/S 143(3) FOR A.Y. 2012-13, THE ASSESSING OFFICER OBSE RVED THAT THE ASSESSEE HAD TAKEN UNSECURED LOAN INTER ALIA, BY CASH FROM THRE E CLIENTS FOR AMOUNT OF RS. 10,00,000/- RS. 10,00,000/- AND RS. 2,20,000/- AGGR EGATING UPTO RS. 22,20,000/-. WHEN ASKED TO EXPLAIN, THE ASSESSEE AT FIRST ACCEPT ED THAT THE SAID LOANS WERE TAKEN IN CASH AND STATED THAT HE HAD TO TAKE THE CASH PAY MENTS IN ORDER TO ENABLE HIM TO MAKE PAYMENT TO LORRIES WHICH CAME FROM REMOTE PLA CES OF TOWN. AFTER HAVING GONE THROUGH THE ASSESSEES SUBMISSION AS STATED AB OVE, THE ASSESSING OFFICER NOTED THAT THE ASSESSEE RECEIVED LOAN BY CASH. THE AO FURTHER OBSERVED THAT THE ASSESSEE COULD EASILY HAVE ACCEPTED LOAN THROUGH BANK AND PAID OUT TO LORRIES FROM THE MONEY WITHDRAWN FROM THE BANK. THUS, THE A SSESSEES PLEA THAT HE TOOK LOAN BY CASH TO PAY TO LORRIES BY CASH DOES NOT HOL D WATER. CONSIDERING THE FAILURE ON THE PART OF THE ASSESSEE TO SUBSTANTIATE THE CLA IM WITH EVIDENTIARY PROOF FOR EXTREME EXIGENCIES OF THE BUSINESS AND ALSO ACCEPT ING THE SAID CASH LOANS OF RS. 22,20,000/- FROM THREE PARTIES WHICHWERE NOT COVERE D UNDER PROVISO OF SECTION 269SS OF THE I.T. ACT, 1961, THE ASSESSING OFFICER HAS IMPOSED PENALTY U/S 271D AT RS. 22,20,000/-. 4. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER , THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS CONFIRMED T HE PENALTY IMPOSED BY THE ASSESSING OFFICER. AGGRIEVED BY THE ORDER OF THE LD . CIT(A) THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HEARD BOTH THE PARTIES AND CAREFULLY GONE THR OUGH THE SUBMISSION PUT FORTH ON BEHALF OF THE ASSESSEE ALONG WITH THE DOCUMENTS FURNISHED AND THE CASE LAWS SOHANLAL SAHA ITA NO.2360/KOL/2016 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 3 33 3 RELIED UPON, AND PERUSED THE FACT OF THE CASE INCLU DING THE FINDINGS OF THE LD CIT(A) AND OTHER MATERIALS AVAILABLE ON RECORD.THE LD. COUNSEL FOR THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE AUTHORIT IES BELOW WHEREAS THE LD. D.R. FOR THE REVENUE RELIED ON THE STAND TAKEN BY THE AS SESSING OFFICER. WE NOTE THAT BOARD'S CIRCULAR NO. 387 DATED 6TH JU LY 1984 ( VIDE (1985) 152 ITR STATUTE 22), WHILE EXPLAINING THE NECESSITY OF BRIN GING IN SECTION 269SS, THE BOARD HAS STATED THAT TO CURB THE PRACTICE OF SHOWING BOG US CASH LOANS AS SOURCE OF UNACCOUNTED CASH FOUND DURING OPERATION U/S 132 (5) , THE SECTION 269SS HAS BEEN ENACTED. IN THE ASSESSEES CASE, DISCOVERY OF UNAC COUNTED CASH DURING SEARCH OR SURVEY IS NOT INVOLVED AT ALL. IN THIS CASE, THE LO ANS, THOUGH TAKEN IN CASH, HAVE BEEN HELD BY THE A.O. TO BE GENUINE LOANS AND NO AD DITION IN THIS REGARD WAS MADE BY THE ASSESSING OFFICER IN THE SCRUTINY ASSESSMENT U/S 143 (3) FINALIZED ON 30.03.2015. WE NOTE THAT ASSESSEE IS AN INDIVIDUAL AND ENGAGED IN THE BUSINESS OF BULK SUPPLY OF PULSES. THE ASSESSEE HAS TO KEEP SUFFICIENT READ Y CASH TO PAY TO THE TRUCK OWNERS/DRIVERS WHO ARRIVE FROM DISTANT PLACES WITH CARGO OF PULSES. THE LD. COUNSEL STATED BEFORE US THAT ASSESSEE WAS COMPELL ED TO OBTAIN THE LOAN IN CASH FOR MAINTAINING READY CASH RESERVE FOR MAKING PAYM ENTS TO LORRIES WHO COME TO THE ASSESSEE. THE LD. COUNSEL ALSO SUBMITTED THAT C ASH RESERVE HAS TO BE KEPT READY FOR MEETING OTHER BUSINESS EXIGENCIES AS INDICATED IN THE CASH BOOK OF THE ASSESSEE. CONSIDERING THE NATURE OF BUSINESS AND CI RCUMSTANCES PREVAILING IN ASSESSEES BUSINESS, AS NOTED ABOVE, WE NOTE THAT A SSESSEE TOOK THE CASH LOANS IN ORDER TO MEET THE BUSINESS EXIGENCIES TO PAY TO THE TRUCK DRIVERS WHO DID NOT HAVE BANK ACCOUNT AND CAME FROM DISTANT PLACES. THE ASSE SSEE TOOK CASH LOAN IN PRESSING CIRCUMSTANCES. BESIDES, THE GENUINENESS OF THE CASH PAYMENT HAS NOT BEEN DISPUTED BY THE ASSESSING OFFICER. THEREFORE, PENAL TY SHOULD NOT BE IMPOSED. FOR THAT WE RELY ON THE JUDGMENT OF HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. DECCAN DESIGNS (I) PVT. LTD. IN [2012] 347 ITR 580 (MAD) WHEREIN IT WAS HELD AS FOLLOWS: THE ASSESSING OFFICER FOUND THAT THE ASSESSEE HAD ACCEPTED AND RECEIVED AMOUNTS OF RS. 52,80,000 AND RS. 44,60,000 RESPECTI VELY, IN CASH, FROM ITS SISTER CONCERN. HE HELD THAT THERE WAS NO SATISFACTORY EVI DENCE OR DETAILS TO JUSTIFY SOHANLAL SAHA ITA NO.2360/KOL/2016 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 4 44 4 REASONABLE CAUSE UNDER SECTION 273B OF THE INCOME-T AX ACT, 1961, NOR WAS A CASE OF EXIGENCY OR URGENCY MADE OUT. ON THAT BASIS HE L EVIED PENALTY UNDER SECTIONS 271D AND 271E. THE COMMISSIONER (APPEALS) FOUND THA T THE LOANS WERE FOR THE PURPOSE OF WAGE DISTRIBUTION, FACTORY EXPENSES AND PETTY CASH. THERE WAS ALSO A FINDING THAT THE ASSESSEE WAS A SICK COMPANY AND HA D TO BE SAVED FROM CLOSURE. THE COMMISSIONER (APPEALS) HELD THAT THE TRANSACTIO NS WERE GENUINE. HE DELETED THE PENALTY AND THIS WAS UPHELD BY THE TRIBUNAL. ON APPEAL TO THE HIGH COURT: HELD, DISMISSING THE APPEAL, THAT THERE WERE ENOUGH REASONS OFFERED BY THE ASSESSEE TO JUSTIFY THE CASH TRANSACTIONS, WHICH IT MADE WITH ITS SISTER CONCERN. THE FACTUAL FINDINGS RENDERED BY THE COMMISSIONER (APPE ALS) TO THE EFFECT THAT SUCH TRANSACTIONS WERE MADE BY THE ASSESSEE WITH A VIEW TO SAVE ITS EXISTENCE AND MAINLY INCURRED FOR THE PURPOSE OF DISBURSEMENT OF SALARY TO THE EMPLOYEES COULD NOT BE DISTURBED IN THE ABSENCE OF ANY CONTRARY EVI DENCE PLACED BEFORE THIS COURT. THE DELETION OF PENALTY WAS JUSTIFIED. 6. OUR VIEW IS FORTIFIED BY THE JUDGMENT OF THE HON `BLE SUPREME COURT IN THE CASE OF HINDUSTAN STEEL LTD. VS. STATE OF ORISSA (1972) 83 ITR 0026 (SC), WHEREIN IT WAS HELD AS FOLLOWS: 5. UNDER THE ACT PENALTY MAY BE IMPOSED FOR FAILURE T O REGISTER AS A DEALER : S. 9(1), R/W S. 25(1) (A) OF THE ACT. BUT THE LIABILIT Y TO PAY PENALTY DOES NOT ARISE MERELY UPON PROOF OF DEFAULT IN REGISTERING AS A DE ALER. AN ORDER IMPOSING PENALTY FOR FAILURE TO CARRY OUT A STATUTORY OBLIGATION IS THE RESULT OF A QUASI- CRIMINAL PROCEEDING, AND PENALTY WILL NOT ORDINARILY BE IMPO SED UNLESS THE PARTY OBLIGED, EITHER ACTED DELIBERATELY IN DEFIANCE OF LAW OR WAS GUILTY OF CONDUCT CONTUMACIOUS OR DISHONEST, OR ACTED IN CONSCIOUS DISREGARD OF IT S OBLIGATION. PENALTY WILL NOT ALSO BE IMPOSED MERELY BECAUSE IT IS LAWFUL TO DO S O. WHETHER PENALTY SHOULD BE IMPOSED FOR FAILURE TO PERFORM A STATUTORY OBLIGATI ON IS A MATTER OF DISCRETION OF THE AUTHORITY TO BE EXERCISED JUDICIALLY AND ON A C ONSIDERATION OF ALL THE RELEVANT CIRCUMSTANCES. EVEN IF A MINIMUM PENALTY IS PRESCRI BED, THE AUTHORITY COMPETENT TO IMPOSE THE PENALTY WILL BE JUSTIFIED IN REFUSING TO IMPOSE PENALTY, WHEN THERE IS A TECHNICAL OR VENIAL BREACH OF THE PROVISIONS OF T HE ACT OR WHERE THE BREACH FLOWS FROM A BONA FIDE BELIEF THAT THE OFFENDER IS NOT LI ABLE TO ACT IN THE MANNER PRESCRIBED BY THE STATUTE. THOSE IN CHARGE OF THE A FFAIRS OF THE COMPANY IN FAILING TO REGISTER THE COMPANY AS A DEALER ACTED IN THE HO NEST AND GENUINE BELIEF THAT THE COMPANY WAS NOT A DEALER. GRANTING THAT THEY ERRED, NO CASE FOR IMPOSING PENALTY WAS MADE OUT. THEREFORE, RESPECTFULLY FOLLOWING THE JUDGMENT OF T HE HONBLE MADRAS HIGH COURT IN THE CASE OF DECCAN DESIGNS (I) PVT. LTD. (SUPRA) AND HON`BLE SUPREME COURT IN THE CASE OFHINDUSTAN STEEL LTD.(SUPRA) AND CONSIDER ING THE FACTS OF THE ASSESSEE`S CASE, AS NOTED ABOVE, WE ARE OF THE VIEW THAT IT IS NOT A FIT CASE TO IMPOSE PENALTY U/S 271D OF THE ACT. THEREFORE, WE DELETE THE PENAL TY OF RS. 22,20,000/-. SOHANLAL SAHA ITA NO.2360/KOL/2016 ASSESSMENT YEAR:2012-13 P PP PA AA AG GG GE EE E | || | 5 55 5 7. IN THE RESULT, THE APPEAL OF THE ASSESSEEIS ALLO WED. ORDER PRONOUNCED IN THE COURT ON 06.09.2019 SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER / DATE: 06/09/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. SOHANLAL SAHA 2. JCIT, RANGE-44, KOLKATA 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES