PRAVIN PHARMA, MUMBAI V. ADDL CIT RG 23(3), MUMBAI

ITA 2379/MUM/2012

• Counselvise Citation: [2015] 120 COUNSELVISE.COM (IT) 9421 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 9 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-01-2015
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 20-01-2015
• Assessment Year: 2007-2008
• Appeal Filed On: 11-04-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: AKHILENDRA YADAV
• Keywords: Reasonable cause

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL C BE NCH, MUMBAI , !' #$%& , '' ' ( BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./I .T.A. NO. 2379/MUM/2012 ( ! ! ! ! ) ) ) ) / ASSESSMENT YEAR : 2007-08 PRAVIN PHARMA, 244/245, GOVIND UDYOG BHAVAN, BAL RAJESHWAR ROAD, MODEL TOWN, MULUND (W), MUMBAI-400 080 ! ! ! ! / VS. THE ITO 23(3)(1), MUMBAI * '' ./ + ./ PAN/GIR NO. : AAAFP 6446K ( *, / APPELLANT ) .. ( -.*, / RESPONDENT ) *, / ' / APPELLANT BY: NONE -.*, 0 / ' / RESPONDENT BY: SHRI AKHILENDRA YADAV ! 0 12' / DATE OF HEARING :20.01.2015 3) 0 12' / DATE OF PRONOUNCEMENT :20.01.2015 '4 / O R D E R PER N.K. BILLAIYA, AM: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER OF THE LD. CIT(A)-33, MUMBAI DT.27.2.2012 PERTAINING TO A.Y.20 07-08. 2. THE SOLE GRIEVANCE OF THE ASSESSEE IS THAT THE L D. CIT(A) ERRED IN CONFIRMING THE PENALTY LEVIED BY THE AO U/S. 271D O F THE ACT. ITA NO. 2379/M/2012 2 3. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT DU RING THE YEAR UNDER CONSIDERATION, THE RETURN WAS FILED ON 27.10.2007 D ECLARING TOTAL INCOME AT RS. 2,31,533/-. THE RETURN WAS SELECTED FOR SCR UTINY ASSESSMENT. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OF FICER NOTICED THAT THE ASSESSEE HAS ACCEPTED LOANS IN CASH IN CONTRAVENTIO N TO THE PROVISIONS OF SEC. 269SS FROM THE FOLLOWING TWO PARTIES: 1. MR. ARVIND C. SHAH - RS. 12,12,867/- 2. SHRI NIHAR A. SHAH - RS. 6,62,500/- 3.1. FINDING VIOLATION OF THE PROVISIONS OF SEC. 26 9SS, THE AO INITIATED PENALTY PROCEEDINGS U/S. 271D OF THE ACT. DURING T HE PENALTY PROCEEDINGS, THE ASSESSEE EXPLAINED THAT IT HAS ACC EPTED INTEREST FREE ADVANCES FROM FAMILY MEMBERS OF PARTNERS. IT WAS F URTHER EXPLAINED THAT SINCE THE ASSESSEE WAS IN THE IMMEDIATE NEED OF MON EY, IT ACCEPTED THE ADVANCES IN CASH, THE CIRCUMSTANCES WERE BEYOND THE CONTROL AND COMPLIANCE TO THE PROVISIONS OF SEC. 269SS OF THE A CT WAS NOT POSSIBLE. THE AO CONSIDERED THE SUBMISSIONS MADE BY THE ASSES SEE. THE AO FOUND THAT THERE WAS NO URGENCY TO THE SITUATION. BESIDES BOTH ASSESSEE AND THE LENDERS WERE HAVING BANK ACCOUNT IN MUMBAI AND IT IS NOT A CASE THAT THE FACTORY OR OFFICE IS SITUATED IN A FAR OF PLACE WITHOUT BANKING FACILITIES. THE AO WAS SATISFIED THAT THE ASSESSEE HAS COMMITTED A DEFAULT AND PROCEEDED BY LEVYING PENALTY AT RS. 18,74,869/- EQUIVALENT TO THE CASH LOANS RECEIVED IN CONTRAVENTION TO THE PROVISI ONS OF SEC. 269SS OF THE I.T. ACT. 4. THE ASSESSEE CARRIED THE MATTER BEFORE THE LD. C IT(A). BEFORE THE LD. CIT(A), THE ASSESSEE FILED TWO LETTERS AND ASKI NG FOR ADJOURNMENTS, NO WRITTEN SUBMISSIONS WAS FILED. AFTER CONSIDERING T HE FACTS AND THE ASSESSMENT ORDER, THE LD. CIT(A) OBSERVED THAT SIN CE THE ASSESSEE HAD ITA NO. 2379/M/2012 3 NOT FILED ANY WRITTEN SUBMISSIONS, IT MEANS THAT TH E ASSESSEE IS NOT DISPUTING THE FACTS BROUGHT ON RECORD BY THE AO IN THE PENALTY ORDER. THE LD. CIT(A) FURTHER OBSERVED THAT THE ASSESSEES MAI N CONTENTION BEFORE THE LD. AO WAS THAT IT WAS IN NEED AND URGENCY OF MONEY WHICH WAS A REASONABLE CAUSE FOR NOT FOLLOWING THE PROVISIONS O F SEC. 269SS OF THE ACT. IT IS OBSERVED THAT THE ASSESSEE WAS HAVING 4 TO 5 MONTHS IN ITS HANDS THEREFORE IT CANNOT BE TAKEN AS A COMPELLING REASON FOR ACCEPTING LOANS IN CASH WHEN BOTH THE ASSESSEE AND THE LENDER S HAVE BANK ACCOUNTS IN MUMBAI. THE LD. CIT(A) AT LENGTH CONSIDERED THE DECISION OF THE HONBLE HIGH COURT OF MADRAS IN THE CASE OF KASI C ONSULTANT CORPN. VS DCIT, THE ORDER IS EXHIBITED AT PAGES 3 TO 6 OF THE APPELLATE ORDER. FOLLOWING THE DECISION OF THE HONBLE MADRAS HIGH C OURT, THE LD. CIT(A) CONFIRMED THE LEVY OF PENALTY. 5. AGGRIEVED BY THIS, THE ASSESSEE IS BEFORE US. 6. NONE APPEARED BEFORE US ON BEHALF OF THE ASSESSE E. 7. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED UPON THE FINDINGS OF THE LD. CIT(A). 8. WE HAVE CAREFULLY PERUSED THE ORDERS OF THE AUTH ORITIES BELOW. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS TAKEN LOAN FROM TWO PARTIES TOTALING TO RS. 18,74,869/- IN CONTRAVENTION TO THE PROVISIONS OF SEC. 269SS OF THE ACT. IT IS ALSO AN UNDISPUTED FACT TH AT THE ASSESSEE COULD NOT BRING ANY COMPELLING REASON NEITHER BEFORE THE AO NOR BEFORE THE FIRST APPELLATE AUTHORITY TO SHOW THE NEED AND URGENCY OF TAKING LOAN IN CASH. BOTH THE LOWER AUTHORITIES HAVE GIVEN A CATEGORICAL FINDING THAT THERE WAS NO URGENCY AND BOTH ASSESSEE AND THE LENDERS WERE H AVING BANK ACCOUNTS IN MUMBAI THEREFORE THERE WAS NO REASON WHY THE TRA NSACTION WAS NOT ITA NO. 2379/M/2012 4 DONE THROUGH ACCOUNT PAYEE CHEQUE. THE DECISION OF THE HONBLE MADRAS HIGH COURT RELIED UPON BY THE LD. CIT(A) AND EXHIB ITED IN HIS APPELLATE ORDERS IS WELL FOUNDED. CONSIDERING THE FACTS OF T HE CASE IN TOTALITY ALONGWITH THE JUDICIAL DECISION RELIED UPON BY THE LD. CIT(A), WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF T HE LD. CIT(A) WHICH WE CONFIRMED. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 20 TH JANUARY, 2015 SD/- SD/- (JOGINDER SINGH ) (N.K. BILLAIYA) /JUDICIAL MEMBER '' / ACCOUNTANT MEMBER MUMBAI; 5! DATED : 20.01.2015 . ! . ./ RJ , SR. PS '4 '4 '4 '4 0 00 0 -1# -1# -1# -1# 6'#)1 6'#)1 6'#)1 6'#)1 / COPY OF THE ORDER FORWARDED TO : 1. *, / THE APPELLANT 2. -.*, / THE RESPONDENT. 3. 7 ( ) / THE CIT(A)- 4. 7 / CIT 5. #8 -1! , , / DR, ITAT, MUMBAI 6. 9 : / GUARD FILE. '4! '4! '4! '4! / BY ORDER, .#1 -1 //TRUE COPY// ; ;; ; / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI