ITO, Panchkula V. Sh. Navtej Singh Sarao, Panchkula

ITA 240/CHANDI/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80966 (ITAT-CHANDIGARH)
• Duration Of Justice: 7 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-03-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: DR AMA RVEER SINGH
• Keywords: Reasonable cause
• Section: 273B; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES B CHANDIGARH BEFORE SHRI BHAVNESH SAINI, JUDICIAL MEMBER AND SHRI T.R. SOOD, ACCOUNTANT MEMBER ITA NO. 240/CHD/2014 ASSESSMENT YEAR: 2008-09 THE ITO, VS. SH. NAVTEJ SINGH SARAO WARD 2 SECTOR 20 PANCHKULA PANCHKULA PAN NO.AXOPS6918G (APPELLANT) (RESPONDENT) APPELLANT BY : DR. AMARVEER SINGH RESPONDENT BY : SH. HARRY RIKHY DATE OF HEARING : 27/10/2014 DATE OF PRONOUNCEMENT : 31/10/2014 ORDER PER T.R.SOOD, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 16/12/2013 OF CIT (APPEALS), PANCHKULA. 2. IN THIS APPEAL REVENUE HAS RAISED THE FOLLOWING GROUNDS 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) HAS ERRED IN DELETING THE PENALTY OF RS. 20,50,838/- IMPOSED BY THE ADDL. CIT IGNORING THE FACTS THAT THE ASSESSEE HAS 2 VIOLATED THE PROVISIONS OF SECTION 269SS OF THE INCOME TAX BY ACCEPTING THE LOAN IN CASH. 2. IT IS PRAYED THAT THE ORDER OF THE LD. CIT (APPEAL) BE SET-ASIDE AND THAT OF THE A.O. BE RESTORED. 3. AFTER HEARING BOTH THE PARTIES WE FIND THAT AO N OTICED DURING THE ASSESSMENT PROCEEDINGS THAT ASSESSEE HAD TAKEN LOAN S AMOUNTING TO RS. 25,54,400/- OUT OF THESE LOANS, LOANS FROM SHRI PYA RA SINGH, SHRI JEET SINGH, SHRI TARIQ MUSHTAQ WERE TREATED AS INCOME OF THE AS SESSEE AS THE LOANS WERE NOT FOUND GENUINE, REST OF THE CASH LOANS AMOU NTING TO RS. 20,50,838/- WERE FOUND TO BE GENUINE. HOWEVER, SINC E THE SAME WERE ACCEPTED IN CASH AND THEREFORE PENALTY PROCEEDING U NDER SECTION 271D WERE INITIATED. 4. IN RESPONSE TO THE SHOW CAUSE NOTICE FOR LEVY OF PENALTY IT WAS MAINLY SUBMITTED THAT ASSESSEE WAS WORKING AS A STO RE KEEPER AT A MEAGER SALARY. HIS ELDER DAUGHTER WAS A BRILLIANT S TUDENT AND WANTED TO GO TO USA FOR HIGHER STUDIES FOR WHICH LOANS WERE T O BE ARRANGED FROM BANKS. HOWEVER, FOR OBTAINING VISA ALSO SAME AMOUNT WAS TO BE SHOWN IN THE BANKS AND THEREFORE CERTAIN FRIENDLY LOANS FROM FRIENDS AND RELATIVES WERE TAKEN WHICH WERE RETURNED IMMEDIATELY AFTER FE W DAYS. THE RELIANCE WAS ALSO PLACED ON CERTAIN CASE LAWS. HOWEVER, ASSE SSING OFFICER DID NOT ACCEPTED THESE SUBMISSIONS AND LEVIED PENALTY AT TH E RATE OF 100% UNDER SECTION 271 D AMOUNTING TO RS. 20,50,838/-. 3 5. ON APPEAL SUBMISSIONS MADE BEFORE AO WERE REITER ATED. IT WAS FURTHER SUBMITTED THAT SECTION 269SS WAS ONLY TO CU RB TAX EVASION AND CIRCULATION OF BLACK MONEY IT HAS NO APPLICATION ON GENUINE TRANSACTION. RELIANCE WAS FURTHER PLACED ON VARIOUS DECISIONS 6. THE LD. CIT(A) AFTER EXAMINING THE SUBMISSION DE LETED THE PENALTY. 7. BEFORE US LD. DR STRONGLY SUPPORTED THE ORDER OF AO. 8. ON THE OTHER HAND LD. COUNSEL FOR THE ASSESSEE R EITERATED THE SUBMISSIONS MADE BEFORE THE LD. CIT(A). HE ALSO REL IED ON THE DECISION OF HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF CIT VS. SAINI MEDICAL STORE 276 ITR 79 AND CIT VS. ARORA ALLOYS LTD. 326 ITR 34. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS CAREFUL LY THE LD. CIT(A) DECIDED THIS ISSUE VIDE PARA 6 WHICH READS AS UNDER : 6. I HAVE CAREFULLY C ONSIDERED THE FACTS OF THE CASE AND THE WRITTEN SUBMISSIONS FILED BY THE APPELLANT. THE ADDL. CIT HAS IMPOSED THE PENALTY U/S 271 D ON HIS FINDING TH AT THE LOAN AMOUNTING TO RS. 20,50,838/- WAS RECEIVED IN CASH I N VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. THE ADDL . CIT FURTHER FOUND THAT THERE WAS NO REASONABLE CAUSE FOR LOANS TAKEN BY THE APPELLANT. WHEREAS, THE APPELLANT HAS BROUGHT T HE FACTS AND CIRCUMSTANCES UNDER WHICH THE APPELLANT RECEIVE D THE AMOUNT IN CASH FROM HIS FRIENDS FATHER, FRIEND AN D HIS FATHER- IN-LAW FOR THE SOLE PURPOSE OF GETTING VISA FOR HIS DAUGHTER TO STUDY ABROAD AND TO ARRANGE FOR AIR TRAVEL AND FEE. THE APPELLANT HAS PRODUCED THE BANK STATEMENT SHOWING E NTRIES OF DEPOSITS AND WITHDRAWALS AND IT IS NOTICED THAT THE CREDIT BALANCE HAVE REMAINED ONLY FOR 1 TO 2 DAYS. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAD E XAMINED THE LOANEES AND THERE WAS NO DOUBT ON THE GENUINENE SS OF THE TRANSACTION. THE APPELLANT HAD ALSO SUBMITTED C OPY OF VISA GRANTED TO HIS DAUGHTER, COPY PASSPORT IN SUPP ORT OF IMMIGRATION TO US AND CERTIFICATE FROM US BASED UNI VERSITY ON 4 COMPLETION OF HER DEGREE. THESE FACTS JUSTIFY BONAF IDE OF THE PURPOSE AND TRANSACTION FOR WHICH THE CASH AMOUNTS WERE TAKEN AND REPAID BY THE APPELLANT. 6.1 HERE IT IS RELEVANT TO REFER TO THE APPLICABLE PROVISIONS OF SECTION 271D AND SECTION 273B OF THE ACT. PROVISION S OF SECTION 271D AND 271E ARE SUBJECT TO THE PROVISIONS CONTAINED IN SECTION 273B OF THE ACT. SECTION 273B WHICH STARTS WITH A NON OBSTANTE CLAUSE DEALS WITH VARIOU S PROVISIONS OF THE INCOME TAX ACT PRESCRIBED FOR IMPOSITION OF PENALTY INCLUDING SECTION 271D AND 271E AND HAS THE HEADING (PENALTY NOT BE IMPOSED IN CERTAIN CASES). THE AFOR ESAID PROVISIONS HAS BEEN ENACTED WITH A PURPOSE VIZ. , T O GIVE AN OPPORTUNITY TO THE ASSESSEE, TO SHOW ANY REASONABLE CLAUSE FOR FAILURE OF THE COMPLIANCE OF THE PROVISIONS, GI VEN THEREIN AND ALSO THE POWER TO THE ASSESSING OFFICER TO CONS IDER THE SAID CAUSE AND IF SATISFIED WITH THE EXPLANATION GI VEN BY THE ASSESSEE, THE PENALTY BE NOT IMPOSED. THE PROVISION CLEARLY SAYS THAT NO PENALTY SHALL BE IMPOSED ON THE PERSON OR ASSESSEE, AS THE CASE MAY BE, FOR ANY FAILURE REFER RED TO THE SAID PROVISION, IF HE PROVES THAT THERE WAS REASON ABLE CAUSE FOR THE SAID FAILURE. 6.2 THE APPELLANT SUBMISSION THAT IF MAY BE A CASE OF NEGLIGENT PERSON WHO DOES NOT HAVE ANY INTENTION OR MENS- REA TO PURPOSELY VIOLATE ANY PROVISION OF THE ACT I S SUPPORTED BY THE FINDING OF HONBLE TRIBUNAL HYDERABAD BENCH QUOTED IN THE CASE OF DILLU CINE ENTERPRISES (P) LTD. (SUP RA) AS UNDER: PROVISIONS OF SECTION 269SS WERE BROUGHT IN THE S TATUTE BOOK TO COUNTER THE EVASION OF TAX IN CERTAIN CASES, AS CLEARLY STATED IN THE HEADING OF CHAPTER XXB OF THE INCOME TAX ACT, 1961 WHICH READS, REQUIREMENT AS TO MODE OF ACCEPTA NCE , PAYMENT OR REPAYMENT IN CERTAIN CASES TO COUNTERACT EVASION OF TAX. LEGISLATIVE INTENTION IN BRINGING S ECTION 269SS IN THE INCOME TAX ACT WAS TO AVOID CERTAIN CIRCUMSTANC ES OF TAX EVASION, WHEREBY HUGE TRANSACTIONS HAD ANYTHING TO DO WITH EVASION OF TAX OR CONCEALMENT OF FIRM THAT THE SE TRANSACTION HAD ANYTHING TO DO WITH EVASION OF TAX OR CONCEALMENT OF INCOME. AS RIGHTLY POINTED BY THE CI T(A) HIMSELF, IT MAY BE A CASE OF NEGLIGENCE. BUT A NEGL IGENT PERSONS DOES NOT HAVE ANY INTENTION OR MENS REA TO PURPOSELY VIOLATE ANY PROVISION OF LAW, SO AS TO BE VISITED W ITH STRINGENT PUNISHMENT OF HEAVY PENALTY 5 6.3 THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (2009) 315 ITR 163 HAS HELD THAT THERE IS NO PENALTY U/S 271D AND 271E WHERE REASONA BLE CAUSE IS SHOWN. THUS, WHERE THE TRANSACTION ARE BET WEEN TWO SISTER CONCERNS BOTH WITHIN THE FAMILY AND THE FUND TRANSFER WERE FOR THE PURPOSES OF BUSINESS WITH TRANSACTION ACCOUNTED FOR IN THE BOOKS THE REQUIREMENT OF REASONABLE CAUS E WAS HELD TO BE SATISFIED. 6.4 IN THE PRESENT CASE, THE APPELLANT HAD TRANSACT ION WITH HIS FRIENDS FATHER, FRIEND AND FATHER IN-LAW, THE TRANSACTION WERE FOUND TO BE GENUINE BY THE ASSESSING OFFICER, THE AMOUNT WAS DEPOSITED AND REPAID. THE PURPOSES FOR W HICH THE TRANSACTIONS WERE MADE HAD GENUINE AND URGENT N EEDS. THEREFORE, IT CAN BE SAID THAT APPELLANT HAD REASON ABLE CAUSE FOR THE SAID FAILURE. SECTION 273B OF THE ACT PROVIDES THAT NO PENALTY IS IMPOSABLE FOR ANY FAILURE REFERR ED IN THE SAID PROVISIONS IF THE ASSESSEE PROVES THAT THERE WAS RE ASONABLE CAUSE FOR THE SAID FAILURE. SO, A COMBINED READING OF THE PROVISIONS OF SECTION 271D AND 273B OF THE ACT MAKE S IT CLEAR THAT IF THE ASSESSEE SHOWS REASONABLE CAUSE FOR THE FAILURE TO COMPLY WITH ANY PROVISION REFERRED THEREIN, THE PEN ALTY FOR ITS VIOLATION SHALL NOT BE IMPOSABLE ON THE ASSESSEE. 6.5 SINCE, THE ASSESSEE HAS BROUGHT REASONABLE CAUS E FOR THE ALLEGED FAILURE OF PROVISIONS OF SECTION 269SS, THEREFORE , IN VIEW OF ABOVE DISCUSSION, I AM OF THE VIEW THAT THE PENALTY U/S 271D IS NOT JUSTIFIED. HENCE, THE IMPOSED PENAL TY OF RS. 20,50,838/- IS CANCELLED. ON PERUSAL OF THE ABOVE WOULD SHOW THAT LD. CIT(A) HAS CORRECTLY DECIDED THE ISSUE. WE FURTHER FIND THAT THE SAME DE CISION HAS BEEN GIVEN BY HONBLE PUNJAB & HARYANA HIGH COURT IN CASE OF C IT VS. SAINI MEDICAL STORE (SUPRA) WHERE IN IT WAS HELD AS UNDER : HELD, THAT IN THE PRESENT CASE THE COMMISSIONER (A PPEALS) IN HIS ORDER DATED JANUARY 18,1999, WHEREBY THE PENALT Y UNDER SECTION 271D OF THE ACT WAS DELETED, HAD ACCEPTED T HE VERSION GIVEN BY THE ASSESSEE THAT VIOLATION OF THE PROVISI ONS OF THE ACT WAS UNDER A BONA FIDE BELIEF OF THE ASSESSEE AND THE SA ME WAS NOT WITH ANY INTENTION TO AVOID OR EVADE THE TAX. THE FINDIN GS OF THE 6 COMMISSIONER (APPEALS) HAD BEEN CONFIRMED IN APPEAL BY THE TRIBUNAL. THE CANCELLATION OF PENALTY WAS VALID . THEREFORE WE FIND NOTHING WRONG IN THE ORDER OF LD. CIT(A) AND CONFIRM THE SAME . 10. IN THE RESULT APPEAL OR THE REVENUE IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 31/10/2014 SD/- SD/- (BHAVNESH SAINI) (T.R. SOOD) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 31/10/2014 AG COPY TO: THE APPELLANT, THE RESPONDENT, THE CIT, TH E CIT(A), THE DR