Srabani Chakraborty, Kolkata V. JCIT, Rg-29, Kolkata, Kolkata

ITA 240/KOL/2014

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 4295 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2016
• Appeal Filed By: Assessee
• Bench Allotted: A
• Next Hearing Date: 05-10-2016
• Assessment Year: 2009-2010
• Appeal Filed On: 10-02-2014
• Court: TRIBUNAL
• Department Lawyers: ANAND KR SINGH
• Keywords: Rule of consistency; Reasonable cause; Tax effect
• Section: 273B; 143(3)

Judgement Text

1 ITA NO. 240/KOL/2014 SARBANI CHAKRABORTY, AY 2009- 10 IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA [BEFORE SHRI WASEEM AHMED, AM & SHRI K. NARASIMHA CHARY, JM] I.T.A NO. 240/KOL/2014 ASSESSMENT YEAR: 2009-10 SARBANI CHAKRABORTY VS. JOINT COMMISSIONER OF IN COME-TAX (PAN: ADKPC2488D) RANGE-29, KOLKATA. ( APPELLANT ) ( RESPONDENT ) DATE OF HEARING: 05.10.2016 DATE OF PRONOUNCEMENT: 21.10.2016 FOR THE APPELLANT: SHRI RAJEEVA KUMAR, ADVOCAT E FOR THE RESPONDENT: SHRI ANAND KR. SINGH, JCIT ORDER PER SHRI K. NARASIMHA CHARY, JM: THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XVI, KOLKATA VIDE APPEAL NO. 35/ CIT(A)-XVI/KOL/12-13 DATED 11.12.2013. ASS ESSMENT WAS FRAMED BY ITO, WARD- 29(3), KOLKATA U/S. 143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FOR AY 2009-10 VIDE HIS ORDER DATED 25.10.2011. PE NALTY WAS IMPOSED BY JCIT, RANGE-29, KOLKATA U/S. 271E OF THE ACT VIDE HIS ORDER DATED 1 9.02.2013. 2. BRIEF FACTS OF THE CASE ARE THAT ONE SHRI TARUN CHAKRABORTY IS THE PROPRIETOR OF M/S. CHAKRABORTY ENTERPRISES, WHO IS THE HUSBAND OF THE ASSESSEE AND CONFIDENTIAL ASSISTANT OF A CENTRAL MINISTER AT THE RELEVANT PERIOD. IN DISCHA RGE OF HIS DUTIES HE WAS TRAVELLING ALL OVER INDIA AND FOR RUNNING HIS BUSINESS SMOOTHLY HE USED TO KEEP SOME MONEY WITH HIS WIFE TO GIVE IT TO THE CONCERN AS AND WHEN NEED ARISES. AC CORDING TO THE ASSESSEE, SHE WAS GIVING THE AMOUNTS TO M/S. CHAKRABORTY ENTERPRISES WHENEVE R THEY REQUIRE. ACCORDING TO HER, IT IS PURELY A FAMILY ARRANGEMENT AND HAS BEEN A PRACTICE QUITE FOR A LONG TIME. HOWEVER, WHILE PROCESSING THE RETURN OF INCOME OF THE ASSESSEE FOR AY 2009-10 IT WAS NOTICED THAT DURING THE RELEVANT PREVIOUS YEAR A SUM OF RS.6,79,000/- W AS PAID BY THE ASSESSEE TO CHAKRABORTY ENTERPRISES BY CASH AND I.E. IN VIOLATION OF PROVIS IONS OF SECTION 269T OF THE ACT. AS SUCH, U/S. 271E OF THE ACT THE JCIT LEVIED PENALTY AT 100 % I.E. RS.6,79,000/- BY HIS ORDER DATED 19.02.2013. AGGRIEVED BY SUCH AN ORDER, ASSESSEE P REFERRED APPEAL BEFORE THE LD. CIT(A), WHO DISMISSED THE APPEAL OF ASSESSEE CONFIRMING THE PENALTY. CHALLENGING THE SAID ORDER, THE ASSESSEE IS IN APPEAL BEFORE US ON THE FOLLOWIN G GROUNDS: 1.FOR THAT THE LD. CIT(A) ERRED BOTH IN LAW AND I N FACT BY CONFIRMING THE PENALTY OF RS.6,79,000/- U/S. 271E OF THE I. T. ACT, 1961 WITH OUT CONSIDERING AND APPRECIATING THE FACT OF THE CASE. 2 ITA NO. 240/KOL/2014 SARBANI CHAKRABORTY, AY 2009- 10 2. FOR THAT THE LD. CIT(A) ERRED BOTH IN LAW AND IN FACT BY NOT CONSIDERING THE JUDICIAL PRONOUNCEMENT IN THIS MATTER PRONOUNCED BY THE SEVE RAL HIGH COURTS & APEX COURT OF THE COUNTRY. 3. FOR THAT THE ORDER PASSED BY THE LD. CIT(A) IS I LLEGAL, ARBITRARY, VOID AB INITIO AND WITHOUT ANY SANCTION OF LAW. 3. IT IS THE ARGUMENT OF THE LD. AR THAT IT IS ONLY DUE TO THE MISTAKE OF THE ACCOUNTANT SUCH AMOUNTS WERE SHOWN AS LOANS BUT, AS A MATTER O F FACT, IT WAS ONLY A FAMILY ARRANGEMENT. HE FURTHER SUBMITTED THAT THE DISCLOS URE OF THE AMOUNT WAS CONTAINED IN THE COMPILATION OF ACCOUNTS AND THE EXPLANATION OFFERED BY THE ASSESSEE CONSTITUTES REASONABLE CAUSE U/S. 273B OF THE ACT, AS SUCH, IMPOSITION OF PENALTY IS NOT JUSTIFIED. HE FURTHER SUBMITTED THAT SINCE THERE IS NO TAX EFFECT, A LIBE RAL CONSTRUCTION OF THE PROVISIONS IS TO BE MADE. FOR THIS REASON, HE PRAYED TO ALLOW THE APPE AL AND QUASH THE ORDERS OF THE AUTHORITIES BELOW. 4. IT IS THE ARGUMENT OF THE LD. DR THAT IN THIS MA TTER THE ACCOUNTS OF THE ASSESSEE ITSELF CLEARLY SHOW THAT THE AMOUNTS WERE TAKEN BY THE ASS ESSEE AS LOAN AND THE REPAYMENT THEREOF IN CASH ARE IN VIOLATION OF PROVISIONS OF SECTION 2 69T OF THE ACT ATTRACTING THE PENAL PROVISION OF SECTION 271E OF THE ACT AND SINCE THE INCOME TAX ACT MAKES NO DIFFERENCE BASING ON ANY RELATIONSHIP THE JCIT IS JUSTIFIED IN IMPOSING THE PENALTY AND THE LD. CIT(A) IS JUSTIFIED IN CONFIRMING THE SAME. FOR THIS REASON HE PRAYED TO DISMISS THE APPEAL. 5. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THERE IS NO DISPUTE THAT THE AS SESSEE IS THE WIFE OF ONE SHRI TARUN CHAKRABORTY, WHO IS THE PROPRIETOR OF M/S. CHAKRABO RTY ENTERPRISES. THERE IS ALSO NO DISPUTE THAT THE ASSESSEE GAVE THE AMOUNTS IN CASH TO M/S CHAKRABORTY ENTERPRISES ONLY. HOWEVER, SINCE IT WAS SHOWN BY THE ASSESSEE IN BALA NCE SHEET AS LOAN AND ADVANCE IN THE LIABILITY SIDE, THE JCIT CONCLUDED THAT IT IS ONLY REPAYMENT OF LOAN IN THE FORM OF CASH ATTRACTING THE PENAL PROVISIONS U/S. 269T R.W.S. 27 1E OF THE ACT. BOTH THE AUTHORITIES BELOW REJECTED THE PLEA OF THE ASSESSEE THAT IT IS ONLY A FAMILY ARRANGEMENT AND NOT OTHERWISE. WHEN THE PLEA OF FAMILY ARRANGEMENT IS TAKEN, THE T RANSACTIONS WERE BETWEEN THE WIFE AND HUSBAND, AND MORE PARTICULARLY IN THE LIGHT OF THE FACT THAT THESE PAYMENTS WERE SHOWN IN THE ACCOUNTS OF THE ASSESSEE, IT DOES NOT APPEAR TO BE A MATTER TO BRUSH ASIDE THE PLEA OF THE ASSESSEE THAT THE ACCOUNTANT COMMITTED A MISTAKE IN TREATING THE PAYMENTS AS REPAYMENT OF LOANS. SHOULD THERE BE ANY MALA FIDE INTENTION, PE RHAPS THE ASSESSEE WOULD NOT HAVE SHOWN 3 ITA NO. 240/KOL/2014 SARBANI CHAKRABORTY, AY 2009- 10 THESE FIGURES IN THE ACCOUNTS ITSELF. IT WAS OPEN FOR THE AO AND FOR THAT MATTER THE JCIT TO VERIFY THE CONTENTION OF THE ASSESSEE THAT A SIMILA R PRACTICE HAS BEEN IN VOGUE QUITE FOR SOMETIME IN THE PREVIOUS YEARS. FURTHER, IT HAS BE EN THE CONTENTION OF THE ASSESSEE BEFORE THE AO AND THE LD. CIT(A) THAT IN THE CASE OF TARUN CHAKRABORTY AND SMT. SARBANI CHAKRABORTY IN THE EARLIER YEARS THE LD. CIT(A) ACC EPTED THIS FACT. IT IS A VERIFIABLE FACT. HOWEVER, THERE IS NO COMMENT ON THIS ASPECT BY EITH ER THE JCIT OR THE LD. CIT(A). RULE OF CONSISTENCY AS LAID DOWN BY THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. N.P.MATHEW 280 ITR 44 (KER) DEMANDS THAT A CONSISTE NT VIEW HAS TO BE TAKEN IN RESPECT OF THE SAME ASSESSEE FOR DIFFERENT YEARS. 6. THE LD. AR PLACED RELIANCE ON A DECISION OF HON BLE APEX COURT IN THE CASE OF CIT VS. JAI LAXMI RICE MILLS AMBALA CITY REPORTED IN ( 2015) 379 ITR 521 (SC) FOR THE PRINCIPLE THAT WITHOUT RECORDING OF ANY SATISFACTIO N NO PENALTY COULD BE LEVIED THOUGH THE AO WANTED PENALTY PROCEEDINGS TO BE INITIATED U/S. 271(1)(C) OF THE ACT. A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VINOD KR. AGA RWAL VS. JCIT IN ITA NO. 237 AND 238/KOL/2013 DATED 04.02.2016 WHILE FOLLOWING THE A BOVE DECISION OF HONBLE APEX COURT DELETED THE IMPUGNED PENALTY LEVIED U/S. 271D AND 2 71E OF THE ACT. 7. ON MERITS ALSO, LD. AR PLACED RELIANCE ON A DECI SION IN THE CASE OF CIT VS. SUNIL KUMAR GOEL (2009) 315 ITR 0163 (P&H) FOR THE PRINCI PLE THAT A FAMILY TRANSACTION BETWEEN THE TWO INDEPENDENT ASSESSEE BASED ON AN ACT OF CAS UALNESS ESPECIALLY IN A CASE WHERE THE DISCLOSURE THEREOF IS CONTAINED IN THE COMPILATION OF ACCOUNTS, AND WHICH HAS NO TAX EFFECT, ESTABLISHES REASONABLE CAUSE U/S. 273B OF THE ACT FOR NOT INVOKING THE PENAL PROVISIONS OF SS. 271D AND 271E OF THE ACT. BASING ON THIS JUDGM ENT, LD. AR SUBMITS THAT IN THIS MATTER THE HUSBAND ENTRUSTED SOME AMOUNTS TO THE WIFE TO B E USED FOR HIS BUSINESS IN HIS ABSENCE AS SUCH, SUCH AN ACT OF CASUALNESS DOES NOT GIVE RISE TO ANY COMMERCIAL RELATIONS BETWEEN THE WIFE AND THE HUSBAND. HE FURTHER SUBMITTED THAT AL L THESE FACTS ARE DISCLOSED IN THE ACCOUNTS OF THE ASSESSEE BUT IT IS ONLY DUE TO THE MISTAKE O F THE ACCOUNTANT SUCH AMOUNTS WERE TREATED AS LOANS AND ADVANCES BUT, AS A MATTER OF FACT, IT IS ONLY PURSUANT TO A FAMILY ARRANGEMENT THE WIFE DEALT WITH THE MONEY OF THE HUSBAND IN HIS ABS ENCE ONLY FOR HIS BUSINESS PURPOSES. 8. CONSIDERING THE FACTS AND CIRCUMSTANCES AS A WHO LE, AN ELEMENT OF TRUTH CANNOT BE RULED OUT IN THE CONTENTION OF THE ASSESSEE. THE A SSESSEE AND HER HUSBAND ARE INDEPENDENT ASSESSEE AND DEALING WITH THE MONEY OF HUSBAND FOR THE PURPOSE OF BUSINESS IN HIS ABSENCE 4 ITA NO. 240/KOL/2014 SARBANI CHAKRABORTY, AY 2009- 10 IS NOT AN UNCOMMON THING. FURTHER, WHEN IT WAS PLE ADED BEFORE THE AUTHORITIES BELOW IT WAS OPEN FOR THEM TO VERIFY THE TRUTH OR OTHERWISE OF T HIS FACT WITH REFERENCE TO THE EARLIER YEARS ASSESSMENTS. FURTHER, THE REVENUE DOES NOT PLEAD A NY TAX EFFECT IN THIS MATTER EXCEPT THE PENALTY. WE ARE THEREFORE, INCLINED TO BELIEVE THE CONTENTION OF THE ASSESSEE THAT CASUALNESS OF THE ACTS BETWEEN THE WIFE AND HUSBAND IN DEALING WITH THE MONEY OF THE HUSBAND FOR HIS BUSINESS PURPOSES IN HIS ABSENCE CONSTITUTES A REAS ONABLE CAUSE U/S. 273B OF THE ACT. EVEN OTHERWISE THE ASSESSMENT ORDER READS THAT PENALTY P ROCEEDINGS U/S. 271(1)(C) OF THE ACT WERE INITIATED BUT THERE IS NO WHISPER AS TO THE SATISFA CTION TO INITIATE THE PROCEEDINGS U/S. 271E OF THE ACT. IN VIEW OF THE BINDING PRECEDENT OF THE J UDGMENT OF THE HONBLE APEX COURT IN THE CASE OF JAI LAXMI RICE MILLS AMBALA CITY, SUPRA FOL LOWED BY A COORDINATE BENCH OF THIS TRIBUNAL IN THE CASE OF VINOD KR. AGARWAL, SUPRA BY RESPECTFULLY FOLLOWING THE SAME, WE REACH A CONCLUSION THAT THE PENALTY PROCEEDINGS WIT HOUT BEING PRECEDED BY RECORD OF REASONS OR SATISFACTION ARE BAD IN LAW AND ANY ADDITION BAS ED ON SUCH PROCEEDINGS IS LIABLE TO BE DELETED. THEREFORE, EITHER IN LAW OR ON FACT THE O RDERS OF THE AUTHORITIES BELOW CANNOT BE SUSTAINED, AS SUCH, WHILE ANSWERING THE GROUNDS IN FAVOUR OF THE ASSESSEE WE DIRECT THE DELETION OF THE PENALTY LEVIED U/S. 271E OF THE ACT . 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS ALLOWED . ORDER IS PRONOUNCED IN THE OPEN COURT ON 21.10.201 6. SD/- SD/- (WASEEM AHMED) (K. NARASIMHA CHARY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 21ST OCTOBER, 2016 JD.(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1 . APPELLANT SMT. SARBANI CHAKRABORTY, FLAT NO. 30B, TOWER-1, SOUTH CITY, 375, PRINCE ANWAR SHAH ROAD, KOLKATA-700 068. 2 RESPONDENT JCIT, RANGE-29, KOLKATA. 3 . THE CIT(A), KOLKATA 4. 5. CIT , KOLKATA DR, KOLKATA BENCHES, KOLKATA / TRUE COPY, BY ORDER, ASSTT. REGISTRAR .