Shri Kantilal R. Patel, Sabarkantha V. The Jt.CIT, S.K.Range, Himatnagar

ITA 2629/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9642 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-02-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 17-02-2016
• Assessment Year: 2005-2006
• Appeal Filed On: 15-09-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: S N DIVETIA
• Keywords: Income from undisclosed sources; Principle of natural justice
• Section: 143(3)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL SMC BENCH, AHMEDABAD BEFORE SHRI GEORGE GEORGE K., JUDICIAL MEMBER ./ ITA.NO.2629/AHD/2015 / ASSTT. YEAR: 2005-2006 SHRI KANTILAL R. PATEL HOUSE NO.12, VASNA KAMPA TAL. KHEDBRAHMA DIST. SABARKANTHA-383 255. PAN : AWKPP 6367 M VS JCIT, SK RANGE HIMMATNAGAR. ! / (APPELLANT) '# ! / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA, AR REVENUE BY : SHRI KAMLESH MAKWANA, DR / DATE OF HEARING : 17/02/2016 / DATE OF PRONOUNCEMENT: 18/02/2016 $%/ O R D E R THIS APPEAL OF THE ASSESSEE AROSE FROM ORDER OF THE LD.CIT(A)-2, AHMEDABAD DATED 30.7.2015 FOR THE ASSTT.YEAR 2005-2 006. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1.1 THE ORDER PASSED U/S.250 ON 30.07.2015 FOR A.Y.2005-06 BY THE CIT(A)-2, ABAD CONFIRMING THE PENALTY OF RS.12 LACS LEVIED U/S.271D BY AO IS WHOLLY ILLEGAL, UNLAWFUL AND AGAINST THE PRIN CIPLES OF NATURAL JUSTICE, APART FROM BEING BARRED BY LIMITATION OF T IME. 1.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN NOT CONSIDERING FULLY AND PROPERLY THE EXPLANATIONS FURNISHED AND THE EVIDENCE PRODUCED BY THE APPELLANT. ITA NO.2629/AHD/2015 2 2.1 THE IMPUGNED ORDER PASSED BY CIT(A) IS BAR RED BY LIMITATION OF TIME IN AS MUCH AS THE ASSESSMENT WAS COMPLETED ON 29-12-2009 AND THE SATISFACTION FOR INITIATING PENALTY PROCEEDINGS WAS REACHED BY CIT- II, ABAD. 2.2 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW AND OR ON FACTS IN UPHOLDING THAT' THERE WAS VIOLATION OF THE PROVISIO NS OF SECTION 269SS WHILE ACCEPTING AMOUNTS AGGREGATING TO RS.12LACS FR OM 10 PARTIES IN CASH. 2.3 THAT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, THE CIT(A) OUGHT NOT TO HAVE UPHELD THAT THERE WAS VIOLATION OF THE PROVISIONS OF SECTION 269SS WHILE ACCEPTING AMOUNTS AGGREGATING TO RS.12L ACS FROM 10 PARTIES IN CASH. 2.4 THE CIT(A) HAS FAILED TO APPRECIATE THAT T HE APPELLANT HAD NOT ACCEPTED LOAN OR DEPOSIT WITHIN THE MEANING OF SECT ION 269SS OF THE ACT FROM 10 DIFFERENT PARTIES SO AS TO INITIATE PENALTY PROCEEDINGS U/S. 271D. 3.1 THE LD. CIT(A) HAS GRIEVOUSLY ERRED IN LAW OR IN FACTS IN NOT APPRECIATING THAT THERE WAS A SUFFICIENT CAUSE FOR ACCEPTING CASH FROM 10 DIFFERENT PARTIES SO THAT NO PENALTY U/S. 271D C OULD BE IMPOSED. IT IS THEREFORE PRAYED THAT THE PENALTY OF RS.12 LA CS LEVIED BY AO AND CONFIRMED BY CIT(A) MAY PLEASE BE DELETED. 3. BRIEF FACTS OF THE CASE ARE THAT AS PER AIR INFO RMATION, THE ASSESSEE HAD MADE CASH DEPOSIT OF RS.12.00 LAKHS IN SAVING BANK ACCOUNT WITH DENA BANK. THE ASSESSMENT WAS FINALIZED UNDER SECTION 143(3) B Y MAKING ADDITION OF RS.12.00 LAKHS AS INCOME FROM UNDISCLOSED SOURCES, WHICH WAS DELETED ON APPEAL BY THE LD.CIT(A). THEREAFTER, ON THE DIREC TIONS OF CIT-2, AHMEDABAD DATED 10.11.2014 PENALTY PROCEEDINGS UNDER SECTION 271D WERE INITIATED. ACCORDINGLY, SHOW CAUSE NOTICE UNDER SECTION 274 R. W.S. 271D OF THE INCOME TAX ACT DATED 20.11.2014 WAS ISSUED TO THE ASSESSEE . THE ASSESSEE SUBMITTED EXPLANATION WHICH WAS NOT FOUND TO BE SATISFACTORY, AND ACCORDINGLY, THE AO LEVIED PENALTY, WHICH WAS CONFIRMED BY THE LD.CIT(A ). ITA NO.2629/AHD/2015 3 4. THE LD.COUNSEL FOR THE ASSESSEE REITERATED THE S UBMISSIONS, AS SUBMITTED BEFORE THE LD.CIT(A), AND THE LD.DR RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. I HAVE HEARD RIVAL CONTENTIONS AND PERUSED THE F ACTS ON RECORD. THE ASSESSEE HAS SUBMITTED EXPLANATION VIDE LETTER DATE D 12.12.2014 IS VERY RELEVANT AND IS REPRODUCED HEREINBELOW: MYSELF ALONG WITH 9 PERSONS ARE ENGAGED IN THE AGR ICULTURAL ACTIVITIES. BANK HAS PROVIDED CROP LOAN TO US TO MEET EXPENDITU RE IN AGRICULTURE ACTIVITIES. MYSELF ALONG WIRE 9 FARMERS WERE HAVING SUCH AGRICULTURAL LOAN TAKEN FROM DENA BANK BUT DUE TO T HE INTEREST RATE DIFFERENCE, WE HAVE DECIDED TO HAVE LOAN FROM STATE BANK OF INDIA. BUT AS PER RULES WITHOUT CLOSING DOWN AGRICULTURE LOAN FROM DENA BANK, LOAN CANNOT BE SANCTION BY STATE BANK OF INDIA, HEN CE DECIDED TO REPAY THE OUTSTANDING LOAN OF DENA BANK TO GET LOAN FROM STATE BANK OF INDIA. TO CLOSE DOWN THE AGRICULTURE LOAN FROM DENA BANK WE ALL FARMERS HAD IN EMERGENCY BORROWED FROM LAXMI FINANC E, A SUM OF RS. 12,00,000/- ON 14/07/2004 [RS. 6,00,000/- AND RS. 5 ,85,000/- { RS. 6,00,000/- RS. 15,000/- INTEREST} RESPECTIVELY. THU S WE ALL FARMERS REPAID THE LOAN OF DENA BANK ON 14/07/2004. ON THE VERY NEXT DAY 15/07/2004 STATE BANK OF INDIA HAD SANCTIONED AND D ISBURSED THE LOAN, ALL FARMERS WITHDRAWN THE ABOVE AMOUNT IN CASH FROM RESPECTIVE SBJ AGRICULTURE LOAN ACCOUNT TO REPAY THE MONEY BORROWE D FROM LAXMI FINANCE. HENCE ON 15/07/2004 THE ABOVE MENTIONED WI THDRAWN CASH WAS BEING LOAN. HENCE ON 15/07/2004 THE ABOVE MENTI ONED WITHDRAWN WAS BEING REPAID IN CHEQUE. COPY OF BANK ACCOUNTS O F DENA BANK AND STATE BANK OF INDIA OF ALL 10 FARMERS ARE ENCLOSED. HENCE IT CAN BE CLEARLY CONSTRUED FROM THE FACT THA T THE ONLY MY ACCOUNT IS USED TO COMPLETE ABOVE TRANSACTION IN EM ERGING/COMPELLING NECESSITY INSTEAD OF INDIVIDUAL FARMERS BANK ACCOUN T. MY BANK ACCOUNT IS USED ON BEHALF OF ALL THE FARMERS. I HAVE NO INTENSION TO TAKE OR DEPOSITS HENCE TRANS ACTION DOES NOT PARTAKE THE CHARACTER OF LOAN OR DEPOSIT. NOT-A SIN GLY RUPEES ENJOYED BY ME. NO MALAFIDE INTENSION BEHIND THIS TRANSACTIO N, FURTHER, BECAUSE OF THESE TRANSACTIONS, IT HAS NOT RESULTED IN LOSS OF REVENUE; THEREFORE, THE ACTION IS PURELY UNINTENTIONAL, TECHNICAL LAPSE NOT KNOWING THE LAW. ITA NO.2629/AHD/2015 4 I WAS NOT PROFESSIONALLY MANAGED AND ALSO NOT GAINE D ANY BUSINESS BENEFIT OUT OF THESE TRANSACTIONS. ALSO THE PROVISION OF SECTION 269SS SHALL NOT BE AT TRACTED SINCE THE PERSONS FROM WHOM THE AMOUNT IS TAKEN AND THE PERSO N BY WHOM THE AMOUNT IS TAKEN ARE ALL HAVING AGRICULTURE INCOME A ND NEITHER OF THEM HAS ANY INCOME CHARGEABLE TO TAX UNDER INCOME-TAX A CT. COPY OF EXTRA OF 7/12, AND 8A ISSUED BY REVENUE DEPARTMENT IS ENC LOSED. IN VIEW OF ABOVE, PRAYED NOT TO IMPOSE PENALTY PROC EEDING U/S. 27ID OF THE INCOME TAX ACT. 6. THE UNDISPUTED FACTS IN THE PRESENT CASE ARE THA T THE ASSESSEE IS ENGAGED ALONG WITH OTHER PERSONS IN THE AGRICULTURE ACTIVIT IES AND BANK HAS PROVIDED CROP LOAN TO MEET EXPENDITURE IN THE AGRICULTURE AC TIVITIES. SUCH LOAN HAS BEEN TAKEN FROM DENA BANK. BUT DUE TO INTEREST RATE DIF FERENCE, IT HAS BEEN DECIDED TO CLOSE DOWN AGRICULTURE LOAN FROM DENA BANK BY TA KING LOAN FROM STATE BANK OF INDIA. THE CONDITIONS LAID DOWN BY THE STA TE BANK OF INDIA WAS THAT THE ASSESSEE SHOULD FIRST CLOSE DOWN DENA BANK LOAN , AND THEN AND THEN ONLY THE LOAN COULD BE SANCTIONED BY THE SAID BANK I.E. STATE BANK OF INDIA. ACCORDINGLY, FOR THE SAID ADJUSTMENTS, THE ASSESSEE ALONG WITH OTHER GROUP OF PERSONS CLOSED DOWN AGRICULTURE LOAN TAKEN FROM DEN A BANK BY TAKING EMERGENCY LOAN OF RS.12 LAKHS FROM LAXMI FINANCE ON 14.7.2014 AND ALL THE FARMERS REPAID THE LOAN OF DENA BANK ON 14.7.2004. IT IS A MATTER OF RECORD THAT ON THE VERY NEXT DAY I.E. 15.7.2004 STATE BANK OF INDIA HAD SANCTIONED AND DISBURSED THE LOAN, AND ACCORDINGLY ALL THE FAR MERS INCLUDING THE ASSESSEE HAD WITHDRAWN THE SAID AMOUNT IN CASH FROM THE SBI AGRICULTURE LOAN ACCOUNT AND REPAID THE MONEY BORROWED FROM THE LAXMI FINANC E THROUGH CHEQUE AND NOT IN CASH. COPY OF THE BANK ACCOUNT OF DENA BANK AND STATE BANK OF INDIA OF TEN FARMERS WERE PLACED ON RECORD BEFORE BOTH TH E AUTHORITIES BELOW, AND IS A MATTER OF FACT ON RECORD. THEREFORE, THE ASSESSE E IN FACT HAS MADE ADJUSTMENTS IN EMERGENCY AND/OR COMPELLING NECESSIT Y INSTEAD OF TAKING LOAN SO DEPOSITED FOR USING THE SAME FOR BUSINESS OR ANO THER PURPOSE. THE ASSESSEE ITA NO.2629/AHD/2015 5 DOES NOT CARRY ON ACTIVITIES EXCEPT AGRICULTURE ACT IVITY, IS A FACT ON RECORD. THE TRANSACTIONS HAVE BEEN TREATED AS GENUINE AND T HAT IS WHY THE LD.CIT(A) HAS DELETED THE ADDITION MADE BY THE AO, AND AGAINS T THAT, NO APPEAL OF THE REVENUE BEING FILED BEFORE THE TRIBUNAL, HAS BEEN B ROUGHT TO MY NOTICE. IN THE CIRCUMSTANCES AND FACTS OF THE CASE, I FIND REA SONABLE CAUSE U/S.273B OF THE ACT FOR TAKING A LOAN FROM STATE BANK OF INDIA AND PAYING THE SAME TO LAXMI FINANCE, AS STATED HEREINABOVE. ACCORDINGLY, PROVISIONS OF SECTION 271D CANNOT BE MADE APPLICABLE AND NO PENALTY CAN B E LEVIED UNDER SECTION 271D OF THE ACT. THE PENALTY LEVIED BY THE AO IS DI RECTED TO BE CANCELLED AND ORDER OF THE LD.CIT(A) IS REVERSED. THE GROUNDS OF THE APPEAL OF THE ASSESSEE ARE ALLOWED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE COURT ON 18 TH FEBRUARY, 2016 AT AHMEDABAD. SD/- ( GEORGE GEORGE K. ) JUDICIAL MEMBER AHMEDABAD; DATED 18/02/2016