M/s Coastal Tea (P) Ltd., Pithapuram V. THE ADDL. CIT, Kakinada

ITA 263/VIZ/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 5313 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-12-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 22-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KOMALI KRISHNAN
• Keywords: Reopening of assessment; Reasonable cause; Ignorance of law
• Section: 273B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL, VISHAKHAPATNAM BEFORE S/SHRI B. RAMAKOTAIAH (AM) & SAKTIJIT DEY (JM) I.T.A. NOS.261 TO 262/VIZ/2013: ASSESSMENT YEAR : 2004 - 05 I.T.A. NO.263 TO 266/VIZ/2013: ASSESSMENT YEARS: 2005 - 06 TO 2008 - 09 M/S. COASTAL TEA (P) LTD., D.NO.04 - 03 - 110, MADHAVAPURAM ROAD, PITHAPURAM. VS. ADDL. CIT, KAKINADA RANGE, KAKINADA. PAN/GIR NO. : AADFC 2270 M ( APPELLANT ) .. ( RESPONDENT ) APPELLANT BY : SHRI G.V.N.HARI RESPONDENT BY : SMT. KOMALI KRISH N AN DATE OF HEARING : 0 3/12/2013 DATE OF PRONOUNCEMENT : 0 6/12/2013 O R D E R PER BENCH: THESE ARE APPEALS FILED BY THE ASSESSEE AGAINST SEPARATE ORDERS OF LD CIT(A) - 11, MUMBAI CAMP AT VISAKHAPATNAM FOR THE ASSESSMENT YEARS 2004 - 05 TO 2008 - 09, IN THE MATTER OF PENALTY UNDER SECTION 271E AND 271D OF THE INCOME TAX ACT, 1961. 2. I N I.T.A. NO.262 /VIZ/2013 FOR ASSESSMENT YEAR 2004 - 05 , IN THE GROUND OF APPEAL, THE ASSESSEE HAS CHALLENGED THE SUSTENANCE OF PENALTY OF RS.12,86,000/ - UNDER SE CTION 271D OF THE I .T.ACT, 1961 AND IN I.T.A NO.261 /VIZ/2013, FOR ASSESSMENT YEAR 2004 - 05, 2 ASSESSEE HAS CHALLENGED THE SUSTENANCE OF PENALTY OF RS.30,000/ - UNDER SECTION 271E OF THE ACT BY THE COMMISSIONER OF INCOME TAX (A) IMPOSED BY THE AO. 4. BRIEF LY STATED THE RELEVANT MATERIAL FACTS ARE THAT THE ASSESSEE, A PRIVATE LIMITED COMPANY, IS CARRYING ON BUSINESS OF MANUFACTURING AND TRADING IN VARIOUS TYPES OF TEA PRODUCTS. FOR THE IMPUGNED ASSESSMENT YEAR, ASSESSEE FILED ITS RETURN OF INCOME ON 27.10.2004 DECLARING LOSS OF RS.4,78,905/ - . THE ASSESSING OFFICER WHILE COMPLETING THE ASSESSMENT FOR ASSESSMENT YEAR 2008 - 09, NOTED THAT ASSESSEE HAD OBTAINED CERTAIN AMOUNT OF UNSECURED LOANS IN CASH IN EXCESS OF THE AMOUNTS SPEC IFIED IN SECTION 269SS OF THE ACT. HE FURTHER NOTED THAT SAME FACTS WERE ALSO EMERGING FOR THE ASSESSMENT YEARS 2004 - 05 AND 2005 - 06 ALSO. SIMULTANEOUSLY, AO ISSUED NOTICES UNDER SECTION 271D AND 271E OF THE ACT REQUIRING THE ASSESSEE TO EXPLAIN NON - COMPL IANCE OF THE PROVISIONS UNDER SECTION S 269SS AND 269T OF THE ACT. FOR THE ASSESSMENT YEAR UNDER DISPUTE, IT WAS NOTED BY THE AO THAT ASSESSEE HAD ACCEPTED CASH LOANS EXCEEDING OF RS.20,000/ - TOTALING TO RS.12,86,000/ - . HE FURTHER NOTED THAT THE LOANS WER E ACCEPTED ON 21 OCCASIONS IN VARIOUS AMOUNTS. IN RESPONSE TO SHOW CAUSE NOTICE, ASSESSEE EXPLAINED THAT ASSESSEE HAD TO BORROW FUNDS DUE TO SLACKNESS IN BUSINESS. THE LOANS RECEIVED FROM THE DIRE CTORS WERE ONLY TEMPORARY LOANS AND TREATED AS UNSECURED L OANS WHICH WE R E INTEREST FREE. THE LOANS WERE TAKEN IN CASH DUE TO URGENT NEEDS OF THE BUSINESS. IT WAS FURTHER SUBMITTED THAT THE LOANS WERE TAKEN FROM DIRECTORS AND SISTER CONCERN UNDER A GENUINE IMPRESSION THAT THE PROVISIONS OF SECTION 269 SS ARE NOT ATTRACTED IN RESPECT OF SUCH LOANS. IT WAS SUBMITTED THAT AS PER COMPANIES ACT, UNDER RULE 2(B)(IX), A DEPOSIT DOES NOT INCLUDE ANY AMOUNT RECEIVED FROM A DIRECTOR OR A SHAREHOLDER OF A PRIVATE LIMITED COMPANY. ASSESSEE FURTHER STATED THAT THERE IS NO FI NDING BY THE ASSESSING OFFICER THAT THE TRANSACTION IS NOT GENUINE. IT WAS SUBMITTED THAT THE EXPRESSION ANY OTHER PERSON EXCLUDES TRANSACTION BETWEEN CLOSELY RELATED PERSONS. SINCE IN ASSESSEES CASE, THE LOANS WERE TAKEN FROM SISTER CONCERN AND DIREC TORS WHO ARE CLOSELY RELATED, THE PROVISIONS OF SECTION 269SS OF THE ACT CANNOT BE ATTRACTED. IT WAS SUBMITTED THAT THE OBJECT OF INTRODUCING SECTIONS 269SS AND 269T ARE TO COUNTER THE USUAL EXPLANATIONS GIVEN BY THE ASSESSEE DURING SEARCH & SURVEY ACTION S 3 BY EXPLAINING UNACCOUNTED MONEY FOUND DURING SEARCH TO BE LOANS BORROWED FROM FRIENDS AND RELATIVES. THEREFORE, WHEN IN ASSESSEES CASE, TRANSACTIONS ARE GENUINE AND THE AMOUNTS ADVANCED AND REPAYMENTS MADE DID NOT REPRESENT ANY CONCEALED INCOME, PROVIS IONS OF SECTIONS 269SS AND 269T ARE NOT APPLICABLE. IT WAS SUBMITTED THAT THE DIRECTORS HAD CONTRIBUTED THE LOANS FROM THEIR OWN SOURCES AND THEY HAD NOT AT ALL VIOLATED THE STATUTORY PROVISIONS. THE LAPSE, IF AT ALL THERE IS ANY, IS SOLELY DUE TO IGNORA NCE OF LAW ON THE PART OF THE DIRECTORS AS THEY ARE NOT WELL EDUCATED. THE AO HOWEVER DID NOT ACCEPT THE EXPLANATIONS SUBMITTED BY THE ASSESSEE AND PROCE EDED TO PASS ORDERS IMPOSING PENALTY OF RS.12,86,000/ - UNDER SECTION 271D AND RS.30,000/ - UNDER SECTI ON 271E OF THE ACT BY HOLDING THAT VARIOUS EXPLANATIONS SUBMITTED BY THE ASSESSEE DO NOT FALL WITHIN THE MEANING OF REASONABLE CAUSE AS DEFINED IN SECTION 273B OF THE ACT. BEING AGGRIEVED BY THE PENALTY ORDERS, ASSESSEE FILED APPEAL BEFORE LD CIT(A). 5. FOR THE SAME REASON, PENALTY OF RS.1,76,000/ - AND RS.25,000/ - UNDER SECTION 271D WAS ALSO IMPOSED BY THE AO FOR THE ASSESSMENT YEARS 2005 - 06 AND 2008 - 09 AND PENALTY OF RS.2,29,000/ - AND RS.23,180/ - UNDER SECTION 271E WAS IMPOSED FOR ASSESSMENT YEARS 20 06 - 07 AND 2007 - 08 AND APPEALS WERE FILED BY THE ASSESSEE BEFORE LD CIT(A). 6. BEFORE THE FIRST APPELLATE AUTHORITY, ASSESSEE REITERATING THE STAND TAKEN BEFORE THE AO, SUBMITTED THAT THE LOANS WITH REGARD TO WHICH PENALTY WAS IMPOSED WERE TAKEN BY THE ASSE SSEE EITHER FROM THE SISTER CONCERN I.E. M/S. SHREE SURYA FINANCE OR FROM THE DIRECTORS. IT WAS SUBMITTED THAT THE LOANS WERE AVAILED TO FUND THE INITIAL INVESTMENT IN THE FORM OF FIXED ASSETS AND WORKING CAPITAL FOR SETTING UP THE COMPANY. IT WAS SUBMITT ED THAT SINCE IT IS A START UP COMPANY, IT WAS DIFFICULT TO OBTAIN LOANS FROM BANKS OR FINANCIAL INSTITUTIONS AND THE COMPANY HAD TO FALL BACK UPON ITS DIRECTORS WHENEVER THERE WAS REQUIREMENT OF FUNDS. THE DIRECTORS EXTENDED INTEREST FREE LOANS EITHER FR OM THEIR OWN ACCOUNT OR THROUGH SURYA FINANCE WHICH IS A PARTNERSHIP FIRM, WHERE THE DIRECTORS OF THE COMPANY SINCE WE RE HAVING MAJOR SHARES. IT WAS SUBMITTED THAT THE DIRECTORS OF THE ASSESSEE COMPANY ARE NOT HAVING ANY EDUCATIONAL BACKGROUND , THEY DID 4 NOT KNOW THE TECHNICALITIES OF THE STATUTORY PROVISIONS AND HENCE, FAILED TO COMPLY WITH THEM. IT WAS CONTENDED BY THE ASSESSEE THAT THE AO WAS NOT CORRECT IN OBSERVING THAT ASSESSEE WAS SUBJECTED TO AUDIT UNDER SECTION 44AB OF THE ACT AS THE TURNOVER OF THE COMPANY FOR ALL THE ASSESSMENT YEARS UNDER CONSIDERATION DO NOT EXCEED RS.12 LAKHS. ON THE AFORESAID SUBMISSIONS, ASSESSEE REQUESTED FOR DELETION OF THE PENALTY. IN SUPPORT OF SUCH CONTENTION, ASSESSEE RELIED UPON VARIOUS JUDICIAL PRECEDENTS. 7. LD CIT(A) WAS HOWEVER NOT CONVINCED WITH THE SUBMISSIONS MADE BY THE ASSESSEE AND HELD THAT ASSESSEE WAS NOT ABLE TO SHOW ANY BUSINESS URGENCY AS CLAIMED BY IT AND THE EXISTENCE OF BANKING FACILITIES IN THE AREA OF OPERATION ALSO COULD NOT BE DENIED BY THE AS SESSEE. HE WAS OF THE VIEW THAT THE LOANS ACCEPTED FROM THE SISTER CONCERN AND INTEREST FREE LOANS FROM DIRECTORS AR E NOT COGENT REASONS TO VIOLATE THE PROVISIONS OF SECTION 269 SS OF THE ACT. HE WAS OF THE FURTHER VIEW THAT LACK OF EDUCATION OF DIRECTOR S COULD ALSO NOT BE SUBSTANTIATED BY THE ASSESSEE AND EVEN THAT CONTENTION CANNOT BE ACCEPTED CONSIDERING THE FACT THAT THE DIRECTORS ARE COMPETENT ENOUGH TO RUN THE COMPANY. HENCE, LACK OF EDUCATION WILL NOT FORM BONAFIDE BASIS TO VIOLATE THE PROVISIONS OF LAW. THE CIT(A) RELYING UPON THE DECISION OF HONBLE KERALA HIGH COURT IN THE CASE OF S.C.NAREGAL, 329 ITR 615 (KER) HELD THAT IGNORANCE OF LAW IS NOT A VALID EXCUSE. SO FAR AS THE DECISIONS RELIED UPON BY THE ASSESSEE ARE CONCERNED, THE CIT(A) DID NO T CONSIDER THEM BY HOLDING THAT THERE IS NO FINDING BY THE AO THAT IT WAS A TRANSACTION BETWEEN SISTER CONCERN OR THAT THE MONEY RECEIVED AS LOAN IS EXPLAINED IN THE HANDS OF CREDITORS. ON THE AFORESAID BASIS, LD CIT(A) CONFIRMED THE IMPOSITION OF PENALTY FOR THE ASSESSMENT YEARS UNDER CONSIDERATION . HENCE, ASSESSEE HAS FILED APPEALS BEFORE US. 8. AT THE TIME OF HEARING, LD A.R. R EFERRING TO THE INCORPORATION CERTIFICATE PLACED AT PAGE 1 OF PB SUBMITTED THAT THOUGH THE COMPANY WAS INCORPORATED ON 17.4.2 001, BUT ACTUALLY IT STARTED ITS OPERATION DURING FINANCIAL YEAR 2003 - 04 RELEVANT TO ASSESSMENT 5 YEAR 2004 - 05. IN EARLIER ASSESSMENT YEARS, THERE WAS NO OPERATION BY THE ASSESSEE. IN THIS CONTEXT, LD A.R. DREW OUR ATTENTION TO PROFIT AND LOSS ACCOUNT OF THE ASSESSEE FOR ASSESSMENT YEAR 2004 - 05, WHICH IS PLACED AT PAGE 28 OF PB. LD A.R. SUBMITTED THAT ASSESSEE IS A VERY SMALL COMPANY AND ALL ALONG ITS TURNOVER REMAINED BETWEEN RS.10 LAKHS TO RS.12 LAKHS. SINCE IT WAS A START UP PERIOD, IT COULD NOT AVAIL LOAN FROM ANY OTHER SOURCES EXCEPT ITS SISTER CONCERN AND DIRECTORS. LD A.R. SUBMITTED THAT SINCE ASSESSEE CONTINUOUSLY SUSTAINED LOSS, ULTIMATELY IT BECOME DEFUNCT. LD A.R. REFERRING TO PAGE 18 OF PB, WHICH IS A MEMORANDUM OF ARTICLE OF ASSOCIATION OF THE COMPANY, WHEREIN, THE DIRECTORS NAME HAVE BEEN MENTIONED AND ALSO THE PARTNERSHIP DEED OF SHREE S URYA FINANCE PLACED AT PAGE 75 OF PAPER BOOK SUBMITTED THAT TWO OF THE DIRECTORS ARE ALSO PARTNERS IN S H REE SURYA FINANCE, SO EFFECTIVELY SRI SURYA FINANCE IS A SISTER CONCERN OF THE ASSESSEE COMPANY. LD A.R. SUBMITTED THAT IT IS NOT A FACT THAT ASSESSEE DID NOT DISCLOSE THE TRANSACTIONS WITH THE SISTER CONCERN BUT IN FACT ASSESSEE HAD DISCLOSED ALL THE TRANSACTIONS TO THE DEPARTMENT IN THE FINANCIAL STATEM ENT SUBMITTED ALONGWITH THE RETURN OF INCOM E. LD A.R. SUBMITTED THAT SINCE IT IS THE FIRST YEAR OF OPERATION, ASSESSEE WAS NOT WELL CONVERSANT WITH THE TAXING PROVISIONS BEING AN UNEDUCATED PERSON. HE DID NOT KNOW THE IMPLICATION OF TAKING LOANS IN CASH. IT WAS SUBMITTED THAT THE OBJECT BEHIND THE INTRODUCTION OF SECTION 269SS AND 269T IS TO PREVEN T EXPLAINING UNDISCLOSED INCOME . HOWEVER, IN CASE OF THE ASSESSEE, NO SUCH SITUATION ARISES AS THERE IS NEITHER ANY DOUBT NOR ALLEGATION BY THE AO WITH REGARD TO GENUINENESS OF THE LOANS TAKEN. LD A.R. THEREFORE SUMMED UP HIS ARGUMENTS BY CONTENDING THAT THE PENALTY IS NOT LEVIABLE AS IT IS A TRANSACTION BETWEEN SISTER CONCERN OR DIRECTORS WHO ARE CLOSELY RELATED TO THE ASSESSEE, SECONDLY SINCE IT IS THE FIRST YEAR OF OPERATION, ASSESSEE COULD NOT HAVE AVAILED LOAN EITHER FROM FINANCIAL INSTITUTIONS OR ANY OTHER PERSONS NOT KNOWN TO IT. ASSESSEE HAS PROVED ITS BONAFIDE BY DISCLOSING THE LOAN TRANSACTIONS IN THE FINANCIAL STATEMENT ALONGWITH RETURN OF INCOME. I T WAS SUBMITTED THAT SINCE ASSESSEES TURNOVER WAS VERY SMALL FOR ALL THESE ASSESSMENT YEARS BEING IN THE RANGE OF RS.10 LAKHS TO RS.12 LAKHS, THERE IS NO TAX AUDIT IN THE CASE OF THE ASSESSEE, WHICH ALSO WAS A CAUSE FOR THE ASSESSEE NOT KNOWING THE IMPLIC ATION OF THE RELEVANT PROVISIONS. IT WAS SUBMITTED THAT THE AO DID NOT EVEN REOPEN THE ASSESSMENT 6 WHICH SUGGEST THE FACT THAT THE LOANS ARE GENUINE. IN SUPPORT OF SUCH CONTENTION, LD A.R. HAS RELIED UPON THE FOLLOWING DECISIONS: I) CIT VS. SHREE AMBICA FLOUR MILLS, 6 DTR (GUJ) 169 II) CIT VS. SUNIL KUMAR GOEL, 315 ITR 163 (P&H) III) CIT VS. DECCAN DESUGNS (INDIA )(P) LTD., 347 ITR 580(MAD) IV) ACIT VS. VI NMAN FINANCE AND LEASING LTD , 120 TTJ (VIS) 462. 9. ON THE OTHER HAND, LD D.R. STRONGLY SUPPORTIN G THE ORDER OF LD CIT(A) IN CONFIRMING THE IMPOSITION OF PENALTY, SUBMITTED THAT ASSESSEE HAS NOT AT ALL BEEN ABLE TO SUBSTANTIATE WHAT ARE THE REASONS WHICH PREVENT ED IT FROM ACCEPTING THE LOANS IN CHEQUE WHEN BANKING FACILITIES ARE AVAILABLE IN THE AREA OF OPERATION. LD D.R. REFERRING TO THE PENALTY ORDER SUBMITTED THAT THE AO HAS DEALT WITH EACH OF THE CONTENTION RAISED BY THE ASSESSEE AND HAS COME TO A REASONABLE CONCLUSION BY HOLDING THAT NONE OF THE REASONS SHOWN BY THE ASSESSEE CONSTITUTE REASONABLE CAUSE AS PER SECTION 273B OF THE ACT. LD D.R THEREFORE URGED THAT IN THE GIVEN CIRCUMSTANCES, ASSESSEE HAVING VIOLATED THE PROVISIONS OF SECTION 269SS, IMPOSITION OF PENALTY IS CORRECT. 10. WE HAVE CONSIDERED SUBMISSIONS OF LD REPRESENTATIVES OF PARTIES AND ORDERS OF AUTHORITIES BELOW. 11. LD A.R. HAS ARGUED FOR DELETION OF PENALTY BROADLY ON THE FOLLOWING GROUNDS: (1) IT IS A TRANSACTION BE TWEEN THE SISTER CONCERN OR THE DIRECTORS. (2) IT IS THE FIRST YEAR OF OPERATION, HENCE, ASSESSEE WAS NOT WELL AWARE OF THE STATUTORY PROVISIONS. 7 (3) ASSESSEE HAS PROVED ITS BONAFIDE BY DISCLOSING UNSECURED LOANS IN THE FINANCIAL STATEMENT ALONGWITH RETURN OF INCOME. SINCE THERE IS NE ITHER REOPENING OF ASSESSMENT NOR ANY ADDITION OF THE UNSECURED LOAN, THE GENUINE NESS OF THE TRANSACTION HAS NOT BEEN DOUBTED. 12. IT IS A FACT THAT AS PER CERTIFICATE OF INCORPORATION, ASSESSEE COMPANY WAS INCORPORATED ON 17.4.2001, HOWEVER, ON PERUSAL OF PROFIT AND LOSS ACCOUNT, FOR ASSESSMENT YEAR 2004 - 05, COPY OF WHICH IS PLACED AT PAGE 28 OF PB, SHOWS THAT THERE WAS NO OPERATION BY THE COMPANY PRIOR TO ASSESSMENT YEAR 2004 - 05. 13. IT IS ALSO A FACT THAT ALL THE DIRECTORS OF THE ASSESSEE COMPANY ARE ALSO PARTNER IN S H REE SURYA FINANCE. THEREFORE, IT CANNOT BE DENIED THAT SURYA F INANCE IS A SISTER CONCERN OF THE ASSESSEE COMPANY. IN THESE CIRCUMSTANCES, IT CANNOT BE SAID THAT THERE WAS NO R EASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT SHOWN BY THE ASSESSEE. 14 . IN THE CASE OF SHREE AMBICA FLOUR MILLS (SUPRA), TH E HONBLE GUJARAT HIGH COURT WHILE CONSIDERING SIMILAR ISSUE OF IMPOSITION OF PENALTY UNDER SECTION 271D AND 271E OF THE ACT, OBSERVED THAT THE TRANSACTIONS BETWEEN SISTER CONCERN ARE NOT COVERED BY EITHER PROVISIONS OF SECTION 269SS OR SECTION 269T OF THE ACT. THE HONBLE HIGH COURT ALSO TAKING INTO NOTE THE OBJECT BEHIND BRING ING SECTION 269SS AND SECTION 269T FOR CURBING BLACK MONEY, HELD THAT WHEN THERE IS NO SUCH ALLEGATION THEN THE VIOLATION OF PROVISIONS UNDER SECTIONS 269SS AND 269T ARE OF VENIAL NATURE AND PENALTY CANNOT BE IMPOSED. 15 . IN THE CASE OF SUNIL KUMAR GOEL (SUPRA), HONBLE P&H HIGH ALSO EXPRESSED THE VIEW THAT WHEN THE ACTION OF T HE ASSESSEE HAD NOT RESULTED IN AVOIDING OF TAX LIABILITY THEN IT CANNOT BE CONSIDERED TO BE NOT BONAFIDE AS NO PREJUDICE IS CAUSED TO THE REVENUE. 8 16 . THE HONBLE MADRAS HIGH COURT IN THE CASE OF DECCAN DESIGNS (INDIA) PVT. LTD (SUPRA) ALSO EXPRESSED SIMILAR VIEW WHEN THE TRANSACTIO N IS BETWEEN SISTERS CONCERN, PENALTY UNDER SECTION 271E AND 271D CANNOT BE IMPOSED. 17 . IN THE CASE OF VINMAN FINANCE & LEASING LTD (SUPRA), THE THIRD MEMBER OF THE BENCH OF ITAT VISHAKHAPATNAM BENCH REPORTED IN 115 ITD 115 HELD THAT IT CANNOT BE SAID TH AT IGNORANCE OF LAW IS NOT A REASONABLE CAUSE. THE TRIBUNAL WAS OF THE VIEW THAT WHEN THE ASSESSEE WAS HAVING A TAXABLE INCOME OF RS.59,210/ - , IT CANNOT BE PRESUMED THAT ASSESSEE KNOWINGLY EXPOSED ITSELF TO PENALTY IN THE SUM OF RS.25 LAKHS. THE THIRD ME MBER , THEREFORE, HELD THAT THERE IS REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B FOR WHICH PENALTY UNDER SECTION 271E IS NOT ATTRACTED. 18 . THUS, CONSIDERING THE FACTS OF THE AS SESSEE IN THE LIGHT OF RATIO LAID DOWN IN DECISIONS AS REFERRED TO HE REINABOVE, THE UNDISPUTED FACTS ARE THAT THE UNSECURED LOA NS ARE TAKEN EITHER FROM SISTER CONCERN OR DIRECTORS , WHO ARE CLOSELY RELATED TO THE ASSESSE, SECONDLY THE AO HAS ALSO NOT DOUBTED THE GENUINENESS OF THE TRANSACTION, AS HE HAS ACCEPTED THE UNSECURE D LOAN WITHOUT MAKING ANY ADDITION IN THIS REGARD. IT IS ALSO A FACT THAT IN ALL THESE ASSESSMENT YEARS, ASSESSEE HAS ALSO RETURNED LOSS. IN THESE CIRCUMSTANCES, AS HELD BY THE THIRD MEMBER BENCH OF THIS TRIBUNAL IN THE CASE OF VINMAN FINANCE & LEASING L TD (SUPRA), IT HAS TO BE PRESUMED THAT ASSESSEE KNOWINGLY WOULD NOT HAVE EXPOSED ITSELF TO PENALTY OF RS.12,86,000/ - UNDER SECTION 271D AND RS.30,000/ - UNDER SECTION 271E FOR ASSESSMENT YEAR 2004 - 05 . IN OUR CONSIDERED VIEW, TH ERE IS NO CASE OF IMPOSITION OF PENALTY AS THE REASONS SHOWN BY THE ASSESSEE IN ITS EXPLANATION FOR NON - COMP LIANCE TO THE PROVISIONS OF SECTION 269SS AND 269T OF THE ACT CONSTITUTE REASONABLE CAUSE WITHIN THE MEANING OF SECTION 273B OF THE ACT. IN THE AFORESAID VIEW OF THE MATTER, WE DELE TE THE PENALTY IMPOSED U/S.271D OF THE ACT. FOR THE SAME REASON, WE ALSO DELETE THE PENALTY IMPOSED U/S.271E ALSO FOR THE IMPUGNED ASSESSMENT YEA R. GROUND NO.2 IN I.T.A. NO.261 /VIZ/2013 SINCE DOES NOT RELATE TO THE SUBJECT MATTER OF APPEAL, THE SAME IS DISMISSED AS INFRUCTUOUS. 9 19 . SINCE ON IDENTICAL FACTS AND ISSUE, THE PENALTY IS IMPOSED BY THE AO AND SUSTAINED BY LD CIT(A) FOR ASSESSMENT YEARS 2005 - 06 TO 2008 - 09, FOLLOWING THE VIEW TAKEN IN ASSESSMENT YEAR 2004 - 05, WE DELETE THE PENALTY IMPOSED UNDER SECTION 271E AND 271D OF THE ACT. 20 . IN THE RESULT, APPEALS FILED BY THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 0 6 / 12/2013 . SD/ - SD/ - (B.RAMAKOTAIAH ) ( SAKTIJIT DEY ) ACCOUNTANT MEMBER JUDICIAL MEMBER VISHAKHAP ATNAM DATED 0 6 / 12 /2013 PARIDA , SR. PS COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT : M/S. COASTAL TEA (P) LTD., D.NO.04 - 03 - 110,MADHAVAPURAM ROAD, PITHAPURAM. 2. THE RESPONDENT. : ADDL. CIT, KAKINADA RANGE,KAKINADA 3. THE CIT(A) - CONCERNED. 4. CIT CONCERNED 5. DR, ITAT, VISHAKHAPATNAM 6. GUARD FILE. BY ORDER SR.P S, ITAT, VISHAKHAPATNAM //TRUE COPY//