BHOPAL SINGH SHEKHAWAT, Jaipur V. JT. CIT, Jaipur

ITA 268/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2031 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 07-04-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AJAY MALLIK CIT DHK
• Assessee Lawyers: F REHMAN KHAN
• Keywords: Gift; Salary income; Question of law; Reasonable cause; Difference of opinion; Ignorance of law
• Section: 143(3); 147; 68; 148; 2

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES (SMC), JAIPUR JH HKKXPAN] YS[KK LNL; ] DS LE{K BEFORE: SHRI BHAGCHAND, ACCOUNTANT MEMBER VK;DJ VIHY LA-@ ITA NO. 268/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 BHOPAL SINGH SHEKHAWAT, 6, BHARTENDU NAGAR, KHATIPURA, JAIPUR. CUKE VS. JT. CIT, RANGE-1, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AOWPS 1925 G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI F. REHMAN KHAN (ADV) JKTLO DH VKSJ LS@ REVENUE BY : SHRI AJAY MALLIK (ADDL.CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 15/09/2017 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 21/09/2017 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE EMANATES F ROM THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 23/01/2016 FOR THE A. Y. 2008-09. THE ONLY ISSUE INVOLVED IN APPEAL IS SUSTAINING THE PENALTY OF RS. 35,000/- LEVIED U/S 271D OF THE INCOME TAX ACT, 1961 (IN SHORT THE A CT). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS DERIVING INCOME FROM SALARY, HOUSE PROPERTY AND OTHER SOURCES. RETU RN OF INCOME WAS FILED ON 31/03/2009 DECLARING TOTAL INCOME OF RS. 1 ,34,790/-, WHICH WAS ITA 268/JP/2017_ BHOPAL SINGH SHEKHAWAT VS JT.CIT 2 PROCESSED U/S 143(1) OF THE ACT. NOTICE U/S 148 OF THE ACT WAS ISSUED AND THE ASSESSMENT WAS COMPLETED U/S 143(3) READ WITH SEC TION 147 OF THE ACT AT RS. 32,66,490/- ON 24/03/2014. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE HAD RECEIVED LOAN OF RS. 25,000/- FROM SHRI MUKESH OF VILLAGE DHANA AND RS. 50,000/- FROM SHRI RUPESH SIN GH SHEKHAWAT. THUS, THERE WAS A VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. THE MATTER WAS REFERRED TO JCIT, WHO ISSUED SHOW CAUSE NOTI CE ON 13/8/2014 FOR LEVY OF PENALTY AND LEVIED PENALTY OF RS. 75,00 0/- VIDE ORDER DATED 18/09/2014. THE LD. CIT(A) PARTLY DELETED THE PENALTY . 3. NOW THE ASSESSEE IS IN APPEAL BEFORE THE ITAT. WHI LE PLEADING ON BEHALF OF THE ASSESSEE, THE LD AR HAS SUBMITTED AS UNDER: 1. RECEIPTS WERE NOT ON ACCOUNT OF ANY LOAN OR DEPO SIT BUT IS ONLY A FAMILY ARRANGEMENT: AT THE OUTSET WE MAY SUBMIT THA T THE ASSESSEE IS A RETIRED SOLDIER AND DOES NOT UNDERSTAND COMPLEXIT IES OF INCOME TAX LAWS. THE FIRST SUBJECTED AMOUNTS OF RS.25,0001- [R S. 5000/- PARTLY SUSTAINED NOW BY THE LD. CIT(A) FOR THE PURPOSE OF PENALTY], WAS REQUIRED IN AN EMERGENCY NEED OF HOUSEHOLD [WHICH F ACT IS NOT DENIED NEITHER BY THE JCIT NOR BY THE LD. CIT (A)] AND AS A USUAL PRACTICE OF COMMON MAN, IT WAS ARRANGED FROM THE FAMILY MEMBERS I.E. COUSIN BROTHER OF THE ASSESSEE. MOREOVER THE SECOND SUBJEC TED AMOUNTS OF RS.50,000L-[RS. 30,000/- PARTLY SUSTAINED NOW BY TH E LD. CIT(A) FOR THE PURPOSE OF PENALTY] WAS RECEIVED FROM SHRI RUPESH S INGH SHEKHAWAT WHO WAS THE SON OF THE ASSESSEE. THE SAME WAS REQUI RED BY THE ASSESSEE FOR GIVING AS AN ADVANCE IN A DEAL OF PURC HASE OF LAND, [WHICH ITA 268/JP/2017_ BHOPAL SINGH SHEKHAWAT VS JT.CIT 3 FACT IS NOT DENIED NEITHER BY THE JCIT NOR BY THE L D. CIT(A)]. HOWEVER, THE SAME DID NOT MATERIALIZE BUT THE AMOUNT SO RECE IVED STOOD UTILIZED IN MEETING WITH SOME OTHER HOUSEHOLD EXPENSES. THE PURPOSE BEHIND THE ARRANGEMENT IS CONSTRUCTION OF ASSESSEE'S HOUSE AT MITRA NAGAR, KHATIPURA, JAIPUR FOR HIM AND HIS FAMILY. THE VERY NATURE OF THESE TRANSACTIONS CLEARLY SUGGEST T HAT IT WAS A MERELY FAMILY ACCOMMODATION AT THE TIME OF NEED. IT WAS NO T TAKEN FROM THE STRANGER / OUTSIDER AND THUS, WAS NOT IN THE NATURE OF LOAN OR DEPOSIT. 2. RELATIVES NOT COVERED: IN ANY CASE, IT IS NOT D ENIED THAT THE SUBJECTED AMOUNTS WERE RECEIVED FROM THE BLOOD/CLOSE RELATIVE S OF THE ASSESSEE WHO CANNOT BE TERMED AS A LOAN IN THE STRICT LEGAL SENSE OF THE TERM. IN THIS REGARD, RELIANCE IS PLACED ON THE DECISION OF DILLU CINE ENTERPRISES PVT. LTD. VS. ACIT (2002) 80 ITD 484 (HY DTRIB) (DPB 13- 24) WHEREIN IT WAS HELD THAT IN THE CONTEXT OF SECT ION 269-SS, 'ANY OTHER PERSON, DOES NOT INCLUDE CLOSELY RELATED PERS ON'. ALSO KINDLY REFER G.D. SUBRAYA SHEREGAR 10 SOT 378 (BANG) LAYING DOWN AN IDENTICAL PROPOSITION. THE VARIOUS BENCHES OF THE HONBLE ITA T HAVE BEEN CONSISTENTLY, TAKING A VIEW THAT ANY AMOUNT RECEIVE D FROM A CLOSE RELATIVE CANNOT BE TREATED AS A LOAN OR DEPOSIT. TH ERE IS NO TRANSFER AS SUCH BETWEEN TWO CLOSELY RELATED PERSONS, WHICH IS A CONDITION PRECEDENT, SO AS TO VALIDLY INVOKE SEC.269SS OR 269 FOR THAT REASON. ALSO KINDLY REFER MUTHOOT M. GEORGE BROTHERS V/S A CIT (1993) 47 TTJ 434 (COCH) (DPB 25-34), MAHESH PRASAD SONI V/S ACIT (2004) 86 TTJ 815 (JAB.) AND ACIT V/S GUJARAT AMBUJA PROTEINS LTD . (2004) 89 TTJ 324 (AHM) AND RAJENDRA SURYAVANSHI VS. ACIT (2011) 56 DTR 0386 (PUNE) (DPB 35-42). ITA 268/JP/2017_ BHOPAL SINGH SHEKHAWAT VS JT.CIT 4 3. SECTION 269SS CANNOT BE INVOKED: 3.1 IT IS SUBMI TTED THAT S. 269SS CANNOT BE INVOKED UNLESS THE DEPARTMENT ESTABLISHES THAT WHAT THE ASSESSEE RECEIVED WAS A LOAN OR DEPOSIT. KINDLY REF ER JAGVIJAY AUTO FINANCE PVT. LTD V/S ACIT (1996) 19 TW 82 (JP). THE AO DID NOT APPRECIATE THAT THERE WAS NO TERM OR CONDITION ON W HICH THE AMOUNT WAS TAKEN AND NO INTEREST WAS PAYABLE ON THE AMOUNT S TAKEN BY THE ASSESSEE. HENCE, THE RECEIPTS WERE NOT IN THE NATUR E OF LOANS OR DEPOSITS AND HENCE WERE OUTSIDE THE PURVIEW OF SECT ION 269-SS. IN THIS REGARD, RELIANCE IS PLACED ON THE DECISION OF KARNA TAKA GINNING & PRESSING FACTORY VS. JCIT(2001) 72 TTJ 307 (MUM) (D PB 1- 8). 3.2 KRISHNA KR. PATHAK (HUF) VS. ITO (2004) 90 TTJ 0940 (KOL TRIB) (DPB 9-11) HELD AS UNDER: THE ASSESSEE(HUF) AND THE KARTA OF THE ASSESSEE(HU F) WERE MAINTAINING CURRENT ACCOUNT WITH EACH OTHER AND THE TRANSACTION S BETWEEN THEM WERE IN THE NATURE OF TEMPORARY ADJUSTMENT/ACCOMMODATION AND THERE WAS NO CASH LOAN OR DEPOSIT BY THE KARTA OF THE ASSESSEE (FIUF) . THE DEPARTMENT HAS NOT DISPUTED THE SUBMISSION OF THE ASSESSEE (FIUF) THAT NO INTEREST WAS PAID OR PAYABLE OR RECEIVED BY EITHER SIDE. BY PASSING THE JOURNAL ENTRY BY THE KARTA OF THE ASSESSEE (HUF) ON ACCOUNT OF EXPENDITURE INCURR ED BY HIM FOR GIVING GIFTS TO RELATIVES ON BEHALF OF THE ASSESSEE (HUF) DOES NOT AMOUNT TO LOAN OR DEPOSIT WITHIN THE MEANING OF S. 269SS AND AS SUCH, NO PENA LTY IS LEVIABLE UNDER S. 271D. ACCORDINGLY, THE PENALTY IS CANCELLED.SHREPA K ENTERPRISES VS. DY. CIT (1998) 60 TTJ (AHD) 199 : (1998) 64 ITD 300 (AHD), MUTHOOT M. GEORGE BANKERS \/S. ASSTT. CIT (1993) 47 TTJ (COCH) 434 : (1993) 46 ITD 10 (COCH), DILLU CINE ENTERPRISES (P) LTD. VS. ADDL. CIT (2002) 80 ITD 48 4 (HYD) AND SUN FLOWER BUILDERS (P) LTD. VS. DY. CIT (1997) 61 ITD 227 (PU NE) RELIED ON.' 4. SUBJECTED AMOUNT WAS FOUND GENUINE: IT IS PERTINENT TO NOTE THAT NO ADDITION U/S 68 OR OTHER PROVISION, WAS MADE IN THE ASSESSMENT ORDER 18.09.2014 THOUGH FRAMED U/S 143(3)/148 MEANING THE REBY THE SUBJECTED TRANSACTIONS WERE TREATED AS GENUINE TRAN SACTION, WHICH ARE NOT INTENDED TO BE COVERED. THERE IS ABSOLUTELY NO DOUBT RAISED IN ANY OF THE ORDERS BY LOWER AUTHORITIES THAT THE MONEY I NVOLVED WAS BLACK ITA 268/JP/2017_ BHOPAL SINGH SHEKHAWAT VS JT.CIT 5 MONEY. KINDLY REFER CIT VS. MAHESHWARI NIRMAN UDYOG (2007) 211 CTR 0579 (RAJ.) (DPB 43-48) HELD AS UNDER: 'APPELLATE AUTHORITY AS WELL AS THE TRIBUNAL HAVING FOUND THAT THE TRANSACTION IN QUESTION IS A GENUINE TRANSACTION AND THAT THE ASSESSEE HAS SHOWN REASONABLE COURSE FOR ACCEPTING LOAN IN CASH IN VIO LATION OF S. 269SS, SUCH FINDING OF FACT CANNOT BE DISTURBED BY THE COURT AN D NO SUBSTANTIAL QUESTION OF LAW ARISES FOR DETERMINATION.' ALSO KINDLY REFER KUSUM DHAMANI VS. ACIT (2014) 40 CCH 0842 (JAIPUR TRIB) (DPB 49-54) WHEREIN THERE IS A DETAILED DISCU SSION EXPLAINING THE LEGISLATIVE INTENT WITH THE HELP OF CBDT CIRCULAR A ND CASE LAWS WHICH ARE NOT REPEATED HERE FOR THE SAKE OF GRAVITY. 5. REASONABLE CAUSE EXISTED 5.1 IGNORANCE OF LAW IS A REASONABLE CAUSE U/S 273 B: THE ASSESSEE IS A RETIRED MILITARY OFFICIAL. HIS MOST OF THE LIFE HAS BEEN SPENT IN THE MILITARY AND THEREAFTER AS A RETIRED PERSON ONLY. H E SELDOM HAD ANY OCCASION TO MEET WITH SUCH A SITUATION. HE WAS COMP LETELY IGNORANT THAT ACCEPTANCE IN CASH FROM HIS OWN SON AND COUSIN EVEN WOULD HAVE AMOUNTED TO A CONTRAVENTION OF A PROVISION OF LAW. THOUGH HE MIGHT BE FILING HIS RETURN OF INCOME IN THE PAST AND EVEN WITH THE HELP OF CA YET HOWEVER, SUCH TRANSACTION OF ACCEPTING AMOUNT C AME TO NOTICE OF CA ONLY MUCH AFTER THE COMPLETION OF THE SAME WHEN THE RETURN WAS BEING PREPARED AND FILED. IT IS A MATTER OF COMMON KNOWLEDGE THAT IN SUCH CASES OTHERWISE ALSO THE ASSESSEE DO NOT FREQU ENTLY CONSULTS WITH HIS CA / CONSULTANT, MORE PARTICULARLY IN THE CASES OF NON BUSINESSMAN SALARIED CLASS EMPLOYEE AND RATHER A RETIRED EMPLOY EE. THE ASSESSEE THEREFORE, PROCEEDED IN THESES TRANSACTION WITHOUT EVEN KNOWING THAT THERE WAS SOME CONTRAVENTION AT ALL (ASSUMING IT WA S SO). THUS, THERE DID EXIST A REASONABLE CAUSE IN TERMS OF S. 273 B. KINDLY REFER MOTILAL PADAMPAT SINGHANIA 118 ITR 326(SC) FOLLOWED IN VEER SALES ITA 268/JP/2017_ BHOPAL SINGH SHEKHAWAT VS JT.CIT 6 CORPORATION 50 TTJ 130 AT 153, DILLU CINE ENTERPRISE S LTD. V/S AD. CIT 80 ITD 484 (HYD.). IN DR. DEEPAK MUCHALA VS. ITO (1 997) 58 TTJ 0524 (MUM.) 'PENALTY UNDER S. 271DLEVIABILITYASSESSEE, A DENT IST BY PROFESSION, IS NOT EXPECTED TO BE WELL-VERSED WITH FAST CHANGING LAWS FURTHER, HE BORROWED MONEY FOR PAYING INSTALLMENTS OF HIS FLAT AND ALSO FOR PURCHASING CERTAIN ITEMS / INSTRUMENT FOR HIS CLINICGENUINENESS OF LOAN NOT D OUBTEDNO JUSTIFICATION FOR APPLYING S. 271DNO REASON TO IMPOSE PENALTY FOR TE CHNICAL DEFAULT' 5.2 IT HAS BEEN HELD THAT THE AMOUNT TAKEN BY THE ASSESSEE IN CASH TO MEET WITH HIS URGENT NEED OF MONEY, WAS A REASONABL E CAUSE IN TERMS OF S.273B. IN THE PRESENT CASE ALSO THE ASSESSEE WA S IN NEED OF FUNDS FOR GIVING AN ADVANCE IN A DEAL OF PURCHASE OF LAND . HOWEVER, THE SAME DID NOT MATERIALIZE. IN THE CASES OF PURCHASE OF LAND, AFTER THE NEGOTIATIONS, THE BUYER IS USUALLY IN A HURRY TO MA KE THE PAYMENT OF SAI (ADVANCE) SO AS TO LOCK THE DEAL AT THE AGREED PRICES BECAUSE THERE ARE ALL THE CHANCES AND APPREHENSION OF THE SELLER NOT TO PROCEED FURTHER AT THE AGREED PRICES IN THE TEMPTATION OF F URTHER INCREASE IN THE PRICES UNLESS HE IS BOUND BY GIVING HIM THE TOKEN A MOUNT/ADVANCE/SAI AND THEREFORE, THE ASSESSEE ARRANGED RS.50,000/- IN CASH FROM HIS SON. ALTHOUGH IN THIS CASE THE AMOUNT COULD NOT BE UTILI SED FOR GIVING ADVANCE YET HOWEVER, THIS FACT IS NOT RELEVANT BECA USE AT THE MOMENT WHEN THERE WAS AN URGENT NECESSITY OF THE AMOUNT TO BE PAID IN CASH AS ADVANCE, ONLY WAS RELEVANT. FOR THIS PREPOSITION KINDLY REFER CIT VS. MAHESHWA RI NIRMAN UDYOG (THE AMOUNT WAS TO BE DISTRIBUTED TO THE LABOURERS BY TH E CONTRACTOR IN THE FIELD WHICH WAS URGENTLY REQUIRED). 6. IN CASE OF DIFFERENCE OF OPINION, THE VIEW FAVOU RABLE TO ASSESSEE MUST BE ADOPTED IN ASSESSMENT AS ALSO IN PENALTY PROCEED ING. KINDLY REFER ITA 268/JP/2017_ BHOPAL SINGH SHEKHAWAT VS JT.CIT 7 CIT V/S VEGETABLE PRODUCTS (1973) 88 ITR 192 (SC), ACIT & ORS. V/S VELLIAPPA TEXTILES LTD. & ORS. (2003) 184 CTR 193 ( SC). 7.1 DESPITE OF FILLING OF DETAILED SUBMISSIONS DAT ED 13.01.2017 (PB 8-15) AND THE CASE LAWS, THE ALLEGATION OF THE CIT(A) THA T NO REASONS WERE STATED AND THAT THERE DID NOT EXIST REASONABLE CAUS E ARE FACTUALLY INCORRECT ON THE FACE OF THE RECORD. 7.2 CASE CITED BY THE LD. CIT(A) IS COMPLETELY DIST INGUISHABLE: BECAUSE IN THE FACTS OF THAT CASE, THE CONTENTION OF THE ASSES SEE WAS THAT THE SUBJECTED AMOUNT OF THE GIFT WERE ALREADY TREATED A S UNDISCLOSED INCOME OF THE ASSESSEE (WHICH WERE SHOWN IN HIS ACC OUNT AS LOAN TAKEN FROM THE WIFE AND THE DAUGHTER), AND HENCE CO ULD NOT HAVE BEEN SUBJECTED TO THE PENALTY U/S 271D IN AS MUCH A S ONCE IT HAD ALREADY BECOME HIS INCOME, THE SAME AMOUNT COULD NO T BE TREATED AS LOAN OR IN OTHER WORDS, ONE CANNOT TRANSACTED WITH HIMSELF. IN THESE CIRCUMSTANCES, THE MATTER WAS CONSIDERED. HOWEVER, , IN OUR CASE NO SUCH PLEA HAS BEEN TAKEN AND ON THE CONTRARY, VIDE PARA 4 IT IS SUBMITTED THAT THE SUBJECTED AMOUNT WAS TREATED GEN UINE AND WAS NEVER ADDED TO THE ASSESSEE'S INCOME AND THEREFORE, NO PENALTY U/S 271D SHOULD HAVE BEEN IMPOSED. THUS, THE CONTROVERS Y AND THE CONTENTION INVOLVED IN THAT CASE WAS COMPLETELY DIF FERENT THEN WHAT IS AVAILABLE IN THE PRESENT CASE HENCE IT IS CLEAR THA T THE LD. CIT(A) BLINDLY APPLIED THE ABOVE CASE AND WRONGLY CONFIRME D THE IMPUGNED PENALTY. 8. LASTLY, WE STRONGLY RELY OUR SUBMISSION FILED B EFORE THE LD. CIT(A) BUT HAS NOT TAKEN JUDICIOUSLY (PB 8-15). 4. ON THE CONTRARY, THE LD SR.DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. ITA 268/JP/2017_ BHOPAL SINGH SHEKHAWAT VS JT.CIT 8 5. AFTER HEARING BOTH THE SIDES AND LOOKING TO THE PECULIAR FACTS AND CIRCUMSTANCES OF THE CASE. I FIND THAT THE ASSESSEE WAS A RETIRED MILITARY OFFICIAL. HE SELDOMLY HAD ANY OCCASION TO MEET SUCH SITUATION. SUCH PERSON REMAIN IGNORANT ABOUT THE LEGAL POSITION THA T ACCEPTANCE IN CASH FROM CLOSE RELATIVE SHALL BE IN CONTRAVENTION OF LA W. KEEPING IN VIEW OF VARIOUS DECISIONS OF ITAT CITED BY THE ASSESSEE, THE PENALTY IS DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21/09/2017. SD/- HKKXPAN (BHAGCHAND) YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21 ST SEPTEMBER, 2017 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SHRI BHOPAL SINGH SHEKHAWAT, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE JT. CIT, RANGE-1, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 268/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR