Sri Madhu Ghosh, Hooghly V. JCIT, Range - 1, Hooghly

ITA 271/KOL/2009

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 54632 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 8 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 14-07-2010
• Assessment Year: 2003-2004
• Appeal Filed On: 26-02-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NIHAR DUTTA GUPTA
• Assessee Lawyers: S M SURANA
• Keywords: Gift; Question of law; Reasonable cause

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA () BEFORE , /AND , . ! . '# ) [BEFORE SRI MAHAVIR SINGH, JM & SHRI C. D. RAO, AM] $ $ $ $ / I.T.A NO. 271/KOL/2009 %& '( %& '( %& '( %& '(/ // / ASSESSMENT YEAR: 2003-04 SRI MADHU GHOSH VS JOINT COMMISSIONER OF INCO ME-TAX PAN: ADIPG 4513D RANGE-1, HOOGHLY (*+ /APPELLANT ) (,-*+/ RESPONDENT ) DATE OF HEARING : 27.10.2011 DATE OF PRONOUNCEMENT: 28.10.2011 FOR THE APPELLANT: SHRI S.M SURANA FOR THE RESPONDENT: SHRI NIHAR DUTTA GUPTA '. / ORDER PER MAHAVIR SINGH, JM ( , , , , ) THIS APPEAL BY ASSESSEE IS ARISING OUT OF ORDER OF CIT(A)-XXXVII, KOLKATA IN APPEAL NO. 02/CIT(A)-XXXVII/JCIT,R-1, HG./07-08 DATED 16.1 2.2008. THE PENALTY UNDER DISPUTE WAS LEVIED BY JCIT, RANGE-1, HOOGHLY U/S. 271D OF T HE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) VIDE HIS ORDER DATED 28.3 .2007. 2 . THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGAINS T THE ORDER OF CIT(A) CONFIRMING THE LEVY OF PENALTY AT RS.4 LAKHS U/S. 271D OF THE ACT FOR VIOLATION OF PROVISIONS OF SECTION 269SS OF THE ACT. 3. THE BRIEF FACTS ARE THAT ASSESSEE RECEIVED ADVAN CE OF RS. 5 LAKHS FROM SMT. JAYANTI GHOSH AS UNDER:- DATE MODE OF PAYMENT AMOUNT 13.12.2002 BY CASH SOURCE BEING CASH WITHDRAWN BY RS.3,00,000 SMT. JAYANTI GHOSH 06.01.2003 AMOUNT WAS PAID TO ONE SRI MANAS DAS TH ROUGH RS.1,00,000 BEARER CHEQUE NO.74181 AS DIRECTED BY THE ASSESSEE TO CLEAR HIS BUSINESS DUES. 07.02.2003 THROUGH BEARER CHEQUE NO.74182 ISSUED I N RS.1,00,000 FAVOUR OF SHRI MADHU GHOSH, THE ASSESSEE RS.5,0 0,000 2 ITA 271/K/20 0 9 WSRI MADHU GHOSH. A.Y. 03-04 THE AO DURING THE COURSE OF ASSESSMENT PROCEEDINGS NOTED THAT ASSESSEE HAS RECEIVED THIS SUM IN CASH OF RS.5,00,000/- IN CONTRAVENTION OF THE PR OVISIONS OF SECTION 269SS OF THE ACT AND HE INITIATED PENALTY PROCEEDINGS U/S.271D OF THE ACT A ND REFERRED THE MATTER TO JCIT, RANGE-1, HOOGHLY. JCIT, RANGE-1, HOOGHLY LEVIED THE PENALTY BY REJECTING THE EXPLANATION OF ASSESSEE. THE CIT(A) ALSO CONFIRMED THE PENALTY OF RS. 4 LAKH AND DELETED RS. 1 LAKH. AGGRIEVED, NOW ASSESSEE IS IN APPEAL AGAINST CONFIRMATION OF PENAL TY OF RS. 4 LAKH. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE CONSISTENTLY BEFORE THE L OWER AUTHORITIES THAT SMT. JAYANTI GHOSH ADMITTED IN HER DEPOSITION BEFORE THE AO THAT SHE L IVED IN A JOINT FAMILY, BEING RELATIVE OF THE ASSESSEE, AND ALL THE FAMILY EXPENSES ARE BORNE BY THE ASSESSEE, SRI MADHU GHOSH. IT IS A FACT THAT SMT. JAYANTI GHOSH AND THE ASSESSEE ARE RELATI VES AND LIVED IN A JOINT FAMILY. NOW THE QUESTION ARISES, WHETHER THE PROVISIONS OF SEC. 269 SS WILL APPLY AMONG THE FAMILY MEMBERS, WHEN THEY AMONG THEMSELVES HAD ADVANCED LOANS OR DE POSITS. THIS HAS BEEN ANSWERED BY HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. N ATVARLAL PURSHOTTAMDAS PAREKH (2008) 303 ITR 5 (GUJ.), WHEREIN IT IS ANSWERED THAT THE ASSES SEE WOULD NOT VIOLATE THE PROVISIONS OF SECTION 269SS AND 269T OF THE ACT, IF THE ASSESSEE RECEIVES AMOUNT FROM THE FAMILY MEMBERS AS LOANS OR DEPOSITS, REASON BEING AMONG THE FAMILY MEMBERS, THE LOANS AND DEPOSITS CANNOT BE CONSTRUED STRICTLY IN THE TERMS OF THESE PROVISIONS . EVEN HONBLE MADRAS HIGH COURT IN THE CASE OF CIT VS. IDHAYAM PUBLICATIONS LTD. (2006) 28 5 ITR 221 (MAD.) AS HELD THAT THE TRANSACTIONS BETWEEN RELATIVES CANNOT BE TERMED AS LOAN OR DEPOSIT PARTICULARLY WHEN NO INTEREST IS BEING CHARGED ON THE TRANSACTIONS. IN THE PRESE NT CASE ALSO THE ASSESSEE HAS NOT PAID ANY INTEREST TO SMT. JAYANTI GHOSH AND IT IS ALSO A FAC T THAT SHE IS RELATED TO ASSESSEE. HONBLE GUJARAT HIGH COURT IN THE CASE OF NATVARLAL PURSHOT TAMDAS PAREKH (SUPRA) HAS CONFIRMED THE FINDINGS OF TRIBUNAL AS UNDER: 18. AS DISCUSSED ABOVE, THE ANNEXURE ATTACHED TO T HE PENALTY ORDER GOES TO SHOW THAT EACH OF THE FAMILY MEMBERS OF THE ASSESSEE AND EAC H ONE OF THEM WAS HAVING SUFFICIENT OPENING BALANCE AS ON APRIL 1, 1990. AFTER THAT WE HAVE TO LOOK INTO SOURCES OF THE AMOUNTS RECEIVED BY THE ASSESSEE ON BEHALF OF HIS FAMILY MEMBERS AS THE SAME IS AN IMPORTANT FACTOR. HANDSOME AMOUNT HAS BEEN RECEIVED ON ACCOUNT OF MATURITY OF NSCS AND THEN MOST OF THE AMOUNTS HAVE BEEN CREDITED ON ACCOUNT OF GIFTS RECEIVED FROM ONE FAMILY MEMBER TO OTHER AND THAT WAS THROUGH JOURNA L ENTRY EXCEPT RS. 32,000 WHICH WAS GIFT BY ONE FAMILY MEMBER TO OTHER. THESE AMOUNTS W ERE NOT RECEIVED BY THE ASSESSEE IN CASH AS THESE WERE MERE BOOK ENTRIES. THESE AMOUNT S CANNOT BE EQUATED WITH ANY OF THE AMOUNTS INVOLVED IN THE CASES RELIED ON BY BOTH TH E PARTIES AS IN THOSE CASES, THE AMOUNTS WERE RECEIVED BY THE ASSESSEE AS DEPOSITS I N CASH AND THAT IS NOT THE POSITION HERE BECAUSE THESE WERE BOOK ENTRIES EXCEPT THE AM OUNTS OF NSCS AND OTHER CASH LOAN OF RS. 11,910. IN THE SAME BREATH, THE AMOUNT OF RS. 1,920 CREDITED ON ACCOUNT OF RENT AND RS. 24,360 CREDIT IN THE ACCOUNT OF HARENDRAKUMAR AND HITESHKUMAR CANNOT BE TREATED 3 ITA 271/K/20 0 9 WSRI MADHU GHOSH. A.Y. 03-04 AS DEPOSITS OR LOAN BECAUSE THESE WERE CREDIT ENTR IES ON ACCOUNT OF SALARY AND BONUS. ACCORDINGLY, THE CRUX OF THE MATTER IS THAT MOST O F THE AMOUNTS AS REFERRED TO ABOVE WAS BASED ON MERE BOOK ENTRIES AND NOT RECEIVED IN CAS H BY THE ASSESSEE FROM FAMILY MEMBERS EXCEPT THE AMOUNT OF NSCS AND OTHER CASH LO AN AND THAT CANNOT BE TREATED AS LOAN OR DEPOSITS FOR THE PURPOSE OF SECTION 269SS. COMING TO THE NATURE OF PAYMENTS, MOST OF THE AMOUN TS, VIZ., RS. 5,41,450 HAS BEEN REPAID BY THE ASSESSEE BY DEPOSITING THE DIFFERENT SUMS ON BEHALF OF HIS FAMILY MEMBERS IN PPF RS. 25,523 HAS BEEN PAID TOWARDS LIC PREMIUM. THE AMOUNTS OF ADVANCE TAX, INCOME-TAX AS WELL AS WEALTH-TAX WILL BE AROUND RS. 80,000 AND AGAIN GIFT FROM ONE FAMILY MEMBER TO OTHER FAMILY MEMBER COMES TO RS. 1.09 LAKHS AND RS. 16,000 IS AGAIN JOURNAL ENTRY FOR ALLOCATION OF SHARE FOR HOUSEHOL D EXPENSES. THIS AGAIN SHOWS THAT NO AMOUNT WAS PAID BY THE ASSESSEE IN CASH TO ANY OF THE FAMILY MEMBER. THESE FACTS AS MENTIONED ABOVE, HAVE NOT BEEN CHALLENGED BY THE RE VENUE AS GENUINENESS OF THESE TRANSACTIONS, VIZ., RECEIPTS OF AMOUNT OF NSCS, BO OK ENTRIES RELATING TO GIFT FROM ONE FAMILY MEMBER TO OTHER AND CREDIT ENTRIES IN RESPE CT OF SALARY AND BONUS AND RENT ETC., THE GENUINENESS OF INVESTMENT IN PPF, LIC PREMIUM MADE TOWARDS DIFFERENT TYPES OF TAXES AND DIFFERENT BOOK ENTRIES, TRANSACTION RELAT ING TO GIFTS ARE NOT DOUBTED BY THE REVENUE. APART FROM IT, THE ASSESSEE HAS FILED DOC UMENTS FROM PAGES 1 TO 14 AND PAGES 17 TO 163 OF THE PAPER BOOK IN SUPPORT OF THESE EN TRIES AND THE LEARNED DEPARTMENTAL REPRESENTATIVE WAS NOT ABLE TO POINT OUT THAT FACTS AS NARRATED ABOVE AND RELIED ON BY THE ASSESSEE ARE IN ANY MANNER NOT TRUE. IF THESE ARE THE FACTS, THEN THE AMOUNTS OF THE ALLEGED RECEIPTS EXCEPT THE AMOUNTS OF CASH LOAN T AKEN BY THE ASSESSEE AND THE AMOUNT RECEIVED BY THE ASSESSEE ON MATURITY OF NSCS OF DIF FERENT FAMILY MEMBERS CANNOT BE TREATED AS LOAN AND DEPOSITS NOR AMOUNTS OF REPAYM ENTS CAN BE BROUGHT FOR VIOLATION OF THE PROVISIONS OF SECTION 269T AS AMOUNTS WERE NOT RECEIVED IN CASH BY THE ASSESSEE NOR HE PAID THE AMOUNTS IN CASH TO DIFFERENT FAMILY ME MBERS. THE TRIBUNAL HAS ALSO FOUND THAT THE ASSESSEE WAS P REVENTED BY A REASONABLE CAUSE IN LIGHT OF THE AFFIDAVIT OF ONE MR. J. B. SHAH, THE A DVOCATE AND THE INCOME-TAX PRACTITIONER HAVING STANDING OF 33 YEARS AS THE GENTLEMAN HAD OP INED THAT THE ASSESSEE WOULD NOT VIOLATE THE PROVISIONS OF SECTIONS 269SS AND 269T OF THE ACT IF THE ASSESSEE RECEIVES AMOUNTS FROM THE FAMILY MEMBERS AND REPAYS TO DIFF ERENT FAMILY MEMBERS. HEARD MR. B. B. NAIK, LEARNED STANDING COUNSEL FOR THE APPLICANTREVENUE AND MR. VARUN PATEL FOR MR. S. N. SOPARKAR, LEARNED SENIOR ADVOCA TE FOR THE RESPONDENT-ASSESSEE. AS CAN BE SEEN FROM THE FINDINGS REPRODUCED HEREINB EFORE THE TRIBUNAL HAS APPRECIATED THE EVIDENCE ON RECORD AND ARRIVED AT CERTAIN FINDI NGS BASED ON SUCH APPRECIATION OF EVIDENCE. THE POSITION IN LAW IS WELL-SETTLED THAT WHETHER EVIDENCE IS CORRECTLY APPRECIATED OR NOT CANNOT GIVE RISE TO A QUESTION OF LAW UNLESS AND UNTIL SUCH FINDINGS ARE CHALLENGED AS BEING CONTRARY TO THE EVIDENCE ON RECORD OR RECORDED AFTER OMITTING TO CONSIDER RELEVANT EVIDENCE AND TAKING INTO CONSIDER ATION IRRELEVANT EVIDENCE. IN THE PRESENT CASE, THAT IS NOT THE POSITION AND IN FACT THAT IS NOT EVEN ALLEGED. FURTHERMORE, THE TRIBUNAL HAS ALSO FOUND THAT THE ASSESSEE HAD B EEN ABLE TO ESTABLISH EXISTENCE OF A REASONABLE CAUSE, EVEN IF THE FINDING OF THE TRIBUN AL THAT THERE WAS NO VIOLATION IS NOT ACCEPTED. IN THE CIRCUMSTANCES, THERE IS NO REASON TO TAKE A DIFFERENT VIEW OF THE MATTER. THE TRIBUNAL HAS FOUND THAT ON THE FACTS AND IN THE LIG HT OF THE EVIDENCE ON RECORD THERE WAS NO VIOLATION OF EITHER THE PROVISIONS OF SECTION 2 69SS OR SECTION 269T OF THE ACT. THE TRIBUNAL HAS FURTHER FOUND THAT THERE WAS A REASON ABLE CAUSE, ASSUMING THAT THERE WAS ANY VIOLATION BY THE ASSESSEE. HENCE, THE TRIBUNAL HAS RIGHTLY DELETED THE PENALTIES LEVIED UNDER SECTIONS 271D AND 271E OF THE ACT. 4 ITA 271/K/20 0 9 WSRI MADHU GHOSH. A.Y. 03-04 IN VIEW OF THE ABOVE, WE ARE OF THE VIEW THAT PENAL TY U/S. 271D OF THE ACT CANNOT BE LEVIED IN THIS CASE AND ACCORDINGLY, WE DELETE THE SAME. 4. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. 5. ORDER PRONOUNCED IN THE OPEN COURT ON 28.10.2011 SD/- SD/- . ! ! ! ! . '# , (C. D. RAO) (MAHAVIR SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER ( !# !# !# !#) )) ) DATED : 28TH OCTOBER, 2011 /0 %12 3 JD.(SR.P.S.) '. 4 ,5 6'5'7- COPY OF THE ORDER FORWARDED TO: 1 . *+ / APPELLANT SHRI MADHU GHOSH, B. M. ROAD, BARABAZA R, P.O. CHANDANNAGAR, HOOGHLY, W.B. 2 ,-*+ / RESPONDENT JCIT, RANGE-1, HOOGHLY 3 . .% ( )/ THE CIT(A), KOLKATA 4. 5. .% / CIT KOLKATA 5=> ,% / DR, KOLKATA BENCHES, KOLKATA -5 ,/ TRUE COPY, '.%?/ BY ORDER, 2 /ASSTT. REGISTRAR .